Premier Wu Den-yih (吳敦義) on Thursday defended a proposed pay raise for civil servants, military personnel and teachers on the grounds that delaying a raise would not do anything to help reduce the government’s deficit. Since that mountain of debt now stands at NT$4.6 trillion (US$158.76 billion) by the government’s accounting — and more than NT$15 trillion according to the legislature’s Budget Center, which took all the government’s liabilities into account — adding another NT$22 billion a year to cover the raises certainly won’t help.
So why the rush? Could it have anything to do with next year’s presidential election? If approved, the pay hike would take effect on July 1. Delaying the raise a year would move it well past election day.
While the proposal would only benefit an estimated 800,000 to 900,000 people, consider the trickle-down effect on their immediate and extended families. That adds up to a significant number of voters.
While some might see that as counting chickens before they are hatched, that seems to be just what the Executive Yuan is doing with its ideas on how to fund the pay raises.
Wu said the money could come from three sources: an increase in the surplus from state-owned enterprises and state-owned shares, an increase in tax revenues caused by the economic boom or the selling off of land now occupied by unused military bases. He said the specifics were still being worked out, but would be detailed when the plan is presented to President Ma Ying-jeou (馬英九) for approval next week.
Yet in almost the same breath, the premier said he had asked Cabinet members to avoid unnecessary spending when drafting their ministry and agencies’ budgets for next year because “the country is in fiscal trouble.”
So the country has severe money problems, which means the government needs to trim its spending, but Wu still doesn’t see anything wrong with a pay hike right now?
Pay raises are a good thing and far too many workers in Taiwan have gone without raises for several years because the economy has been in the doldrums, even as they have seen their real spending power plunge because of the steep rise in the cost of living during the past decade. If Wu needed a reminder, he need look no further than the data released by the Ministry of Finance on Monday that showed that average incomes dropped in 2009 in the wake of the global recession, with the bottom 10 percent of earners making about 20 percent less than they did in 2008. The ministry also said that middle and low-income workers were the most affected by the layoffs, factory closures and salary decreases caused by the economic downturn.
However, civil servants, teachers and military personnel have long enjoyed “the golden rice bowl” because they don’t face the risk of redundancy or pay cuts that their counterparts in the private sector do — or the risk of seeing their jobs outsourced to China or Southeast Asian nations.
It would be better for Wu and the nation if the Executive Yuan waited a year to see just how much money would really be raised by the three sources he mentioned and to determine if these additional revenues would be sustainable, before committing the government to a permanent increase in personnel costs. After all, one of the reasons the level of national debt is so high is that the government has been borrowing to cover the cost of its political promises — for decades and regardless of who was in power — and has continued to do so even as its income has decreased in recent years.
Individuals know what happens when they continue to live and spend beyond their means — they have to tighten their belts and keep their wallets shut or risk bankruptcy. The Cabinet should do the same.
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