The employment panel of the Economic Development Advisory Conference recently proposed that the minimum-wage rules be abolished and replaced with an hourly pay system. The proposal involves the welfare of millions of workers, as well as the question of what the government's proper role in labor-capital relations is. Another major matter discussed by the conference's employment panel -- the proposal for an individual-account pension system -- also concerns labor welfare and guarantees.
In fact, only workers whose salaries are on the fringe of the minimum-wage margin -- or lower -- would be affected by these proposals. Given Taiwan's current wage levels, only a limited number of people would be affected by the abolition of the minimum wage. All laborers, however, would be affected if an hourly wage system is adopted.
Apart from using the so-called "no work, no pay" system as a basis for wage calculation, is the Council of Labor Affairs also planning to let employers cut salaries in the process? This will lead to an understanding that dramatic wage cuts are in store, which in turn will lead to protests.
First of all, if the idea of "no work, no pay" were established, then wouldn't all the legally stipulated and widely accepted practices involving paid sick leave, paid holidays, paid vacations and voluntary retirement pensions all become mistakes?
Also, is the council going to make the hourly wage system mandatory? If so, how does it plan to go about enacting and amending the necessary laws? The troubling question is: how could the government engage in such deep interference and control? Basically, whether to adopt an hourly, daily, weekly or monthly wage system is a matter for labor and capital. This is also why no industrialized country has such regulations.
Obviously, the hourly wage issue is not just a problem of labor welfare and survival, but also an example of inappropriate expansion of government power and an encroachment on the autonomy of both labor and capital. It is also a contemptuous rejection of the economic and social structures of industrialized nations in Europe and the Americas.
The proposal for an individual account system is also an arrogant act that contravenes the practice common to the industrialized nations of Europe and the Americas. The so-called individual account system forces the populace to make savings. In the past, such systems were widely used in British colonies in Asia and Africa. We can call it the hallmark of a colonial economy. In the post World War II era, Augusto Pinochet's military regime established such a system in Chile. The sys-tem led to the collapse of Chile's existing annuity and insurance programs, and brought disaster to the country's social security system.
Such individual account systems offer very little guarantee for workers because they do not have the functions of risk-sharing and mutual help. On top of this, there are the possibilities of inflation and currency devaluation. Such mandatory savings systems also deprive the people of control over their assets.
At the same time, because the massive collective savings are concentrated in the hands of a few management companies (as was the case in Chile) or the government (as was the case in former British colonies), they have a very serious impact on a free economy. The latter case in particular, which is what the council is proposing, would allow the government to gather massive private funds without being subject to budget and accounting proce-dures, thereby resulting in the centralization of funds and power. This means political centralization would also be near at hand.
Such individual account systems are colonial economic mechanisms that reject the modern welfare society and free economy. This is an important reason why no industrialized nation has adopted such a system. It is also why more than 90 percent of New Zealanders opposed such a system during a public referendum. It is also why experts from both the International Labor Organization and the International Social Security Association have criticized such systems. Some used to cite a World Bank research report to support such proposals, but now even Joseph Stiglitz, chief economist of the World Bank, is deeply suspicious of that report.
So why is the council still insisting on pushing an individual account system? Also, in planning a national pension system, why is the advisory conference pushing for a so-called "savings insurance system," which features the characteristics of an individual account system? The mandatory corporate pension system stipulated by the Labor Standards Law, which forces employers to take responsibility, is a system at odds with those adopted by the industrialized nations.
Today, Taiwan is once again rejecting social security systems that have been tried and tested for centuries in those countries, and instead trying to implement an individual account system used in Chile and in British colonies. Aren't we capable of learning lessons?
The worry here is not merely about whether Taiwan's workers will have any guarantee or whether the country will be able to establish a security system for its elderly citizens. A bigger concern is the question of whether, since the DPP government came to power, Taiwan has abandoned its pursuit of a system that takes care of both the free economy and a welfare society, and instead is going after the colonial economic systems of Asia and Latin America. Was the purpose of last year's political transition to achieve economic and political centralization?
Kuo Ming-cheng is a professor of law at National Chengchi University.
Translated by Francis Huang
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