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Commercial Times: Understanding the changes in misery index

2012/09/04 16:57:23

Lately, there has been much discussion about the changes in Taiwan's misery index -- the sum of the country's unemployment and inflation rates.

Some people have cited the rise in the misery index in July, when the inflation rate rose to 2.46 percent, to support their claim that life is getting harder in Taiwan. The Council for Economic Planning and Development, however, pointed out that Taiwan's misery index was 5.64 in the first half of this year, which is lower than the same period last year and is the lowest among Asia's four little dragons.

In fact, the country's misery index has indeed gone up since the global financial crisis.

During the 2008-2011 period, the index averaged 6.16, much higher than 10 years ago, when the index never exceeded 6, with the unemployment rate maintaining a figure of around 1.5 percent.

The rise in the misery index in recent years is not the result of price increases, but the rise in the unemployment rate, which is now three times higher than in the 1990s.

This demonstrates that the greatest problem facing Taiwan today does not lie in the fluctuation of commodity prices, but in the loss of employment opportunities in the labor market. Many people are becoming less tolerant to price increases because their salaries have remained stagnant for a long period of time.

It is possible that the unemployment rate will move further up and salaries drop to even lower levels, pushing up the misery index. Our government officials should deal with the situation cautiously. (Editorial abstract -- Sept. 4, 2012)

(By Y.F. Low)