The risk that the annual labor insurance pension system will break down because the Labor Insurance Fund is soon to go bankrupt, in combination with the unjust pension mechanism for military personnel, civil servants and public school teachers and their year-end bonus payments, has upset the general public and is causing something of a panic. However, this is but one of the many structural crises currently facing Taiwan.
Rapid changes in the demographic and industrial structure along with an outdated Constitution and legal system have created an increasingly unjust social framework that is hurting the vitality of economic development. These factors have also served to further highlight a series of structural crises that the government has been unwilling and afraid to address.
The most obvious structural crisis is that in the fiscal system. The comprehensive evaluation report for next year’s central government budget issued by the Legislative Yuan’s Budget Center shows that more than NT$5 trillion (US$171 billion) of government debt with a maturity of more than one year still has to be repaid.
This is already approaching the debt limit, and the sharply falling birthrate and the rapid aging of Taiwanese society is leading to concerns that the government’s future ability to repay its debts will be further weakened.
The Budget Center also points out that hidden debt of more than NT$14 trillion has not been included in the public debt. In addition, there are many regulations in place that remove the upper limit on public debt.
According to how major countries calculate unpaid debt as a proportion of GDP, Taiwan’s debt currently stands at 125 percent of GDP. According to the debt rules for EU member states, national, regional and local governments may not have unpaid debt exceeding 60 percent of GDP. Taiwan’s debt is twice that. The worry is that the government’s lack of fiscal discipline will set off a debt crisis of the same kind that is currently rocking Greece, Spain and Italy.
The next urgent structural crisis is in the education system. As the birth rate drops, an accompanying sharp drop in demand will pose severe challenges to the educational system as a whole. Even more worrying is that an inability to improve educational quality in response to economic and industrial needs and social changes will create a problem with large numbers of unemployed people holding useless doctoral and master’s degrees.
Unemployment among university graduates is almost three times as high as the general unemployment rate, which has created a situation where many people who “have a degree but not an education,” make up a class of dispossessed educated people. We are now faced with what some media outlets have said amounts to profit-driven schools bringing about the demise of the nation.
The third structural problem is the unresolved constitutional crisis. Taiwan’s semi-presidential system has created an unclear division of powers and responsibilities and serious inefficiencies at the national government level. At the local government level, the rash decision to create four new special municipalities to meet electoral needs has resulted in deteriorating fiscal allocation and failed to improve government efficiency by bringing about a reasonable improvement in the chaotic and imbalanced regional structure.
In the remaining county, city and township governments, the phrase “of the people, by the people and for the people” in the first article of the Republic of China (ROC) Constitution could be replaced by “of organized crime, by organized crime and for organized crime” or “of the wealthy, by the wealthy and for the wealthy.” The result is a government credibility crisis.
Additionally, the structural crisis leading to a wealth gap continues to worsen. The results of the Survey of Family Income and Expenditure announced by the Directorate-General of Budget, Accounting and Statistics on Aug. 17 showed a difference of 6.17 times between the 20 percent of households with the highest and lowest incomes.
If government transfers are excluded, the wealth gap last year increases to 7.75 times, the second-highest after 2009, when the wealth gap was 8.22 times. In addition, the media have reported widely on the benefits for retired military personnel, civil servants and public school teachers who, in addition to their pension payments, get relief payments for three different holidays, a year-end bonus and electricity and water subsidies. This situation is enforcing the view that “officials fatten themselves, while the public starves,” and that is affecting societal harmony.
In addition to all this, potential structural crises also exist in the population, urban-rural, communications, high-tech and national defense sectors. The government authorities, including the legislature and the Cabinet, must address these issues and implement comprehensive and thorough structural reform so that Taiwan does not fall behind South Korea or even the Philippines, and so that the younger generation do not leave the country due to their frustrations and disappointments.
Tony Lin is a lawyer.
Translated by Perry Svensson
Could Asia be on the verge of a new wave of nuclear proliferation? A look back at the early history of the North Atlantic Treaty Organization (NATO), which recently celebrated its 75th anniversary, illuminates some reasons for concern in the Indo-Pacific today. US Secretary of Defense Lloyd Austin recently described NATO as “the most powerful and successful alliance in history,” but the organization’s early years were not without challenges. At its inception, the signing of the North Atlantic Treaty marked a sea change in American strategic thinking. The United States had been intent on withdrawing from Europe in the years following
My wife and I spent the week in the interior of Taiwan where Shuyuan spent her childhood. In that town there is a street that functions as an open farmer’s market. Walk along that street, as Shuyuan did yesterday, and it is next to impossible to come home empty-handed. Some mangoes that looked vaguely like others we had seen around here ended up on our table. Shuyuan told how she had bought them from a little old farmer woman from the countryside who said the mangoes were from a very old tree she had on her property. The big surprise
The issue of China’s overcapacity has drawn greater global attention recently, with US Secretary of the Treasury Janet Yellen urging Beijing to address its excess production in key industries during her visit to China last week. Meanwhile in Brussels, European Commission President Ursula von der Leyen last week said that Europe must have a tough talk with China on its perceived overcapacity and unfair trade practices. The remarks by Yellen and Von der Leyen come as China’s economy is undergoing a painful transition. Beijing is trying to steer the world’s second-largest economy out of a COVID-19 slump, the property crisis and
Former president Ma Ying-jeou’s (馬英九) trip to China provides a pertinent reminder of why Taiwanese protested so vociferously against attempts to force through the cross-strait service trade agreement in 2014 and why, since Ma’s presidential election win in 2012, they have not voted in another Chinese Nationalist Party (KMT) candidate. While the nation narrowly avoided tragedy — the treaty would have put Taiwan on the path toward the demobilization of its democracy, which Courtney Donovan Smith wrote about in the Taipei Times in “With the Sunflower movement Taiwan dodged a bullet” — Ma’s political swansong in China, which included fawning dithyrambs