2024 Q2 Job Market Report

Global Macroeconomic Assessment and Outlook

The OECD Economic Outlook report, released in May, signals a positive turn in global economic prospects, with an ongoing economic recovery gaining momentum. Nevertheless, the pace of worldwide economic expansion remains modest. According to the May forecast, the OECD anticipates global GDP growth for 2024 to remain stable at 3.1%, mirroring 2023’s rate, while projecting a slight uptick to 3.2% in 2025.

Global Economic Recovery, with Inflation Cooling Faster than Anticipated and Positive Trade Growth

The OECD outlook highlights the continued impact of monetary policy tightening on housing and credit markets, which is resulting in a faster-than-expected decline in inflation rates. Consequently, central banks in several countries may consider interest rate cuts in the latter half of 2024 to bolster consumer income. However, ongoing geopolitical tensions and regional conflicts remain significant threats to global economic stability, casting a shadow of uncertainty over economic growth. On a positive note, real incomes have risen, buoyed by easing inflation rates and a positive turn in trade growth.

Easing Labor Supply-Demand Imbalances Unlocks Workforce Expansion Potential

The global labor market is witnessing a gradual easing of the supply-demand imbalance, with unemployment rates lingering at or around historic lows. Adecco’s “2024 Labor Market and Policy Outlook” highlights a persisting tight labor market characterized by talent scarcity and forecasted employment rates reaching unprecedented levels. As turnover rates decline, job growth accelerates and the number of job vacancies declines, signs of labor market tightening are becoming less pronounced. Nonetheless, given the high inactivity rate, high levels of contract employment, and rising youth unemployment, both developed and developing economies demonstrate potential for labor force expansion.

AI Opportunities Boosting Export Momentum, Inventory Destocking in Traditional Manufacturing, Continued Growth in Service

The burgeoning demand for AI technology is creating lucrative business opportunities, driving robust growth for Taiwan’s semiconductor industry and server-related supply chains. This trend has translated into a remarkable export performance, as evidenced by a significant year-over-year increase of 12.91% in Taiwan’s first-quarter export value, which has triggered a surge in demand for raw material stockpiling in certain sectors. Meanwhile, driven by the backlog effect observed in the first quarter, traditional manufacturing inventories continue to deplete. However, despite these positive developments, the recovery in end-user demand remains sluggish. As a result, customers are adopting a cautious approach in their ordering patterns amidst the ongoing economic recovery, prompting companies to maintain a conservative approach in inventory management and equipment investment.

On the domestic front, demand is steadily climbing, with consumption maintaining strong momentum. The first quarter showcased continued growth across retail, food and beverage, and service sectors like air travel and tourism, fueled by the Lunar New Year holiday shopping and travel boom. Figures released by the Directorate General of Budget, Accounting and Statistics under the Executive Yuan show Taiwan’s GDP for the first quarter of 2024 reached approximately 6.51%-the highest level in nearly 11 quarters.

Labor Shortages Persist, Employment Rebounds as Companies Recruit to Fill Vacancies

Talent recruitment is expected to stabilize as Taiwan’s economy slowly and steadily rebounds, with an anticipated uptick in job openings compared to 2023. The 2024 Survey on Manpower Demand, released by the Ministry of Labor, reveals a projected increase of 53,000 jobs by late April over the end of January- the smallest rise for the same period in three years. The manufacturing sector spearheaded the surge in labor demand, adding 20,000 new jobs, closely followed by the accommodation, food and beverage services, and other service industries. Persistent labor shortages and the need to backfill positions left open by workforce turnover were cited as the primary drivers behind these increases.

Adecco’s observations point to a significant shift in job market dynamics from 2023 to 2024, as companies have transitioned from leaving vacancies unfilled to recruiting to fill them. The first quarter witnessed a hot job market, spurred by post-New Year career shuffles, with roles being staffed up. Historically, job openings tend to slow down in the second quarter, but this year, talent demands have kept up even before the third quarter, a telltale sign the job market is steadily regaining its footing.

Surging Demand for Semiconductor R&D and Manufacturing Talent, Caution Prevails in Traditional Manufacturing

Taiwan’s pivotal role in the global supply chain, coupled with TSMC’s AI-driven expansions in Kumamoto, Japan, and Chiayi, has fueled an increased demand for talent in AI, data analytics, AI servers and other R&D and various manufacturing sectors, leading to job openings for mid-to-high level talent in central and southern Taiwan. Moreover, there has been a notable shift in job seeker behavior: while previously reluctant to relocate across counties or cities, now 70-80% of job seekers are open to exploring opportunities in different areas for better job prospects.

Adecco reports that the current demand for talent is primarily concentrated in prominent semiconductor companies, with many other industries yet to experience a similar revival. A clear recovery has yet to be seen, and companies are taking a cautious stance on hiring while they focus on depleting excess inventories. Despite stabilization in traditional manufacturing, sectors such as footwear and bicycle industries continue to experience weak demand. Moreover, some OEM factories in industrial hardware and components sectors are even facing job cuts due to a drop in downstream orders.

Furthermore, the resumption in talent mobility in the post-pandemic era has been evident. Initiatives such as the CHIPS Act and the US-China trade war have driven traditional manufacturing and electronics manufacturing, among others, to collectively reshore to emerging countries in Southeast Asia, like Vietnam, which presents a significant challenge for companies in effectively managing foreign talent pools.

Retail Demand Plummets, Food and Beverage Turns to Tech for Staffing Shortages

The notable surge in labor demand in the first quarter for retail sectors like cosmetics, luxury goods, and fast fashion has begun to taper off and the sluggish performance of the consumer market is expected to amplify internal pressures within companies, prompting employees to explore external job opportunities. Additionally, given the aligned talent demands between the cosmetics sector and the broader consumer goods industry, a spillover effect on talent mobility can be expected through the consumer goods industry at large. In response to these challenges, companies are adopting a more conservative approach to hiring, increasingly preferring to fill job openings internally, even for marketing professionals.

On the other hand, the food and beverage industry faces intense labor demand pressures. In response to shifts in economic cycle, recruitment for mid-to-high level talent has slowed during the second quarter. Besides, having been greatly impacted by labor shortages in 2023, companies are actively exploring various solutions. Among these are the deployment of delivery robots, the implementation of self-service ordering systems, the reduction of seating capacity to uphold service quality standards, and the adoption of minimum staffing levels- all aimed at addressing long-term labor shortages.

Soaring Demand in Pharmaceuticals, Finance and Insurance; Biotech, Green Energy Eye Foreign Recruitment

The banking and insurance sectors are experiencing a surging demand for entry-level professionals, fueled by the rapid pace of organizational transformation. Recruitment processes are accelerating, with numerous job openings becoming available. In contrast to the same period and the fourth quarter of the previous year when vacancies remained unfilled, foreign pharmaceutical companies continue to exhibit high labor demand in 2024. The market remains exceptionally active, igniting a wave of job changes reminiscent of pre-pandemic conditions. Notably, timelines for hiring business representatives and mid-level managers have been significantly expedited, accompanied by the emergence of senior-level openings- signaling a growing hunger for talent in the pharmaceutical industry. Furthermore, job postings traditionally seen in the third quarter are now being released as early as the second, reflecting the heightened demand for skilled professionals across these sectors.

Given the intense global competition for talent, Taiwanese companies are increasingly casting their nets wide to countries like Thailand, India, and Vietnam to recruit IT professionals. Moreover, in the renewable energy and biotech industries, where local talent is scarce, there is a growing need to hire internationally. While the Taiwan Employment Gold Card issued by the government is a starting point, additional support is essential for effectively competing for international talent. Such measures must transcend visa-related assistance to include aid with tax obligations, housing, spousal employment, children’s education, and other factors that influence the willingness of talented individuals to work in Taiwan.

Furthermore, in the first quarter, there has been an emerging trend of middle-aged and senior talent finding employment in sectors such as pharmaceutical, life sciences, traditional service and manufacturing services, and manufacturing industries, highlighting the value placed on their reliability, experience, and expertise in the job market.

Conservative Q2 Forecast, AI and Automation Implementation, Proactive Talent Retention Tactics

Overall, Adecco predicts that amid concerns about market optimism, companies in Taiwan will likely remain cautious and maintain a “stop, look, and listen” stance. As such, throughout the second and third quarters, businesses are expected to carefully assess the level of optimism pervading the market. While new job positions will continue to open up, the decision-making time for recruitment processes is poised for extension.

To navigate the fluctuations in labor demand effectively, Adecco advises companies to embrace new AI and automation technologies to bolster productivity. Their “2024 Human Resources Trends” report highlights the growing significance of generative AI tools in streamlining HR processes, alongside the increasing prevalence of conversational AI. According to industry experts, a staggering 40% of enterprises are poised to integrate conversational AI. Additionally, findings from a survey conducted by human resource analytics firm SIA on “AI for Human Resources” reveal that, on average, 39% of employers anticipate AI to take over certain tasks within the existing recruitment cycle.

Furthermore, Adecco recommends that companies allocate resources towards talent retention initiatives to address employees’ psychological needs in the post-pandemic era. These initiatives could encompass offerings such as flexible working schedules, an ESG and DEI culture, and opportunities for skill enhancement and further education. Such measures are designed to ensure employees remain up-to-date with evolving technology and can transition seamlessly into new roles. Moreover, given the presence of four distinct generations in many workplaces, fostering an open mindset and facilitating effective communication and collaboration among colleagues are essential for aligning internal work goals and enhancing talent retention efforts.

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