Hardly buoyed by the record of incompetence and fatuity of President Ma Ying-jeou’s (馬英九) administration, the Chinese Nationalist Party (KMT) is awaiting next year’s presidential election with a degree of trepidation.
In an attempt to bolster its election prospects, the party has once again proposed increasing the salaries of state employees — military personnel, public-school teachers and civil servants — to consolidate these voters’ loyalty to the party. Again, it is resorting to underhanded political methods, using policy to buy votes.
The problem is that national debt is already pushing NT$25 trillion (US$800 billion), an average of as much as NT$1.08 million per person. If the government promises higher salaries for state employees, it will not be long before the state goes bankrupt.
For this reason, many academics are saying that the Ma administration is pushing Taiwan down the same path as Greece. However, this is letting Ma off lightly. Yes, Greece is in dire straits, but the difference is that Greek politicians have been working hard to solve their country’s financial problems, while the government officials Ma leads seem hell-bent on rushing to the precipice of financial ruin.
The June 25 edition of Time magazine carried an article entitled: “Why Europe can’t leave Greece adrift.” The article pointed out that, although the Greeks elected an anti-austerity government, headed by the SYRIZA party, to stand up to foreign creditor nations, things had gone very wrong: “Greece has taken extraordinary steps to meet the demands of its creditors.”
“Over the past five years, it has cut spending and raised taxes on a scale equivalent to 30 percent of [Greek] GDP. No other eurozone government has done nearly so much. Pension benefits have been cut and the retirement age raised to 67,” the article said.
It also adds: “For every euro in bailout funds, the Greek government receives less than 20 percent. The rest goes to bankers and bondholders.”
In other words, a full four-fifths of the bailout funds go toward paying off debt. Over the past few years, Greeks have had to endure the pain of austerity.
The Time article goes on to say: “Spain, Portugal and Ireland have lost less than 7 percent of GDP since the eurozone crisis began. Greece has lost 26 percent. Nearly one in five Greeks can’t meet daily food expenses. Homelessness is rising. Rates of HIV infection have doubled since 2011 as unemployment pushes more young people toward drug use and treatment funding is sharply cut. In Norway, the child poverty rate is 5.3 percent. In Greece, it’s 40.5 percent. The British Medical Journal has found a ‘significant, sharp and sustained increase’ in suicides.”
Life in Greece is a daily fight for survival.
Compare this with what the Ma administration has been doing for the past seven years. It has been hiring superfluous personnel and hastening the emptying of national coffers. According to Ministry of Civil Service figures, the number of government employees reached a 10-year high last year, an increase of more than 12,000 from a low in 2006. A detailed comparison shows that in 2004, during the administration of president Chen Shui-bian (陳水扁), there were 368,899 people in the employ of the government. This figure had fallen following the privatization of state-run companies to 337,261 employees in 2005 and again to 335,274 in 2006. By the time the KMT regained power, that figure started to rise again, standing at 347,816 last year — an increase of 12,542 compared with 2006. Of this increase, 9,796 were at the level of local government institutions and 2,746 were at the central government level.
In the past three years, there have been an additional 120 selected appointment-rank government officials of rank 10 and above, totaling 8,315 last year. This increase in government employees has created a considerable burden in terms of human resources and yearly bonus expenditure. The personnel costs for central government institutions this year total NT$407 billion and the retirement payouts are NT$141.6 billion, representing a new high and growth of 10 percent, or NT$11.8 billion, compared with a decade ago.
Reform is always met with resistance from vested interests. When the EU demanded that Portugal, Italy, Greece and Spain solve their sovereign debt crises, the respective countries’ vested interests — predominantly state employees — were enraged, explaining the rise of so many new anti-austerity parties from either the left or the right. In Greece there is SYRIZA and Golden Dawn; in Spain there is Podemos; in Britain the UK Independence Party; in France the National Front; in Germany the Alternative for Germany; and in Italy the Five Star Movement. The growth of these parties and the anger of the general public in those countries presented a serious threat to further reform and the restructuring of the EU, but it seems that at the moment, German Chancellor Angela Merkel is holding firm.
In comparison, Ma has appeared to just buckle under pressure. In July last year, the Cabinet made a U-turn on pension reform for state employees after people reacted negatively to a plan to make pension payments quarterly — which would have saved the treasury NT$383 million in interest — or monthly — which would have saved NT$640 million — instead of biannually. Then-premier Jiang Yi-huah (江宜樺) canceled the reform, saying it would have limited impact on the treasury.
Ma is constantly promising pension reform, saying that he will slash the preferential 18 percent interest rate by half, extend the retirement age or lower the base figure at which they are calculated to make finances fairer. All of these assurances resulted in nothing after they were met with resistance from KMT legislators in October last year.
Of course, the legislators only dared to oppose Ma because they knew they had his implicit agreement. In fact, this is a good demonstration that Ma is, on the surface, not all that he appears to be. He has no problem with trading in assurances and allowing trust in the government to collapse.
If nothing is done to reform government finances within the next two years and to quickly rein in expenditure on pension payments for state employees, Taiwan is looking at getting itself in a bigger rut than Greece is in right now.
As Taiwan does not have the safety net of the IMF, if it goes bankrupt the only country it will be able to borrow from is China. And if China becomes its greatest creditor, the public can say goodbye to sovereignty and the two sides of the Taiwan Strait will finally be unified.
Is this what the Ma administration has been planning all along?
Hsu Hung-yi is a writer.
Translated by Paul Cooper
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