Taiwan Faces Workforce Crisis as 6.67 Million Set to Retire

Taiwan is bracing for a significant demographic shift, with an estimated 6.67 million workers expected to retire in two major waves over the coming years. According to the Ministry of the Interior, the first wave has already begun as individuals born during the baby boom years of the late 1950s and early 1960s exit the workforce. This trend is exacerbated by a persistent shortage of younger workers, leading to a potential labor crisis.

The largest baby boom in Taiwan occurred between 1958 and 1966, resulting in a population increase of approximately 3.78 million. A second boom followed between 1976 and 1982, adding another 2.89 million to the population. As of 2023, members of these cohorts are beginning to retire, causing a sharp decline in the available labor force.

The situation is compounded by Taiwan’s ongoing low birth rates, which have produced fewer than 1.6 million new entrants into the working-age population. This leaves a shortfall of over 2 million workers compared to those retiring. The Ministry of the Interior defines “working-age youths” as individuals aged 15 and older, underscoring the growing gap between the retiring workforce and new job seekers.

Future Projections and Economic Implications

The first wave of retirements is expected to be followed by another in approximately 16 years, when those born in the late 1970s and early 1980s reach retirement age. Together, these two waves could reduce Taiwan’s working-age population by a staggering 6.67 million, raising urgent questions about the future economic landscape.

Further complicating the issue is the low labor force participation rate among older adults in Taiwan. Only 10 percent of individuals aged 65 and older remain employed, a stark contrast to countries like South Korea, Japan, and Singapore, where participation rates range from 25 to 35 percent. Additionally, younger Taiwanese are spending more time in education, delaying their entry into the workforce. Participation rates among those aged 15 to 29 stand at just 38 percent, significantly lower than the 60 percent observed in Europe and the United States.

The Ministry of Labor has reported that over 196,000 university and college graduates in Taiwan have yet to register for labor insurance, excluding those serving in the military, working overseas, or engaged in agriculture. This indicates that a large number of young Taiwanese may be struggling to find employment or are remaining idle at home.

Ongoing Population Decline

Taiwan is also grappling with a broader population decline. Recent government data revealed that as of the end of July 2023, Taiwan’s population stood at 23,337,936, marking the 19th consecutive month of contraction. This figure reflects a decrease of 8,805 from June and 71,387 from the same time the previous year.

As Taiwan confronts these demographic challenges, the impacts on the economy and social structure are likely to be profound. Addressing the impending labor shortage and fostering an environment conducive to higher birth rates will be critical for sustaining the nation’s workforce and overall economic health in the years to come.