It is not surprising that the issues of labor insurance and insurance for government employees have drawn so much attention and debate lately. These problems lay dormant for many years as fast-paced economic growth and better times made the crisis seem distant. However, with the current falling birth rates and lower pay levels, many systemic problems have begun to appear.
Although an annual pension system has been implemented, future generations will face higher insurance fees and a decrease in payments, which is in serious breach of the spirit of intergenerational justice. It is a problem that does not only exist within one insurance system — it also exists between different insurance systems. If these problems are not fixed, these systems, which are important for safeguarding economic security, will not last and social cohesion between generations will suffer.
It is unfortunate that much of the debate on the issue is populist, partly becoming ammunition for arguments between different political parties. Such a situation does nothing for clarifying the nature of the problem.
The government has said that plans will consider a multifaceted approach involving payment rates, income substitution rates, payment conditions and standards, fund management efficiency and the government’s payment responsibility. While these methods will fill some of the holes in the system, they do not constitute a fresh look at the position of the labor insurance.
Labor insurance in Taiwan suffers from an incompleteness in the social security system. Social insurance is viewed as a form of benefit and this has caused the current labor insurance system to take on an aspect of social security. The general public view it as a form of benefit in their calculations. Labor insurance is clearly a social insurance, but it has taken on the function of a social security system that makes it impossible to maintain a balance of payments. These factors have made it impossible for the labor insurance system to cope. The question is whether the government, if labor insurance has indeed already taken on the function of social security, can continue to ignore the debt problem created by the labor insurance.
Insurance for government employees is plagued with the same problem.
From looking at wealthy nations around the world, it is evident that Taiwan’s insurance for government employees is a “luxury” social insurance. This luxury is built on a system in which the government acts as the final line of financial backing. Improper subsidies of this kind of system have cemented the injustices within the same generation as well as between different generations.
The more than 9 million people who have labor insurance contribute to Taiwan’s economic development just as much as the 500,000 covered by government employee insurance. So why do the latter receive such different treatment? Government employee insurance and labor insurance are both ways of securing one’s finances in old age and there is no reason why the government should be handing out differential treatment. This is not to say that the government should take on the responsibility for paying all the hidden labor insurance debt, but rather that at this crucial point in time, the general public and the government must choose one policy.
If labor insurance and insurance for government employees and school staff are to once again become unambiguous insurance systems, rather than social welfare, the government should explain this clearly to the public and implement drastic reform to do what needs to be done to set things right.
Liu Mei-chun is a professor in the Institute for Labor Research at National Chengchi University.
Translated by Drew Cameron