We Cannot Abandon Reform over Dissent
Pension reform is of vital importance as Taiwan faces the challenges of industrial transformation as well as an aged society. Can the long-overdue reform succeed this time?
We Cannot Abandon Reform over DissentBy Rebecca Lin
From CommonWealth Magazine (vol. 607 )
From the top-down reform of the past to today’s reform from the ground up, Lin Wan-i, executive director of Taiwan’s national pension reform committee, has penned articles and translated information on national pension programs around the world, making all the information available online. Can large-scale reform impacting millions avoid political manipulation and help the country get back on its feet? The following are excerpts from our exclusive interview with Lin, in his own words:
The previous pension system was designed in the context of the industrial age, characterized by stable employment, 9-to-5 jobs, and classic employment situations. However, changes in the external environment such as globalization in the 1990s, waves of financial turmoil, economic crises, and the global economic downturn have significantly impacted pension systems, also raising questions as to whether the younger generation can find stable employment, or earn sufficient wages to make a living.
A system to safeguard the economic security of today’s youths in their old age, i.e. the pension system, is especially uncertain. The interaction between employment and pensions is such that the unemployed are unable to pay their share into the pension system, and when employment is unstable, seniority is similarly impacted. When wages are low, wage levels used to calculate future benefits are set low, so that economic safeguards in the future will fall even shorter.
Consequently, the stress is twofold, not only consisting of structural changes in the nation’s population, but also in the external economic environment.
Not Just Targeting the Minority
This round of reforms is focused on areas that were poorly designed in the existing system. With an aging society, a low birth rate, and changing industrial structure, the younger generation is already contending with a high-risk employment environment. Even the current design of the pension system is biased against them, forcing debt upon them. The pension reforms we are undertaking are not targeted at the minority; rather, Taiwan must respond to changes in the global economic climate while addressing the remnant inequities of the previous system.
I know that many people want the reforms to begin as soon as possible, and that scholars and experts question why the government has not presented a proposal for everyone to discuss openly. But doing so would only take us back to the Kuomintang era, when the government would present an infinite number of proposals, none of which were well received. In an era of insufficient information,whenever someone proposes one option, or two, the people invariably suspect there is still a third option. That is just social psychology – we know all about that. We do not want the people to figure that there is a third option, a fourth one, or a backdoor deal that favors military personnel, civil servants and teachers.
If we are to resolve this issue at the root, we must make accurate information available, maintain transparency throughout the process, and lessen political influence, all of which we have achieved this time. I would find it highly disappointing if rational, open, transparent and comprehensive information is not enough to win the people’s understanding.
We are not isolated pioneers in this reform process. Rather, we have looked at the experiences of many other countries, and allowed many stakeholders to discuss pension systems that involve their own personal interests. This is something many countries have not been able to do, so regardless of the outcome, we will have left our mark on history.
Our pace has not been interrupted. With respect to the magnitude of reform, adjustments can be made first according to certain principles, including income replacement ratio, payment standards, recipient age, average wage calculation benchmark, seniority pay ratio, and how to allocate funds when running a deficit. All of these can be considered minor reforms.
If everyone is still not satisfied, we can also carry out a structural consolidation. However, refinements must be carried out even if the entire system is to be changed. Expanding its scope, we can still discuss whether we want a social security system for everyone, encompassing existing military, civil servant, labor, government, and farmer insurance.
Different Types of ‘Fairness’
The purpose of reform is to ensure the economic security of all, after which comes fairness. If security exists, inequity is taken care of as a matter of course.
Under an equitable design, even if you draw out a bit more, it is not unreasonable, which is why you build in maximum underwritten wages and minimum safeguards. Contributions must also be equitable – you can’t just leave everything to employers, i.e. the state and corporations. The design must take into account competition between and among professions, labor and employers, different generations, companies, and countries. Not only must these types of fairness be considered, they must be balanced as well. During the process there will invariably be people who say, “No matter what you do, don’t reform us!”
We can tolerate the existence of such voices, because ours is a diverse society. But should we give up on reform because of dissenting voices? Of course not. Reform has failed in the past because so often, when one person raises their voice, the government responds. But we need to respond to the entire system rather than individual voices; we need to respond to the entire population, and certainly not just to those with the loudest voices.
With more elections up ahead in 2018, in order to prevent political railroading, we set a timetable a year away to come up with a proposal, so that even if we are not completely certain, we will still have to set our minds to it. First, we will hold regional conferences in November, followed by a national affairs conference next January, and submit our proposed reforms to the Legislative Yuan in March. However, since it touches upon at least 13 sets of laws and thousands of regulations, I have allowed a buffer period through May 19.
At this time, 13 different systems are starting to converge, and although the outcomes we achieved here (through a lengthy process) may also be obtained through discussion over the course of two classes or one committee meeting, considering all the gripes and misgivings that 23 million people have accumulated over nearly 60 years, I am more than satisfied at this point. But now comes the really hard part. I know that a total consensus is impossible, but consensus must be the guiding principle, and exceptions can be entered into the meeting minutes for the citizens to discuss.
When has everyone ever agreed on reform? Even when 10 dishes are served at a table, some dishes will still go uneaten.
Translated from the Chinese by David Toman