As nation ages Taiwan’s young workers barely get by
Taiwan holds its presidential election on Jan. 16 amidst a sputtering economy and rising sentiment against mainland China.
With the economy deep in recession, the election is becoming a referendum on the China policy of current President Ma Ying-jeou.
However, Taiwan’s young workers are becoming a bigger problem as the country has in just two generations moved from being a young and vibrant Tiger economy to one that is ageing and unsteady. The working-age population is not growing fast enough, nor are they getting paid enough to help fund their parents’ retirement.
While highly-skilled college graduates barely earn an average monthly pay of $15,000 Taiwan dollars (US$450) through part-time work, retired state employees receive four times that from their retirement pension. And while the government can no longer afford to pay out the generous taxpayer-funded average monthly retirement pension of $60,000 Taiwan dollars, lawmakers fearful of a political backlash are unable to cut the benefits.
Even as the government struggles to pay out the current pension, a wave of barely middle-aged mostly government employees are racing to retire on generous taxpayer-funded pensions before these are watered down, reported Reuters.
Between 2010 and 2013, the number of retired state employees jumped more than 50% to 32,000, said Reuters.
“Reforms need to be carried out soon or state employee pensions will collapse. The government cannot sustain it for long,” Wu Chung-cheng, deputy minister of the civil service ministry, told Reuters.
But the dissatisfied youth aren’t waiting for politicians to come to the rescue. Instead many are considering leaving home and moving to Japan to find a better job.
Of course, with Taiwan’s rapidly aging population diminishing the number of skilled workers required to propel the economy on its next growth phase, an exodus of young workers is just making the situation worse.
As the youth leave, the burden of caring for their parents falls to the state at a time when government resources are getting stretched to breaking point amid spiraling health-insurance and pension costs.
Public debt burden is now at a record $550 billion Taiwan dollars, while pension costs are set to rise to an all-time high of 7.37%, or $147.2 billion Taiwan dollars in 2016, of the total government budget, said Reuters.