Mon, Jul 13, 2009 - Page 8 News List

The age of working for life is just about here

By Chuang Chi-ming 莊淇銘

When teaching future studies I have called on social and political figures not to retain an industrial society mindset by thinking that government finances will never fail.

Following Iceland’s bankruptcy, California Governor Arnold Schwarzenegger recently declared a fiscal state of emergency as that state teeters on the brink. This is a warning we should all heed.

A more worrying problem is that Taiwan’s demographic structure is being gradually transformed from the pyramid shape of agrarian societies to the shape of an upside-down pyramid.

In other words, the taxpaying working population is shrinking as the proportion of the population receiving pensions or welfare benefits is growing. In 2004, retirement expenditure reached NT$210 billion (US$6.4 billion), the same as the amount of the government’s revenue from individual income tax that year. The numbers have continued to rise since then and set new records.

With the demographic structure retaining the shape of an upside-down pyramid, the nation’s fiscal deficit will inevitably increase. The government cannot continue to solve this problem by increasing budget spending, as industrial societies might, because the future working population won’t be able to pay enough taxes to sustain national expenses.

The pension system did not develop until after the industrial revolution. Labor relations and related social problems started to appear because the majority of people came to be employed by an enterprise or organization. To protect workers after retirement, governments created legislation regulating welfare and pension systems.

The Council for Economic Planning and Development has said that the decline in the nation’s population at the current rate will result in a population of 8 million people 100 years from now. As population distribution turns into an upside-down pyramid, many welfare and insurance structures are bound to collapse. This is evidenced by a huge deficit in labor insurance payments and the National Health Insurance’s debt of NT$51.1 billion.

In addition, the National Pension System was only launched in October last year, but the Ministry of Interior already expects a deficit of NT$8 billion next year and of more than NT$20 billion the following year. The government will not be able to sustain these welfare programs in their current form.

We need a new approach to career and life planning. The average lifespan in Taiwan is 78 years, while the average retirement age between 2001 and 2007 was 55. This means that people on average need to prepare funds for 23 years of retirement. If labor and health insurance are no longer guaranteed, post-retirement living and medical expenses will become a heavy burden. Thus, as I argue in my book Future Studies, we should prepare for this time our entire lives and avoid being a burden to our children.

How do we achieve this? Simple math: Save enough money to support yourself until death. As life expectancy expands, it will be necessary to postpone retirement and develop multiple areas of expertise. Postponement of retirement is an inevitable trend, and it can be done in one of two ways: by staying on at one’s job or by changing jobs. Regardless, the message is to keep working — to have a lifetime job, as it were. This is what is meant by the new concept of “silver-collar worker.”

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