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EDITORIAL: The burden
of public sector benefits
It is time to reassess whether public sector workers are becoming an intolerable
burden on the national coffers amid growing public dissatisfaction about their
lavish pay. The government can only hope to recoup some of this expense through
new taxes, as the current tax base is eroding during the economic downturn. To
sort out the problem, innovative thinking is needed to prevent new policies from
weakening an already fragile economy. The implementation of austerity measures
can often be a double-edged sword.
The government also has to take into consideration that the payroll of those
working in the public sector includes numerous benefits and a retirement
package, which accounted for 66 percent of the its overall budget in 2011.
The latest in a slew of nonstop calls to reduce the drainage on public funds is
to scrap the practice of issuing credit cards that are tailored-made for the
nationˇ¦s 480,000 public sector workers, including public school teachers and
government agency staff.
The special credit card, first issued in 2003, was originally aimed at boosting
the nationˇ¦s tourism sector and encouraging government employees to take
holidays instead of receiving pay for untaken leave.
This policy is seen as a travel subsidy program and costs the government about
NT$7 billion (US$242 million) a year because employees are given an allowance of
NT$16,000 per person per year, through using the credit card at designated
stores nationwide.
The program did help to boost domestic consumption and spending, especially at
hotels and restaurants, in the first few years of its implementation and the
impact was particularly marked during the SARS epidemic in 2003, when the
tourism sector went through a rough time.
However, the effect on the tourism sector has gradually diminished, with
statistics from the Council of Economic Planning and Development showing that
only 40 percent of the NT$40 billion spent on domestic tourism was attributed to
the credit card last year.
Despite this, the council said that the NT$7 billion program has stimulated
domestic demand and boosted private consumption which, in turn, has helped the
economy grow. The program has also saved the government NT$14 billion in
payments that would have been made for untaken leave, the council added.
The program may well help drive Taiwanˇ¦s GDP growth, as private consumption has
evolved into a major factor influencing Taiwanˇ¦s GDP and is becoming more
important in supporting economic growth as overseas demand dwindles.
However, the program has been in place for a decade and adjustments both in
policy and scale are needed. First, it should be disconnected from development
in the tourism sector, which is now significantly supported by Chinese tourists
rather than local travelers.
The government should also stop paying public sector staff for untaken annual
leave and consider using their budget to give a travel subsidy instead. This is
a policy commonly used in the private sector in Taiwan ˇVˇV public sector
employees should not enjoy preferential treatment.
In addition, NT$16,000 a year for travel is substantial compared with other
travel subsidies offered, usually about NT$3,000. The government should reduce
the amount to a more reasonable one.
This is probably just wishful thinking and an over-simplification of the issue,
given the complicated government police-making process, involving interwoven
political interests. However, to reduce public anger, the government needs to
work out new plans that make fair use of public funds. After all, hardworking
taxpayers need to know their money is being spent on the right things.
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