In her inaugural address, President Tsai Ing-wen (蔡英文) pledged to build a better nation for young people. She said that, although she could not increase their wages right away, she would take immediate action. She said that the main priority was structural economic reform and that the second-most urgent issue was to improve the social security net.
The last piece in the social security net puzzle is outstanding, affordable and universal long-term care. The establishment of an outstanding and universal long-term care system cannot wait, but the need to stress affordability could be discussed.
A high cost-performance ratio is good, but affordability could extend the problem. It is not that affordability is not a good thing, but the exaggerated pursuit of affordability is one of the factors holding wages back.
In the 1980s, the World Bank and the IMF made a great effort to introduce structural readjustment programs in developing countries. International organizations injected capital, but the receipients were required to introduce economic structural adjustments.
However, according to the WHO, these adjustments frequently had a negative impact on public health: First, reducing public expenditure often meant that the government cut down on investments in health services, which in turn reduced the supply of such services.
Second was that wage cuts meant that families had to cut down on their medical expenses, which meant that demand dropped. As both supply and demand dropped, an equilibrium was found, but the result was that public health levels deteriorated.
A long-term care system should not only be a system that solves problems, it should also create value. The nation has some way to go before it can build robots to care for older people, which means that long-term care remains a labor-intensive industry.
The best design would be a high-quality, high-wage system to entice people by offering higher wages, which would increase the cost-performance ratio without pursuing affordability.
The question is how everyone would be able to afford long-term care if it is not affordable. That would of course require coordinated investment from the government and the private sector, and that makes long-term care insurance crucial.
Both the government and individuals must invest in the system, buying long-term care services and turning that into higher wages for long-term caregivers, and then using these higher wages to improve the image of caregivers so that both young and middle-aged people would feel that this is a meaningful and dignified job, thus creating a positive circle.
If all that the government and the private sector want is to spend less, they would end up paying less and creating job opportunities for foreign workers, and that would not be helpful in transforming the local work force and raising wages.
In the past, the first idea that came to mind when talking about economic structural reform was to develop the high-tech industry. The high-tech industry indeed offers high added value, but it is normally capital-intensive, while labor requirements continue to fall. Even if development is successful, profit goes to inventors, while the general public does not gain anything.
This is also one of the reasons why the wealth gap has been increasing in so many countries: It is true for the US, and it is equally true for Taiwan.
Finding a solution that uses the aging society to create a well-paid work force and a labor-intensive industry is key to the success of economic structural transformation.
Yang Cheming is a professor in the School of Health Care Administration at Taipei Medical University.
Translated by Perry Svensson
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