Sun, Jan 20, 2013 - Page 8 News List

Editorial: Unfortunate side-effects of austerity

Since the economy is not doing very well, the Presidential Office and Executive Yuan have announced the cancelation of annual banquets that are held for employees prior to the Lunar New Year. Other companies have also decided either to scale down their celebrations or simply not to hold the events at all this year.

Government officials said that canceling the banquets was to help reduce government expenditure. However, the move is also believed to be a reflection of current public opinion and social perceptions during a difficult time.

As for local businesses, many of those still wanting to hold annual banquets have decided not to have large feasts this year or invite pop stars to entertain their employees.

The annual banquets, known as wei ya (尾牙) parties, are traditionally held ahead of the Lunar New Year as a way for bosses to show their appreciation for employees’ hard work throughout the year and to offer an opportunity for companies to improve relationships between employees and employers.

The announcements by the Presidential Office and Executive Yuan have caught other government agencies by surprise, even though they said they did not expect other public agencies to follow suit. Some ministries have decided to scrap the events, while others are struggling to decide whether they should disappoint their employees or consider alternative ways to appropriately thank them.

This public sector austerity measure may be seen as politically correct, but could have negative consequences economically. It has set an example for the private sector to cut spending on their year-end banquets and celebrations, but this could have knock-on-effects for the nation’s economy, with weakened aggregate consumption impacting upon domestic demand in the short term, especially for restaurants and catering operators.

For example, a restaurant association in Taipei reportedly said last week that this year’s reservations for year-end banquets had dropped by as much as 30 to 40 percent compared with the previous year. The government may not have anticipated this impact.

It is unknown whether the public sector’s austerity measure will extend to the spring banquets which are held after the Lunar New Year for bosses to boost employee morale and encourage staff to achieve the new year’s business targets. If most government agencies opt not to hold spring banquets and local companies also follow this pattern, it could have further negative impacts on business growth and job creation across the nation, causing more challenges for the nation’s economic recovery.

There have been mixed reactions toward the government’s decision. Some have praised it for taking into account the nation’s social and economic situation, while others have lamented the move for its bad timing and economic impact.

However, rather than dwelling on whether the government should take the lead in cutting back unnecessary spending, people should consider that the money saved from such cancelations is nothing compared with the NT$37 billion (US$1.27 billion) cut from the national budget for this year, which was approved by the legislature last week.

The action could instead be used as an opportunity to consider the roots of wei ya parties in Taiwanese culture –– for people in an organization to get together to show mutual respect and appreciation for each other as the current lunar year’s end approaches.

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