Reform recommendations for the mid-term

when they are off work) Labor Insurance may be troublesome without much benefit and will impair the financial sustainability of Labor Insurance. Hence some sort of amendment to part-time workers’ Labor Insurance rights may be reconsidered. Since part-time workers demand for their right to join Labor Insurance due primarily to the protection of occupational accident insurance in Labor Insurance, promoting an independent Occupational Accident Insurance is imminent as a coordinative measure.

b. promote an independent occupational accident insurance

Promoting an independent occupational accident insurance can separate the insured who aim only for occupational accident insurance, alleviate unnecessary burdens in Labor Insurance and incorporate the Act for Protecting Workers from Occupational Accidents. Labor Insurance is composite insurance, including ordinary incident insurance and occupational accident insurance.

The insured can get the protection of occupational accident insurance only if they joined Labor Insurance. The concept of workers joining Labor Insurance compulsorily is mostly based on the protection of occupational accident insurance,⁴⁴ which is more evident in the process of campus part-time student workers’ demand to join Labor Insurance.⁴⁵ Therefore, promoting an independent occupational accident insurance is imminent. Suppose workers can join occupational accident insurance and ordinary insurance separately, the financial status of Labor Insurance would be improved.

c. pension payment calculation

The ideal goal of the pension payment calculation base is to take account of insured wages across all periods. In Civil Servants and Faculty and Staff Insurance, the pension payment base is calculated from the most recent 120 months of insured wages. In Labor Insurance, the pension payment base is calculated from a maximum 60 months of insured wages, which encourages speculators to reduce their insured wage after they have achieved the highest insured wage (NT$45,800) for 60 months to save premiums. Hence the calculation base period shall be extended. The best way is to calculate the average wages of all insured periods as a pension payment base, but it is infeasible politically. Instead the government has proposed to adopt the

“maximum 144 months of insured wages” to calculate pension payment. Eventually a “maximum 120 months of insured wages” may be more feasible.

Furthermore, early retirement pension shall be deducted by a larger amount to discourage early retirement. Currently in Labor Insurance, the early retirement pension will be deducted for 4% of the pension benefit amount for each year of claiming advancement with the upper limit of a 20% deduction. This is in the same magnitude (but reversed direction) as the postponed retirement pension. In order not to encourage early retirement pension applications, the deduction of early retirement pensions may be increased progressively.

d. reconsider how to cover part-time workers

Due to mini-job workers possibly deteriorating the financial sustainability of Labor Insurance, a threshold excluding mini-job workers from joining Labor Insurance may be adopted.

Referring to Japanese Employment Insurance excluding workers with weekly work hours less

44 For example, some scholars have suggested to require employees of all units to join Labor Insurance compulsorily.

45 Particularly, student workers in campus labs encounter a higher risk of accidents than other student workers, and students have a higher risk of traffic accidents than general workers. Traffic accidents during the insured period of Labor Insurance can be regarded as an occupational accident under due conditions.

than 20 and employment period less than 31 days, German Pension excluding workers with monthly earnings no more than 450 Euros, and as the minimum insured wage is NT$11,100 in Labor Insurance currently, such a definition of mini-jobs may be set at monthly earnings of no more than half of minimum wage (NT$20,008 from July 2015). Suppose excluding these workers from Labor Insurance were not politically feasible, the mini-job workers’ insured period for old-age payment may be discounted according to their proportion of insured wage with respect to the first grade (the minimum insured wage of full-time workers) of insured wage (NT$20,008).

Specifically, the insured period of the insured wage of NT$11,100 shall be discounted as 55.48%

(NT$11,100/NT$20,008).

e. reconsider fully funded reserve concept

Suppose stakeholders can accept the concept of a pay-as-you-go system as adopted by NHI and Japan (Takayama, 2010), instead of the fully funded reserve concept, then the impact of a financial threat would be less severe. Of course, under the pay-as-you-go system, it does not imply an immunity to financial threats. One has to project how many months or years of reserves would be required and what shall be amended once the reserves become insufficient. Under such circumstances, some built-in stabilizers (to amend payments and premiums) may be required for in-time reactions.

f. reduce premium subsidies from government

Referring to stipulations in other economies, the social security tax in the U.S., mutual and old-age pension premium in Japan and pension premium in Germany are all shared 50/50 by employer and employee. In Chinese Taipei, insured employees of Labor Insurance get a 10%

premium subsidy from the government, the insured of Civil Servants and Faculty and Staff Insurance get 32.5% premium subsidy from the government, the insured of Old Farmers Health Insurance get 70% premium subsidy from the government and the insured of National Insurance get at least 40% premium subsidy from the government. Furthermore, government subsidy to premium in Labor Insurance varies according to the kind of insurance, which nourishes loopholes for speculators, which should be reduced and unified to various kinds of insurance. At least government subsidies to premiums can be reduced as the insured wage increases. The government certainly may subsidize social security, however, better groups to be subsidized shall be judged by a means-test, not by occupation.

g. promote labor force participation rate

More of the insured will increase premiums and alleviate the financial burden at least in the mid-term. Compared to other economies (see Table 2), Chinese Taipei encounters relatively lower labor force participation rates, especially for females, particularly those that are 45 years old or above (see Figure 2). Suppose Chinese Taipei can effectively promote its labor force participation

rate,⁴⁶ the contribution to social security can be enhanced. Of course, the labor force had better obtain some jobs rather than mini-jobs.