Look into labor flows in the market for an insight into how Taiwan's economy is restructuring. The rise of services is radically redefining the skills needed by employees in the marketplace—and where they can find work.
As in the developed countries of the world, the service sector is proving to be of key importance in the modernization process. The percentage of the gross domestic product (GDP) produced by Taiwan's service sector finally surpassed 50 percent in 1989. The large number of people employed by service industries has already made the sector a powerful force in the market. The growth of manpower employed by services means that workers in this sector will have a louder voice about salaries, working conditions, and benefits. They will demand no less attention to their needs than their employers who, in turn, require higher levels of skills, greater concern for customer needs, and closer attention to maintaining high standards of performance.
The changing economic situation is dictating new responses from both management and labor. Statistical evidence shows the extent of restructuring already in process. The 1960s and 1970s were times of soaring growth for Taiwan's economy. With the exception of the oil crisis years (1974-1979), the growth rate consistently exceeded 10 percent. During these two decades, the service sector's share of total output remained relatively constant, ranging between 46 percent and 49 percent of GDP.
Cost projections, for a price—thousands of young management consulting firms are vying for clients in a market flush with idle capital.
By 1989, the services GDP exceeded 50 percent. At the same time, great changes were well underway in both industry and agriculture. From 1965 to 1989, the share of agriculture went down from nearly one-fourth of GDP to only 4.4 percent. Simultaneously, the proportion of industry in GDP rose from 27 percent in 1965 to a high point of 47.6 percent in 1986, after which a slow but steady decline began.
Starting in 1987, the growth of the service sector surpassed industry, indicating that Taiwan was following the same path toward a heavily service oriented economy that the world's advanced societies had traveled. The importance of the service sector to the economy in times of stress was demonstrated in 1985, when the industrial sector went into a slump. The service sector remained strong and contributed substantially to the overall health of the economy.
Entrepreneur on the job—services should have little trouble taking root in a land known for its aggressive small-scale businessmen.
The Council for Economic Planning and Development (CEPD) has mapped out a program for promoting the service sector and has set up a special unit to carry out its plans. High-priority lines of business include information, medical and health care, entertainment, and engineering consultation. Government planners expect enterprises in these fields to reach high standards of quality and competitiveness.
Although the service sector has accounted for a relatively steady proportion of GDP over the years, the sorts of businesses that have dominated the sector have changed considerably. In the 1950s and 1960s, for example, wholesale and retail businesses accounted for a large proportion of income and employment. But beginning in 1987, finance, insurance, real estate, and business services leaped ahead; by 1989, GDP from these segments had exceeded the retail and wholesale segment's GDP by 12 percent.
Until the late 1960s and early 1970s, Taiwan was predominantly an agricultural society. As the island's economic miracle began to unfold, the populace started to leave the agricultural sector and move into light industries. Employment in industry and the service sector accelerated in the 1970s. In recent years, the service sector has drawn large numbers of employees from agriculture and industry, creating, in some respects, a shortage of workers, especially in agriculture.
Some new service jobs require little retraining time for workers leaving other fields couriers stand inspection before the day's runs.
In 1980, the industrial sector employed the largest number of people. From 1981 to 1986, there was a manpower drain, but in 1987 and 1988 industrial· employment increased. In 1989 once again there was a labor drain from the industrial sector. Over the same period, the service sector continued to recruit, adding about 555,000 employees. While the industrial sector experienced a two-way inflow and outflow of labor during the past decade, the main flow of labor has been away from the agricultural sector.
Distribution services (including wholesale and retail trade, transportation, storage, and communications) have the largest number of employees, about two times the number in other service industries.
Large numbers of employees are also engaged in the producer service industries (finance, insurance, and business services) and the consumer service industries (restaurants, cultural institutions, and entertainment businesses). Nonprofit service industries (education, medical care, sanitation, environmental protection, government, and social services) have the smallest number of employees.
The fastest employment growth is in producer service industries and nonprofit service industries, followed by consumer service industries. In 1989, distribution services came last and even experienced a decrease of 8.12 percent. The number of people employed in the producer service industries has not been significantly affected by fluctuations in Taiwan's overall economic performance, whereas the consumer service segment is very sensitive to ups and downs in the economy. If another economic downturn occurs, the consumer service industries may well be the first to be affected. —Wang Su-wan and Hsueh Li-min are both researchers at the Chung-Hua Institution for Economic Research in Taipei.