Following Greece’s example
On Saturday, the Japanese newspaper Yomiuri Shibun reported that Greece, which some Germans have mocked for being a “paradise for civil servants,” has still not got out of the fiscal trouble it has been in since 2010.
This month, Greece presented the EU with a new reform plan, hoping to get more aid from the EU.
The plan basically involves finding ways to increase revenue and cut spending — increased revenue would be achieved by raising taxes and the expenditure cuts include sweeping pension cuts.
Take, for example, the case of a 67-year-old retired police officer mentioned in the article.
In 2007, he could draw a monthly pension of 2,600 euros (US$2,894 at the current exchange rate), but by 2010 that had shrunk by half, to 1,250 euros.
The deputy president of the Greek pensioners’ association was critical of the government, saying: “Pensions have so far been cut by 50 percent to 60 percent, which is more than elderly people can bear.”
In the old days, some Greeks who met certain conditions could start drawing pensions when they turned 55, but in 2013 the retirement age was raised to 67, and it might still be raised yet again, to 70.
The latest reform plan also proposes a further round of pension cuts in 2019.
The Greek government is hoping that parliament will approve the reform package by Thursday next week.
It is a big challenge for the ruling Coalition of the Radical Left, whose support rate has fallen to about 10 percent, but it knows it must institute reforms for the sake of the country.
Taiwan’s government should learn from Greece’s experience and speed up pension reforms, otherwise we will suffer from bigger and bigger fiscal deficits.
The later pension plans are reformed, the harder it will be to reform them, and there is a risk that Taiwan could end up following Greece’s path to bankruptcy.
Let us also call upon those who oppose pension reform to wake up and realize that the sooner pension reforms happen, the less pain they will cause.
It is the only for those people to avoid ending up having their pensions halved like the retired Greek police officer in the report.
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