Editor note: The Chinese version of this article was originally published on December 8,2017 after the passage of the milestone Act for the Recruitment and Employment of Foreign Professional. It provides relevant perspective and insight into internationalization efforts and government perspectives in Taiwan.
Translated by: Wordcorp
At the end of October 2017, the Legislative Yuan passed the Act for the Recruitment and Employment of Foreign Professionals and relaxed the strict visa and residence regulations from the martial law era. It feels like a dream to me, almost unreal, especially looking back at all the fuss from our first public hearing last March till now.
However, reality is cruel. We cannot stop here while other countries continue to move forward at a quick pace. The normalization (Apologies, I personally do not consider this “preferential treatment”) of visas, residency and even taxes won’t solve all our problems. We still must ask: we passed the bill, now what’s next?
On November 20, IMD World Competitiveness Center released the IMD World Talent Ranking 2017 report. While we do not have to blindly trust everything an international report claims, a review from outside is nevertheless a good place to start.
Decrypting the IMD World Talent Report
Let’s not just focus on the bad news, however. Taiwan ranked 23rd among 63 countries and regions listed in this report - an above average rank. Among Asian countries, we ranked only behind Hong Kong (ranked 12th) and Singapore (13th). We also outperformed rapidly developing Malaysia (28th), kept our advantage against Japan (31st) and Korea (39th) , and even defeated the often-overestimated China (40th). We don’t have to be overly pessimistic, but we need to keep going.
That’s the end of the good news. Let’s move on to the other details.
The immediately visible weakness lies in the percentage of our GDP we spend on education. We spend 3.8% of our GDP here, placing us at a global rank of 46. Another is the teacher-to-student ratio in secondary education, having one teacher per 14.6 students gave us the rank of 45. We may very well conclude that we should invest more in education, but it is more complicated than that.
The first problem is getting the funds. If the government wishes to invest more in education, it will still have to ask taxpayers to pay for that. This would in turn increase the effective personal income tax rate, taking away one of Taiwan’s advantages in the Talent Report. The international flow of talent and funds are, after all, powered by practical concerns like income, tax, future and environment. If it is difficult to live here, they will simply move elsewhere. This is exactly why the Financial Committee is so careful about tax reforms: they know very well that a poorly reasoned tax raise would not just trigger poor public opinion, but would also push people out of the country.
If a higher tax rate is not a solution, what about a redistribution of our resources? Well, the possible range for such redistribution is very limited. Society expects the government to do all kinds of things, more public daycares for low fertility rate, more long-term care for population aging, more infrastructure for handling urban-rural gaps… I would not say that all these expectations should be simply ignored, but we do have to work with limited resources.
Some may say that while we have limited resources, education is still important. Yes, it is, as we all know very well. But, we need a more solid measure of its importance. In our current regulations, there is a minimum for the percentage of our annual budget to be allocated to education. The minimum was raised from 22.5% to 23% two years ago. Parents and teachers immediately began asking for 23.5%. Perhaps some would still consider it insufficient but continuously raising the minimum would go on to create problems of its own.
For example, why did we have to make a special budget for the Forward-Looking Infrastructure program? One of the reasons was exactly because such a minimum limits the range for budget allocation. If we want to raise the budget for infrastructures, we need to raise the education budget as well, so that the whole budget will not violate regulations. The law was of course written out of a good will to “make sure that education is sufficiently emphasized”. But, a higher minimum will threaten the flexibility of our policies, creating an abnormal budget-making process. As a result, this needs to be adjusted carefully.
Government Investment is not the Solution to Everything
Another topic for us to discuss is whether our low education budget ratio actually affects the outcome of our education. After all, the amount of investment does not necessarily translate to a corresponding positive outcome. The outcome of education programs is reflected in the Readiness section of this report. Three out of five items in which Taiwan scored well appeared under this section, with excellent scores in: emphasis on science, student inbound mobility, and on the PISA educational assessment. While the education system in Taiwan is often criticized for its lack of relevance to a student's future career, the rankings in educational system (21st), university education (31st) and management education (29th) don’t support such criticism. While Taiwan’s ranking in these items are not necessarily the best, it’s still far from being our weakness.
Now this takes us to a very interesting question: is the outcome of education dependent on how much the government invests? If we make a graph for the relationship between each country’s education budget ratio ranking and its talent readiness ranking, we are expecting a positive relationship to prove that more investments brings better outcomes. However, the actual graph looks like this:
Apparently, this result is far from what we expected. It shows that governmental investment and emphasizing are not enough to assure the outcome of education programs. Such a result is another setback for the seemingly intuitive solution of investing more in education. Our performance in the Readiness section is obviously supported by some other factors besides our small educational budget. I would say that the suggestion to relentlessly expand the scale of public investments in education to improve the ranking should probably be revised before being put into action.
For data crunchers, the Pearson correlation coefficient for the correlation between educational investment and talent readiness is 0.146 (p=0.128) under a 95% confidence interval, which falls short of being significantly correlated. Linear regression analysis also shows that they are not significantly correlated (p=0.257).
However, in the detailed scores of the Appeal section, we can see two major weaknesses of Taiwan: brain drain and (the appeal to) foreign highly-skilled personnel. It is ironic to see such weaknesses after knowing that we are getting better educational outcomes than what we paid for, as this means we are good at training talent, but we can’t keep them or attract more of them. What should we do?
The Elephant in the Room?
You may think I’m avoiding the elephant in the room: Taiwan’s poor employment conditions consistent of low wages and high working hours. Taiwan ranked poorly in “attracting and retaining talent (being a priority of companies)”, standing on the 38th place, seems to agree such a criticism as well. However, as a politician, I need to know how far I could go and where my duty is. I can’t just blame the entrepreneurs for everything.
Knowing how far I could go would mean acknowledging that wages and working conditions are the results of a complicated economy in our society. Simply forbidding all the unwanted phenomena will not protect the weakest workers but further hurt them.
Recently, Premier Lai has put his own political career at risk when he insist in loosening the regulations that became no longer actionable after the new act regarding employees’ leaves passed last year. The reason behind this is exactly that we should know where our limits as politicians are. We have to understand and respect the fact that there are many occasions of helplessness behind each of these unspoken “flexibilities”. We can’t consider the whole Taiwan as our checkerboard, and its people our pawns for us to order around and to shape the society into what we would like to see.
My duty is to recognize the numerous limits the current regulations put onto these talented personnel. I have been following the development of digital economy, internationalization and local creation. The reason is that a higher efficiency from human-machine cooperation, a better interface for international trade and a more innovative, various local service industry are the true solutions that will create more jobs by creating new industries, while improving working conditions at the same time.
However, innovations are not easily made in Taiwan. Current regulations and the interests of pre-existing businesses, the bureaucratic fear for troubles in the government and the public culture of criticizing the government all created a difficult environment for talent to thrive. Entrepreneurs fear for violating regulations, and youth returning to their hometowns to create fine tourism experiences are fined and forced to quit one by one. Such phenomena are my personal responsibility, and the government should also reflect on what allowed such events to happen.
Allowing Talent to Thrive is the Duty of the Government
To prevent such occasions from taking place repeatedly, I have been constantly focusing on adapting our laws to the ever-changing world. This includes the establishment of the Act for Banking Innovations and Experiments for lifting the limit for banking services to be carried out by a bank; it also includes the Act for Foreign Professionals for more convenience for foreign talent to come to Taiwan; and the amendment of the Act for the Development of Tourism for more practical and actionable regulations. All these measures are to allow more talent to come to Taiwan and provide them a space for them to grow their businesses and contribute. If they must consistently face obstacles and limitations, why should they come here?
The next critical step is the amendment of the Act for Development of Small and Medium Enterprises. This large-scale amendment is to create a legal space for non-financial innovations and experiments. Current law adapting mechanisms like the digital economy law adapting program of the National Development Council or the SME sandbox of the Small and Medium Enterprises Administration are all advisory and limited to discussions, which at most gathers feedbacks and opinions for further adjustments. Before the adjustments are done, the current regulations still apply.
On the other hand, the SME sandbox implemented in the new Act for Development of Small, Medium and New Enterprises drew from the example of similar regulations in Japan, where enterprises can exercise their innovation first, and allow laws to follow up later. After all, such innovations follow a pre-set scale, means and space. If we want to attract talent to come to Taiwan, we need to prepare a proper stage for them. This is my duty as a politician, and the responsibility of our government.
Some may suggest that given the limited energy for innovation, the outdated business culture, the arrogance of entrepreneurs, and the pursuit by consumers for cheaper goods, talent will have a limited range of innovation even with proper regulations. Yes, I agree that this is partially true. However, as a politician, I can only do my duty. I will have to leave the rest to the hardworking people at their positions. After all, a better Taiwan is only possible through collaboration between the government and the private sector.