2023 Q4 Job Market Report

Evaluation and Prospect of Global Macroeconomics

According to the OECD Economic Outlook, Interim Report September 2023, the global economy has been more resilient than expected in the first half of 2023. However, the growth outlook continues to be gloomy. With increasingly stricter monetary policy, numerous interest rate hikes announced by the Fed and major central banks in Europe since 2022, and the weaker-than-expected economic recovery in China, global growth in 2024 is likely to be lower than in 2023. Despite the continued decline, inflation is expected to last longer amid tight labor markets, further hitting the energy and food sectors. The much slower growth in China could drag down the global economy, where public debt still stays high among many countries.

Global growth to remain subdued with sluggish merchandise trade but recovered services trade

The OECD report reveals that the global GDP compound annual growth rate reached 3.2% in 1H23 compared to 2H22. The US and Japan witnessed buoyant growth, whereas growth in most European economies remained weak. The initial momentum following China’s border reopening also weakened gradually, while the real estate crisis and other structural problems slashed domestic demand.

Opposite to the global output, the global trade volume in 1H23 was lower than expected amid a decrease in trade intensity. Merchandise trade volume was depressed, particularly in the developed economies. As of June 2023, global merchandise trade volume had shrunk by 2.5%. Conversely, the tourism industry rebounded strongly from the low point during the initial outbreak of COVID-19, leading to a mild return of service trade performance.

The OECD report predicts the global economy to grow 3.0% in 2023, but the rate will inch down to 2.7% in 2024, showing a continued trend of sluggish economic growth. Despite the lower-than-expected recovery in China, Asia will nevertheless contribute to global growth in 2023 and 2024 with a disproportionate share.

(Source: OECD Interim Economic Outlook 114 database; and OECD calculations.)

Pressure in labor markets to ease, creating a favorable environment for job seeks

According to the Adecco Macroeconomic and Labor Report 2Q23, labor market pressure in the OECD countries has been mitigated during 2H23. The level of labor market tightness—referring to the number job openings available for each unemployed individual—has been higher than the pre-pandemic level. The number of job openings continue to exceed that of unemployed people, signifying a situation that is generally favorable to job seekers. Additionally, the proportions of contract and part-time workers among new employees in most OECD countries have declined, compared to an increase in the proportion of positions offering employee benefits (e.g., health insurance, retirement plan, and paid leave).

(Source: SIA & OECD Employment Outlook, 2023)

https://www.oecd-ilibrary.org/sites/1f628002-en/index.html?itemId=/content/publication/1f628002-en

Taiwan’s manufacturing sector remains sluggish in 3Q23, while the development of offshore wind depends on the 2024 presidential election

The supply chain and manufacturing sector in Taiwan, as an export-driven economy, is largely affected by global economic development. Although the labor market in 3Q23 was more balanced initially than the previous two quarters, the good time did not last long as recruitment costs continued to rise, widening the supply–demand gap. Adecco also discovered that bicycle manufacturing and automation equipment manufacturing, two major sectors in central Taiwan, remained weak in the third quarter. Bicycle manufacturers were troubled by high inventory and sluggish demand, while automation equipment providers were hit severely by the ongoing recession. Whether for domestic distribution or exports, a business is destined to fail without order placements. Entering the fourth quarter, usually an off season, some companies will reportedly lay off more employees considering slow global growth and their inability to stimulate demand due to the current economic downturn.

The offshore wind sector, another pillar industry in central Taiwan, is largely affected by politics. Deciding to support the development of offshore wind projects, the administration of Taiwan’s President Tsai Ing-wen requested foreign offshore wind firms to localize their supply chain, namely to transfer relevant technologies to Taiwan. As a result, local manufacturers (e.g., those of wind turbine blades) have witnessed increasing demand in 2023 compared to the demand two years and four years ago. Nevertheless, the long-term prospect of offshore wind in Taiwan will not be clear until the results of the 2024 presidential election come out.

Demand for finance and accounting roles becomes lower, whereas customer service and financial consulting jobs are in-demand

Similar to the situation in the manufacturing sector, the demand for finance and accounting roles increased in Q3 compared to Q1 and Q2, but it is still lower than the same periods in previous years. One of the reasons could be that multinational companies have postponed the distribution of dividends to April or May next year. Therefore, employees tend to consider getting a new job after then.

In the financial sector, customer service and financial consulting have been the most in-demand jobs this year in Taiwan. Entering 2023, DBS acquired the consumer banking business from Citigroup Inc., while Taipei Fubon Commercial Bank replaced Cathay United Bank to become the new partner with Costco on an co-branded credit card deal. The two major events stimulated the demand for customer service positions tackling customer complaints and other transition-related problems. Meanwhile, other sectors have been striving to develop financial customer service talents, resulting in a desperate shortage of customer service personnel.

In the financial sector, customer service and financial consulting have been the most in-demand jobs this year in Taiwan. Entering 2023, DBS acquired the consumer banking business from Citigroup Inc., while Taipei Fubon Commercial Bank replaced Cathay United Bank to become the new partner with Costco on an co-branded credit card deal. The two major events stimulated the demand for customer service positions tackling customer complaints and other transition-related problems. Meanwhile, other sectors have been striving to develop financial customer service talents, resulting in a desperate shortage of customer service personnel.

With delayed reaction and low sensitivity, luxury and catering markets are still booming

Unlike the exporting and manufacturing sectors that are highly sensitive to the global economy, Adecco holds that the service industry—where 30% of the workforce in Taiwan is employed—is not sensitive to the global economy. Trends in the demand for services in Taiwan often lag behind those in the US and European markets by 3 to 6 months. Therefore, such demand did not fall in the third quarter or even a shorter period, while there was no sign of a slowdown regarding consumer spending. In particular, sales in the hospitality, catering, wholesale, and retail industries hit record highs, with the demand for labor soaring in these sectors. Only a few multinational companies reacted quickly to slowed global growth and began laying off workers. Driven by festivals and holidays, the domestic market outlook will continue to be optimistic in the fourth quarter, including tourism, catering, consumer packaged goods, and consumer electronics. The resultant demand booms will likely stimulate short-term jobs, but the hiring of senior and full-time staff requires further observation.

The return of international tourism has dragged down luxury spending in Taiwan, while the yen’s depreciation even makes things worse. Luxury brands, as one of the major players in retail services, has made significant contribution to department stores in Taiwan. However, Taiwanese people have rushed to travel broad after the border was reopened, and even shopping in Japan becomes cheaper. Consumers tend not to buy stuff in Taiwan, causing great pressure on the retail industry, particularly the multinational luxury brands.

Energy, healthcare, and IT sectors are promising, but there is a shortage of specialized labor

With weakened end-market demand globally, uncertainties surround prospects for recovery. In addition to the tightened monetary policy adopted by central banks, high interest rates, and slowed economic growth in China, geopolitical risks and volatile energy prices will both affect the supply of commodities. That being said, Adecco estimates that workforce demand in the service sector will rise in Taiwan, along with a considerable labor shortage in the construction industry. Workforce demand is also going to soar in segments of energy, healthcare, AI applications, digitalization, and internet communication services, while the launch of iPhone 15 and other consumer electronics will stimulate growth in order placements for relevant components.

However, Adecco also indicates that compared to promising job openings in the IT sector, labor shortages in the catering industry (entry-level workers) and the construction industry (woodworkers previously and construction engineers now) are not triggered by global economic outlook. Instead, they represent the labor shortage and structural changes—including the declining birth rate and industry chain changes—in Taiwan’s job market. Job seekers are inclined to apply for white-collar and multinational company positions, namely jobs requiring no physical labor. Moreover, in certain job categories, experienced workers could hardly find qualified ones to take over their job when they retire, making expertise inheritance more difficult. In the catering sector, there is shortages of both front of house and back of house staff, with losses of middle managers being the biggest challenge to employers. In fact, firms in all sectors are now facing the problem of training and retaining middle management workforce, for which preventive measures should be developed.

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2023 Q4 台灣就業趨勢報告