In late June, several pension reform bills were passed to phase out the 18 percent preferential savings interest rate for military personnel, public servants and public school teachers over two years and lower the pension income replacement ratio from 75 to 60 percent over 10 years. There have been many repercussions following the passage of the reforms.
A group of veterans calling themselves the 800 Heroes have vowed to fight the government, like John Rambo in First Blood.
Others have protested wherever President Tsai Ing-wen (蔡英文) was due to make a public appearance. One even threw a smoke bomb outside the Taipei Municipal Stadium, preventing athletes from attending the Parade of Nations at the Taipei Summer Universiade last month.
Public servant groups have criticized the pension reform, saying that it is unfairly designed to target lower-ranking public servants while benefiting high-ranking government officials. Although most private-sector employees support the pension reforms, few have noticed that the Executive Yuan has been working on a series of measures to compensate public servants and military personnel for the pension cuts.
For example, the Ministry of Civil Service has been drafting an amendment to the Civil Servants Work Act (公務人員服務法) that would allow public servants to work 20 part-time hours every month in another job, provided that the part-time income does not exceed the minimum wage.
Following pension reforms, many lower-level public servants have been discussing the amendment and inquiring about part-time job opportunities in industries related to their skills. Allowing public servants to also work in the private sector could blur the boundaries between the public and private sectors, and perhaps some public servants could even end up dozing off during regular work hours as they devote most of their energy to their part-time jobs.
In addition to the amendment to the Civil Servants Work Act, the Executive Yuan is planning to loosen its revolving door rule prohibiting former public servants who left their public post less than three years ago from working as supervisors, managers, advisers or shareholders with executive responsibilities in industries related to their role in the government in the final five years of their public career.
The cooling-off period could be shortened from three years to two years and the period of public service to be considered relevant might be shortened from five years to three years.
If these changes were made, high-ranking government officials could easily be making NT$10 million (US$332,215) only two years after they leave the public sector by emulating Premier Lin Chuan (林全), who used to sit on the board of six different listed companies.
The position as independent director at big companies is being used by state-owned companies to reward individuals. The positions are already filled with former government officials and university professors, which is not in line with international management standards and raises concerns of backroom politics.
Finally, the Ministry of Education’s Yushan Project aims to increase the salaries of professors. Under pressure from university presidents, the Executive Yuan has offered to raise the annual salaries of several professors by NT$5 million, a move meant to placate academics opposed to the pension reforms. The project is set to create the highest salaries available at public universities around the world.
While the gross salaries offered by the project would be just as high as those of well-known universities in the US, Singapore and Hong Kong, the professors’ disposable income would be the highest in the world, even more than the highest monthly salary a professor at a public Canadian university can earn — US$9,465. The salary would be seven times the salary of an assistant professor, the biggest salary gap between different ranks of professors at public universities anywhere in the world.
Following pension reform, public university professors with 35 years of service would lose 36.48 percent of their monthly pension. Ten years from now, the monthly pension for some of them will have dropped by as much as NT$30,000.
However, 1,000 academics would receive an annual salary of NT$5 million through the Yushan Project, which would compensate for their pension loss in the 10 years after their retirement.
The public university professors who are not part of the project can still receive an additional research allowance of NT$5,409 per month — NT$120,000 per year — which would make up for one-third of their pension loss. For younger academics, irrespective of their talent and abilities, there are no added benefits, only a smaller pension.
Repercussions against pension reform are not limited to threats from the 800 Heroes or the protesters who follow Tsai. More dangerous are the Executive Yuan’s plans to offer additional benefits to public servants to appease the protesters.
The plans could create more opportunities for high-ranking government officials to become independent directors of state-owned enterprises, while allowing low-ranking public servants to do only part-time work outside their job.
Although the plans would benefit well-respected professors, young academics would have an even less stable life. In a way, pension reform has made the fat cats fatter by offering extremely generous compensation and by giving them money that they would not have received until retirement.
Tai Po-fen is a professor of sociology at Fu Jen Catholic University.
Translated by Tu Yu-an
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