Taiwan seeks to ease labour shortage by easing residency rules

In a bid to boost corporate investment in Taiwan and address the labor shortage, Taiwan’s National Development Council (NDC) said it is considering a system similar to Japan’s “J-Skip” program, which allows those with a master’s degree or higher, or advanced skills and a certain income level, to apply for permanent residence after just one year.

Taiwan is at a critical juncture in its economic development and industrial transformation, with significant demand for talent in key industries such as semiconductors and digital technology. As global supply chains are reorganized, countries are competing fiercely for talent, making it harder for Taiwan to attract international professionals. Policy must respond quickly to these dynamics.

AND Trading times The report says the idea has gained support from the Legislative Yuan, which argues that instead of looking for talent abroad, the government should focus on retaining foreign students already in Taiwan. These students are better job candidates than talent hired directly from abroad because they have a good understanding of Taiwanese culture and language.

However, to achieve this goal, it is necessary to ease current legal restrictions and shorten the time required to obtain permanent residence.

Relaxation of talent residency rules is long overdue

Lawmakers from all sides support amending parts of the “Foreign Professionals Recruitment and Employment Act,” and the NDC is coordinating inter-ministerial policies to promote these ideas. In particular, foreign students with a bachelor’s degree or higher will be able to obtain permanent residence faster, and PhD holders will be eligible for permanent residence after just one year, creating a more competitive talent recruitment system.

Statistics show that as of the end of April, the NDC had issued 56,427 effective permits to foreign professionals, an increase of more than 80% since the introduction of the recruitment law in 2017. In addition, 14,187 permits were issued to specified foreign professionals, including 9,942 golden employment cards.

According to the Ministry of Internal Affairs, there are about 57,000 foreign students with valid study permits in Taiwan. The three main source countries are Vietnam, Indonesia and Malaysia. Of these, 11 foreign specialists with a Taiwanese doctorate have one year of residence deduction, 512 foreign specialists with a Taiwanese master’s degree have one year of residence deduction, and 164 foreign specialists with a Taiwanese doctorate have two years of residence deduction.

Second wave of labour shortages

In the 1980s, Taiwan’s growing economy, rising national income, and rising labor costs led to labor shortages in agriculture, forestry, industry, and construction. This was the first time Taiwan introduced foreign workers.

Taiwanese job portal 1111 noted that 40 years later, Taiwan is facing a second wave of labor shortages due to the following factors:

Significant decline in birth rate: The postwar baby boom of the 1930s and 1950s filled the labor force and fueled economic growth, earning Taiwan the title of “Asian Tiger.” But Taiwan’s birth rate has fallen sharply since the 1980s. The population fell by more than 180,000 in 2021 from a year earlier, with just 153,820 births, the lowest on record, according to the Ministry of Home Affairs. That decline is a significant factor in the labor shortage.

Increase in job offers thanks to the return of Taiwanese companies: The US-China trade war has prompted Taiwanese companies to move their factories from China back to Taiwan, leading to an estimated $570 billion in Taiwanese investment and more than 50,000 jobs. But the return of high-end manufacturing has created an imbalance between talent supply and demand.

Industry reorganization: The pandemic has accelerated trends in internet technology, health care and online entertainment, causing talent to shift away from traditional industries, services and tourism. The high-wage semiconductor industry has intensified the war for talent, making it harder for companies to find workers.

Companies are now turning to international students studying in Taiwan after their efforts to attract foreign professionals have not yielded satisfactory results. Students from Southeast Asian countries find Taiwan attractive because of its cultural and linguistic similarities and higher wages. Many industries are struggling to fill positions despite offering high salaries. This problem is not limited to labor-intensive industries, but also affects mid- and high-level labor markets. Finally, the government is easing restrictions on foreigners working in Taiwan, a long-awaited reform.