On Friday last week, the legislature passed the Act Governing Civil Servants’ Retirement, Discharge and Pensions (公務人員退休資遣撫卹法) to abolish the 18 percent preferential savings rate for civil servants in two years, and significantly lower their income replacement ratio and extend their retirement age. This is expected to save the national treasury NT$1.4 trillion (US$45.75 billion), and President Tsai Ing-wen’s (蔡英文) administration deserves praise for its most daring reform so far.
After the act takes effect on July 1 next year, civil servants will no longer have their name dragged through the mud, as everyone will be equal. They will become ordinary people and will no longer belong to a special class of their own.
If the Chinese Nationalist Party (KMT) wants to carry out a political mobilization against the act in an election campaign, it should give up the idea now.
The Democratic Progressive Party has already resolved the KMT’s long-accumulated historical glitches and former president Ma Ying-jeou’s (馬英九) failure to handle the issue during his presidency.
If the KMT plays the trick of electoral mobilization, assuming that civil servants remain their die-hard supporters, it is doomed to face another defeat.
However, for Tsai, Taiwan’s pension reform is only half finished.
After handling pensions for government employees and public-school teachers first, she should handle pensions for military personnel with caution. Moreover, the key to her administration’s success will lie in how she deals with the pension issue for tens of millions of workers.
As Tsai has said: “I have the softest spot in my heart for workers,” but the protection of workers’ well-being takes more than her left-wing thinking, writing superficial commentaries in a “hipster” style, or viewing the problem from the perspective of a “big rice pot” communal dining system under socialism.
By doing so, not only will she not make the problem better, she will make it worse.
A good example is the five-day workweek policy of “one fixed day and one flexible day off,” which has drawn complaints from all sectors.
The issue involves two laws: the Labor Insurance Act (勞工保險條例) and the Labor Standards Act (勞動基準法). For the former, the Cabinet has submitted a draft amendment to the legislature for review.
Since the draft act would significantly increase the contribution rate of employees, it has irritated both employees and employers.
The income of private-sector workers is not too high, and their average pension is a little more than NT$10,000 per month. Unlike for civil servants, there will be no ceiling of NT$63,690 or a minimum of NT$32,160 for private-sector workers. For civil servants, the money saved from the pension cut will pour into their retirement funds. However, for private-sector workers, how can their retirement funds be protected and where will the money come from?
The Tsai administration has spun a cocoon around itself: it is caught in its own trap. It is clear that the five-day workweek policy has severely damaged businesses while hurting the relatively weak workers at the grassroots level.
However, the government continues to insist on relying on figures to support the controversial policy without taking action to amend the Labor Standards Act.
As her administration refuses to amend the law that is harming both entrepreneurs and workers in a timely manner, Tsai’s claim that she has the softest spot in her heart for workers sounds more than a little disingenuous.
Chen Shan-jung is a reporter for the Liberty Times.
Translated by Eddy Chang
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