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Survey Shows Young Taiwanese Lack Savings, Are Highly Indebted

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More than 20% of Taiwanese under the age of 40 say they lack savings and 65% report they are in debt, according to new survey findings from a Taiwanese job site, highlighting the growing generational wealth gap here.

Conducted by the job search website “yes123,” the survey further revealed that only one-third of respondents said their income exceeds their expenses, while the rest said their income either only met their monthly needs or fell below them.  

Nearly half of all debt was attributed to tuition fees, followed by debt linked to loans, credit cards and vehicle expenses, according to respondents. Some 41.8% of respondents said their debt was high enough that they felt economic pressure. 

The results highlight the long-term impact of Taiwan’s two-decade wage stagnation, said Taipei-based fair wage advocate Roy Ngerng, who also writes about Taiwan’s economy for local media.

Growth in real wages – the value of wages adjusted for inflation – slowed around 2002 as Taiwan’s manufacturing-led economy underwent major structural changes. Real wages remained roughly the same until 2019 when they finally began to recover, according to government statistics.

“For people in their 40s today, 20 years ago, they were earning higher starting pay, and managed to continue earning higher and higher pay based on annual increments if they stayed on the same job,” Ngerng told VOA.

“But then for younger workers, they started entering the workforce during a time when wages stagnated and do not have the same opportunity to see their wages grow, so there is a massive gap between those above their 40s, and those below their 40s,” he said.

Taiwan’s rising housing costs have also made it difficult for young people to climb the property ladder — a key way to accrue savings — without family help. It is not uncommon to live at home long after graduating as a means to save money as rent has also climbed in urban centers.  

Taiwanese investigative magazine Commonwealth reported last year that Taiwan is undergoing its biggest real estate boom since the 1980s, when the economy took off with advanced manufacturing.

Today, even small housing units in Taipei can command prices exceeding $1 million, depending on location within the city and certain amenities, like elevators and guards for residential buildings, while other parts of Taiwan are catching up. Surveying 70,000 transactions, the magazine found that housing prices across six cities including Taipei rose more than 30% between 2019 and 2021.  

Much of the inflated prices in housing is fueled by the long running problem of property speculation in Taiwan and very little social housing. It is also not uncommon for wealthy landlords in Taipei and elsewhere to own multiple apartments, and even leave them empty rather than face the hassle of tenants.

Last year Taiwan’s Ministry of Finance reported unoccupied houses and apartments make up nearly 12% of Taiwan’s housing stock, or 876,000 units.

Recent university graduates, by contrast, make an average of around $1,000 a month, according to another survey by yes123. The figure is not far off from the average monthly salary of about $975 for a recent graduate in 2000, according to the Labor Ministry.

“The general story over the past couple of decades has been that wage growth has been really, really flat and a lot of that also reflects that minimum wage adjustments … have also been relatively flat,” said Nick Marro, an analyst for China, Taiwan and Macau at the Economist Intelligence Unit.

At $913 a month, Taiwan’s minimum wage is considered extremely low for an advanced economy, but the government has started taking steps to address the imbalance. Last year, the government raised minimum wage 5.21%, the highest rate in 15 years, but it may take more than that to address the wage gap.

“Taiwan has just generally struggled with this culture of a really weak wage environment, and that’s one of the reasons why a lot of Taiwan youth struggle with savings and also look, to move abroad,” said Marro.

“I think a lot of the refrain over the past couple of years has been how the economy has really struggled, but in fact many economic fundamentals are better than people realize,” he also said. “But it’s the mindset, I think, which keeps businesses really, really hesitant on raising wages further.”

Marro said low inflation has kept many Taiwanese relatively complacent, but that could change if Taiwan sees U.S.-style increase in prices from rising energy costs. It could also push even more to seek opportunities abroad, adding to Taiwan’s already high level of brain drain.

The United States is undergoing its worst inflation in 40 years thanks in part to rising energy prices and fallout from the pandemic.

Prices in Taiwan are already up this year, according to the Directorate-General of Budget, Accounting and Statistics, which reported food prices were up 5.29% in February from one year earlier, while fuel prices rose 16.88%.

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