Sun, Aug 24, 2014 - Page 8 News List

Law reform needed on wages and pensions

By Lin Fang-ting 林芳婷

Chinese Nationalist Party (KMT) Legislator Sun Ta-chien (孫大千) has signed a petition, along with more than 40 other legislators in the pan-blue camp, to have the threshold for annual pension bonuses for former public service employees — retired military personnel, public school teachers and civil servants — expanded to apply to those on monthly pension payments of less NT$25,000 (US$832.78), a bump up from the current cut-off point of NT$20,000.

Coming from the state treasury, this would entail an additional burden on the taxpayer of NT$1 billion to NT$1.9 billion a year. Sun said the reason for the proposed amendment was that government finances were in a more favorable state. He has perhaps forgotten that the threshold was originally amended to the lower level in 2012, as the threshold as it stood “flew in the face of what society thought reasonable,” and had been widely criticized.

Not only that, but the 18 percent preferential savings rate for retired public service employees — the justification for which continues to elude most people — costs the government an extra NT$55 billion in interest payments every year. This, and the urgent need for pension reform, not the lowering of the monthly pension threshold for bonuses, is the most pressing financial issue for the government.

However, regarding Sun’s contention that government finances are now in a more favorable state than before, from a demographic perspective, coupled with the consumer price index (CPI), there is little cause to share his optimism. Several days ago, the National Development Council announced its latest demographic projections, saying that Taiwan’s population is set to enter negative growth in eight years — four years earlier than previously forecast — and in three years, the nation will officially be an “aged society” — one in which the elderly constitute more than 14 percent of the population. This news suggests that the effect of the low birth rate is hitting sooner than expected, and with this comes an increase in the dependency rate and an aging and insufficient labor force.

Regarding prices, last month the CPI appeared to be stable, increasing by 1.75 percent from past year, but it is a different picture when we look at individual household expenditure: Food prices have increased by 4.2 percent, fruit prices are up 10.9 percent, and meat prices have gone up 12.51 percent. The public might not be feeling the “more favorable” economic situation Sun referred to.

The increase in the dependency rate, constant price rises and the falling wage levels of the last 20 years have all conspired to create a new class of working poor. Despite this, whenever an election comes around, a number of politicians try to curry favor with a certain section of the electorate, soliciting their votes.

The government is less vocal about increasing the basic wage for ordinary workers, tending to favor big business and the elite, who threaten to freeze wage increases, and in the end offers only meager increments or set conditions for wage increases to materialize.

This year, Premier Jiang Yi-huah (江宜樺) has decided to take the workers under his wing, and is set to convene a meeting of the Basic Wage Deliberation Committee next week. It must be hoped that President Ma Ying-jeou’s (馬英九) administration bears in mind the spirit of guaranteeing basic living standards for workers and their dependents, as per the 1970 Minimum Wage Fixing Convention (No. 131) of the UN’s International Labor Organization.

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