But analysts say there may be no quick fix for the economy unless the global recovery picks up steam.
The Democratic Progressive Party's push for a no-confidence vote in the legislature on Friday against Premier Sean Chen comes as Taiwan's economic growth shrank 0.2 percent in the April-June period, the first quarterly contraction since 2009.
The government expects the 2012 growth to be just above 1 percent, down from last year's 4 percent.
The vote is tentatively set for Friday but will unlikely be passed since the legislature is controlled by the ruling Nationalists. Still, the move could pressure the government into finding ways to boost the economy as exports—the engine of growth—have declined for months amid weakening foreign demand.
"The government has failed to handle the economy, nor does it feel people's pain," DPP lawmaker Ker Chien-ming said, adding Taiwanese are waiting to be lifted "out of their desperation."
Looking at its key economic indicators, Taiwan's problems may appear modest. Its jobless rate stood at 4.3 percent, down from over 6 percent in 2009 amid the global financial crisis. The government projects 2012 inflation at below 2 percent.
But even ruling party lawmakers have called attention to the poor employment picture, noting
A graduate from an elite Taiwanese university grabbed headlines for taking up a job at a slaughterhouse in Australia because of the higher pay.
Taiwan's average monthly salary stands at 34,000 New Taiwan dollars ($1,150), unchanged from 1998, according to government figures.
Lawmakers say educated professionals such as engineers are leaving the island to find higher-paying jobs in places like Singapore, Hong Kong and mainland China.
The Cabinet won some applause when it announced Monday that it will suspend a planned electricity rate hike—the second in six months. The hike was meant to resolve the mounting debts of the state-run power company, which has long subsidized power bills.
The government hopes to attract Taiwanese investors to return from the mainland to set up factories at home. The government says it will provide incentives such as relaxing regulations regarding the hiring of cheaper foreign labor.
Yang Chia-yen, an economist with the Taiwan Institute for Economic Research, said that leading Taiwanese companies, such as iPhone-maker Foxconn Technology Group, are unlikely to shut down their immense mainland operations despite China's soaring labor costs over the past year.
"The whole supply chains have long moved to the mainland, and the big companies will likely speed up their automation there instead of moving back to Taiwan or elsewhere," Yang said.
Taiwanese have invested more than $120 billion in the mainland over the past three decades.