Fri, Jun 22, 2018 - Page 8 News List

EDITORIAL: Pension reform woes not yet over

Nearly 25 months after President Tsai Ing-wen (蔡英文) swore to reform the nation’s pension systems in her inauguration speech, her administration seems to have jumped over a major hurdle after its reform proposal for retired military officers and noncommissioned officers cleared the Democratic Progressive Party (DPP)-dominated Legislative Yuan late on Wednesday.

Despite it being an unpleasant and time-consuming process, which had been overshadowed by violent protests and even a death, the long-awaited achievement warrants praise. Unfortunately, it is unlikely to translate into votes for the DPP in the year-end elections. Instead it could cost the party dearly.

That is not to say that pension reform is not the right thing to do — far from it. However, the reason that many leaders before Tsai tried to avoid going through the entire reform process is simply because it is extremely unpopular among affected groups.

The past few months have seen some of the ugliest chapters in the nation’s protest history, with the veterans’ group 800 Heroes leading a demonstration during which some members resorted to violence and targeted journalists.

If you think that the chaos and ugliness is over, think again. There is one more pension system on the administration’s agenda that has yet to be tackled and it is perhaps the toughest one to reform: the one for the nation’s 9 million private-sector workers.

The Executive Yuan approved a draft amendment to the Labor Insurance Act (勞工保險條例) and forwarded it to the legislature for review in March last year, but the bill has remained in limbo.

Under the draft amendment, the calculation of an insured private-sector employee’s pension would be based on the average of the highest 180 months of their salary, as opposed to the highest 60 months at present.

This proposed change has caused concern even among DPP lawmakers, some of whom have said that the 15-year calculation period is far too long and would significantly reduce pensions.

Private-sector workers would also be expected to pay higher labor insurance premiums, as the bill proposes that the premium rate be gradually increased from the current 9.5 percent to 12 percent.

There is little chance that DPP lawmakers are going to review the amendment ahead of the Nov. 24 nine-in-one elections.

The elections are likely to make or break the DPP for years to come, as they will determine how much influence it retains at the grassroots level. That will in turn affect whether it continues to occupy the presidency and the number of legislative seats it will hold after the 2020 presidential and legislative elections.

Against this backdrop, the Tsai administration would most likely wait until at least December to deal with this political hot potato, particularly given that its labor reforms concerning workweek rules have drawn serious ire.

As DPP caucus whip Ker Chien-ming (柯建銘) said in a radio interview in April, pension reform for private-sector workers is the toughest issue for any party to deal with, which is why previous Chinese Nationalist Party (KMT) leaders also shunned the matter.

“But the DPP will still have to face it one day,” Ker said.

When it does, it is not going to be pretty and the public is not going to like it.

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