Premier agrees with president on civil servant pay increases


TAIPEI, Taiwan — Premier Wu Den-yih said yesterday that there is consensus between himself and President Ma Ying-jeou about pay hikes for civil servants and that a plan is being discussed by the Cabinet “in a careful manner.”

Ma said during a public forum a day earlier that the government will not lay off employees this year and reiterated that the Cabinet is seriously considering raising their pay.

Wu said the Cabinet is considering the possibility of raising the salaries of civil servants based on the country’s overall economic situation, including two-way trade growth and tax revenues in 2010, as well as how “extravagantly” the private sector is expected to spend on year-end bonuses and entertainment for its staff.

On allegations that snowballing government debts will dent the pay raise plan, Wu said the debt issue cannot be resolved in the short term, but he also pointed out that civil servants’ salaries have not been adjusted upward for five years.

“The administration is carefully pondering the pay raise issue, and especially its timing,” he said.

Meanwhile, lawmakers from across party lines had mixed reactions to the pay raise issue, with most of them opposed to the notion.

According to ruling Kuomintang (KMT) Legislator Lo Shu-lei, although the government has said Taiwan has already put the 2008-2009 global economic crunch behind it, most private sector bosses have not felt the recovery and few of them have started talking about pay raises.

Lo suggested that the government should not begin talking about pay raises for civil servants until the domestic economy has fully recovered.

Opposition Democratic Progressive Party Legislator Lai Kun-cheng said civil servants’ salaries are relatively more stable than the incomes of blue-collar workers and farmers, and pointed out that their salary structures also include utility and education subsidies.

Lai said these subsidies are an anachronism and are now a controversial topic.

He said the government should not talk about increases for civil servants until their benefits — particularly the much-criticized 18 percent preferential interest rate for certain retired civil servants — are completely addressed.

Otherwise, he said, “the development is poised to cause a social stand-off and exacerbate the gap between rich and poor.”

Meanwhile, academics also offered a variety of opinions on the pay raise notion.

Chen Tain-jy, a professor of economics at National Taiwan University, said government activities lead activities in the private sector and a pay raise for civil servants will lead private companies to follow suit.

“The size of the pay raise does not matter, but it will serve as a signal,” Chen said.

However, Yang Chia-Yen, a senior researcher with the Taiwan Institute of Economic Research (TIER) a local think tank, did not agree with Chen’s opinion.

The government is no longer able to “lead” activities in the private sector, said Yang, director of the TIER’s Research Division VI.

If the government uses taxpayer money to fund civil servants while private companies do not offer pay raises, the “partial” pay hikes for only the privileged few will not sit well with the public, Yang said.