Newspaper article China Post

Price Hikes, Unpleasant Truths and Presidential Elections

Newspaper article China Post

Price Hikes, Unpleasant Truths and Presidential Elections

Article excerpt

The Ministry of Economic Affairs' (MOEA) decision to cut benefits for Taiwan Power Corp. (Taipower) employees and to downsize its headcount sounded like a government appeasement of the angry public after an over-16-percent power price hike, but this is the smaller issue at hand.

Since the benefit cuts and layoffs will mostly affect rank-and-file Taipower employees - people working in the power grids and on the streets to maintain the power network instead of the potential fat cat executives the people are truly angered by - these cuts could lead to a reduction in service quality. In this sense, the MOEA's announcement might actually mean that people are going to pay more for less service.

Preferential electricity prices, one of the perks to be cut, are not uncommon for power company employees around the world, who are also generally well paid not necessarily because of a government conspiracy to reward its employees but simply because of the importance and hardship of their work. Not unlike miners and workers in the oil industry, a considerable number of utility professionals are highly trained and highly skilled people working in some highly toiling environments. If anything, ensuring good pay for the people who keep the lights on and the tap running is the smart thing to do.

The cuts are response to a campaign against employee bonuses in utility companies at a time of price hikes. The argument is that it is intrinsically wrong for utility workers to earn a "performance bonus" if their companies are racking up losses. It is wrong, for example, for Taipower to take credit for "performance achievement" for merely reducing a fraction of its multibillion-TWD deficit.

Such arguments, however, confuse for-profit enterprises with state-run utilities, which have the primary objective of not making a profit but to provide a service. It is only right for Taipower, which sell its products mainly to its major shareholders (the people), to redistribute any profit it makes to its major shareholders through price cuts. As a result, employees in state-run utilities are in a business where an operating surplus should be the abnormality. …

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