TAIPEI (Taiwan News) — Taiwan’s unemployment rate dropped to 3.38% in September, the lowest for the month in 25 years, signaling labor market stability despite rising underemployment.

The Directorate-General of Budget, Accounting, and Statistics (DGBAS) said Monday that the decline points to a stable labor market, even as the number of underemployed workers climbed to 129,000, the highest this year, per CNA. After seasonal adjustment, the jobless rate stood at 3.35%, unchanged from August.

Data showed that the unemployment rate dropped 0.07 percentage points from the previous month. Officials said the overall decline reflected a stronger job market for new graduates and fewer layoffs across industries.

DGBAS Census Department Deputy Director Tan Wen-ling (譚文玲) said the number of unemployed fell by 8,000 in September to 407,000, a 2.02% decrease from August. First-time job seekers dropped by 4,000 while those unemployed due to business closures or dissatisfaction with previous jobs each fell by 2,000.

However, the number of underemployed, those working fewer than 35 hours per week due to weak business or seasonal factors, rose for a third straight month. The 129,000 figure marked a 6.56% increase from August and the highest level so far this year.

Tan said the rise in underemployment was partly linked to slower output in the manufacturing sector, which lost about 4,000 jobs in September. She noted that US tariffs and global industrial overcapacity have started to weigh on factory operations.

Despite that, Tan said labor conditions remain stable. Both the number of unemployed and the four-week unemployment average declined, suggesting no signs of broader deterioration in the job market.

She added that the outcome of Taiwan-US tariff negotiations will be critical in determining whether the labor market stays steady. If Taiwan secures more favorable terms, she said, the overall employment situation should remain solid.