East Asia welfare Regimes

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					East Asian welfare regimes
East Asian countries
                       Japan     S.      Taiwan      Hong         Singapore        EU
                               Korea                 Kong                       /OECD
Population July 2007    127.4   49.0      22.9       6.98            4.53        490.4
est.                    (12 )  (26th)    (51st)     (100th)        (119th)        (4th)
% of 65+ (2006 est.)     20%   9.2%      9.8%       12.8%           8.3%         16.8%
                               77.04                                81.71
Life Expectancy         81.25            77.43      81.59                         78.3
                               (54th)                                (4th)
Income per capita      33,800 24,600     29,800     42,000         48,900       32,900
(US PPP) 2007 est.      (34th) (50th)    (42nd)      (14th)          (8th)       (37th)
Gini index                                                                        .31
                        .25      .32      .34         .52            .42
2003                                                                            OECD
Unemployment rate       4.0      3.2      3.9      3.5 (latest)      1.7      8.5 (06 est.)
(2007 est.)
Fertility rate (2006                      1.57       0.95
                        1.40    1.27                                1.06          1.47
est.)                                    (189th)    (226th)
Public spending         36.9    28.1%    15.6%      18.2%          16.5%
Public debts            158       20      33.6        1.8           102.9        67.3
% of GDP, 2005 est.     (4th)   (96th)   (82nd)     (114th)         (11th)      Germany
Public Social
spending (2001 % of     16.9     6.1                 5.6%
                            countries 1995, 2001

                            Public social spending in OECD

General Characteristics

 Small emerging export-oriented economies (except
 Either Japanese colony (S. Korea 1910, Taiwan 1905) or
  British (HK 1842, Singapore 1867)
 Population homogeneity (Taiwan and S. Korea, to a large
  extent HK), but multi-cultural in Singapore
 Special geo-politics – East Asia as the US strategic
  partner to contain communism in the 50s until mid-70s.
 Authoritarian and anti-communist regimes until the 90s
  but gradually democratized
 Traditional Confucian culture – family orientation,
  authoritarian/benevolent culture
 Re-emerging from Asian financial crisis,
  redefining its role in the knowledge economy
  (globalization, IT industry, education/ talents)
 Changing socio-demographic conditions –
  ageing and dissolving family functions (rising
  divorce rate)
 Growing social spending – becoming welfare
  states? (especially Korea and Taiwan)
East Asian welfare models (Statist
versus cultural argument)
   It’s characterized by …high rates of
    economic growth into the 1990s, low rates of
    taxation, public expenditure and social
    provision, and considerable social stability
    even during the 'Asian crisis' of the late
    1990s (Paul Wilding, 2000).
Nine main features
1.   Low public expenditure on social welfare;
2.   Productivist social policy focused on economic growth
3.   Hostility to the idea of the welfare state
4.   Strong residualist elements
5.   Central role for the family
6.   Regulatory and enabling role for the state
7.   Piecemeal, pragmatic and ad hoc welfare development;
8.   Use of welfare to build legitimacy stability and support for
     the state; and
9.   Limited commitment to the notion of welfare as a right of
East Asia Welfare Model?
 Confucian welfare state (Jones, 1993)
 Productivist (Holliday, 2000) [a growth-
  oriented state and subordination of all
  aspects of state policy, including social policy,
  to economic/industrial objectives.]
 Japan-focused East Asian welfare regimes
  (Goodman and Peng, 1996)
 East Asian welfare model (Kwon, 1997)
 Emerging welfare states?
History of welfare policies – the
    case of Japan
   After Meiji Restoration, various
    retirement pension system introduced:
    1871 – retirement allowances for the
    army, 1875 – for the navy, 1882 – for the
    police, 1884 – for the civilian officers,
   1874 – The Poor Relief Regulation –
    with very limited government
 New Constitution in 1947 - to provide
  welfare for all Japan’s citizens on an equal
 “White Paper on Economy” (1956) -
  needed to build a modern Japanese
  society. Introduced a number of social
  welfare measures – national pension,
  health care insurance schemes
 Beginning of 1960s, Six Basic Welfare Laws
  (Fukushi Roppo 福祉六法) – legislation
  concerning mentally disabled, elderly, lone
  mother families, children, public assistance, and
  physically handicapped persons were established
 “First year of Welfare” programme introduced
  in 1973 (福祉元年 がんねん) - “Welfare First,
  Growth Second” but being shelved and
  replaced by Japanese Style Welfare State due to
  oil crisis
   Prime Minister Miki Takeo (三木武夫) - “Japanese style
    of welfare society” Nihongata shakai fukushi (日本型社
    會福祉)- JSWS.
   1979 Ohira Masayoshi (大平正芳) – human
    relationships based on patience and the traditional
    social system based [on] mutual assistance.”
    “Japan must seek a new type of welfare society: in other
    words a ‘JSWS’ and should depend on ‘self-help and
    solidarity of family and local community’.
   In 1981- 82, the Japanese government spoke about
    “Active Welfare Society”- a society of self and mutual
    help with only a moderate degree of state intervention.
 The bubble economy collapsed in 1989.
 Welfare provision was expanded especially in
  the rise of social security expenditure.
 Social security system was also reviewed in
  1989, 1994 & 1995 leading to new policies and
  legislation aimed at redesigning the Japanese
  welfare system (particularly in elder care and
  child welfare).
 Introduction of Chronic Care Insurance (or
  Long Term Care Insurance) (Koteki Kaigo Hoken
  公的介護保險) in 2000.
 The system aimed at financing the long-term
  care services for elderly aged over 65 (with
 The expansion was due to social &
  demographic changes as well changes in the
  corporate attitudes about company welfare (or
  the corporate-centred system).
South Korea
   South Korea (The Republic of Korea 大韓民國), 99 263
    sq. km (100 times that of HK) 49 million (7 times that of
   Democratization (1987, Roh Tae-woo, followed by wide
    spread labour movement, 1992, Kim Young-sam, 1997,
    Kim Daeo-jung, 2002, Roh Moo-hyun, 2008 Lee Myung-
    bak) heading towards a welfare states, but the expenses
    are too low by western welfare state standards.
   In 2004, the average production worker in
    manufacturing earned KRW 273 566 881 (HKD 2 219,
    or 1419 in Nov/2008).
 President Park Chung-hee (in power
  during 1960-1979) pursued a social policy
  motivated almost entirely by economic
 Industrial Accident Insurance (1964), a
  Public Assistance Programme for the poor
  (1965), National Health Insurance (1977)
    mandatory for employees and their dependents in large
    firms (more than 500)
Korea – after democratization
 National Pension Programme (1988),
  Employment Insurance Programme (1995)
 Korea still has pervasive residues of
  Confucianism and developmental statism
  in its social protection system –
  diminished though, for e.g. income
  transfer among family members, privileged
  position of the core workforce
Year       Recent social policy initiations
       Unemployment insurance scheme expanded to workplaces with more
1998   than one employee
       Social Insurance Integration Committee formed
       Enactment of People’s Health Insurance Act
1999   National Pension system expanded to all citizens
       Enactment of Minimum Livelihood Guarantee Act
       Workers’ Compensation Act expanded to workplaces with more than
       one employee (1.5 million in 2001, up from 540,000 in 1999)
2000   Enforcement of Minimum Livelihood Guarantee Act
       Integrated Health Insurance scheme put into effect
   However, Korea has witnessed a rapid
    strengthening of the universal features of
    a modern welfare state which is far
    beyond Asian distinctiveness.
Social policies in comparison
    NHI in Taiwan
 The Military Servicemen's Insurance Law
  of 1953, and social rights very limited until
  the emergence of democracy in 1987.
 The military, state bureaucrats and
  teachers (軍, 公, 教) took 75% central gov’t
  welfare expenditure in 1991 for a total of
  9 percent of the population.
 In 1995, NHI --'the most significant
  welfare effort by the Taiwanese state in
  the post-war era (Ku, 1998: 119)
 Characteristics: Mandatory enrollment,
  Single-payer system, Public administration,
  Payroll-related premium rate,
  Contribution shared by the employer, the
  employee and the government

全   健
民   康                                                        保   醫
健               醫                                                療
    保   承   財   務   企   資   稽    秘   會   人       政       醫   險
康   險                                                    審   安   費
保       保   務   管   劃   訊   核    書   計   事       風               用
    爭   處   處   理   處   處   室    室   室   室       室       小   全
險   議                                                    組   準   協
監               處                                                定
    審                                                        備
理   議                                                        管   委
委   委                                                        理   員
員   員                                                        委   會
會   會                                                        員
                                     聯   台   台   台   高
                                     合   北   北   中   雄       會
                                     門   聯   第   聯   聯
            台   北   中   南    高   東   診   合   二   合   合
            北   區   區   區    屏   區   中   門   聯   門   門       直屬關係
                                         診   合   診   診
            分   分   分   分    分   分   心   中   門   中   中       規劃、監督、管理
            局   局   局   局    局   局       心   診   心   心       協調、配合
   Public/Private Mix of Providers
            Public   Private    Total

Hospitals    79       471       550
            (14%)     (86%)    (100%)

 Clinics     434     16,947    17,381
             (2%)     (98%)    (100%)

  Beds      33,903   76,335    110,258
            (31%)     (69%)    (100%)
Hong Kong: 4.9 hospital beds, 1.7 doctors, 5.1 Nurses for 1000 population
     Flow of Healthcare System
          under the NHI
The Insured                           Providers
                  Medical Services

 Premiums     NHI Cards    Payments
                                      Medical Claims

  Premium 4.55% of income in 2002 (to be
  shared by insured, employer, government)
  Premium = insurable income ×premium
  rate × share of contribution ×(1+number
  of dependents)
 Growing deficits from 1999-2002
400            Insurance Cost Average growth rate : 5.71%                                                                 367.4
360                                                                                                 337.1
                                                                                         323.3                    351.8   361.0
320                                                                           301.8
                                                            285.9    285.2                            336.8
280                                              262.0                                     307.6
                      241.3           243.6
                                                                      284.2      286.1
240                                                 260.5    264.9

      194.0                   222.9      237.6
160                                   Insurance Revenues Average growth rate :
120                                   4.58%
                                                                                            Insurance Revenues
40                                                                                          Insurance Cost

         1995          1996           1997         1998     1999     2000     2001       2002         2003       2004     2005
 Reforms
 2002 Global Budgeting for hospitals
 2004 RBRVS – Resource- based relative
  value scale (relativity of procedures used
  in USA since 1989), Performance/Quality-
  based payment
 2006 – 2nd Generation NHI?
Unemployment benefits in
S. Korea (1995 )
 Unemployment scheme and low income
  protection was established in the 1995
  (Employment Insurance System)
 Comprises unemployment benefits as well as
  active labor policy measures (job placement and
  vocational training)
 EIS covers all employees since 1998, temporary
  part-time workers are excluded.
 In 2000, contribution rate was 0.5% of the
  payroll, each for employees and employers.
 to prevent unemployment
 to promote employment
 to develop and improve the vocational
  ability of workers
 to strengthen the nation’s vocational
  guidance and job placement capacity and
 to stabilize the livelihood of workers and
  promote their job-seeking activities
 Three basic programmes –
 Unemployment Benefits (job-seeking
  allowance and employment promotion
 Employment Stabilization Programme
  (ESP), and
 Job Skill Development Programme (JSDP).
Employment Promotion Allowance, split into:
◦ Early Re-employment Allowance - for those who get
  a steady job earlier than halfway the given benefit
  duration (half of the residual days of Basic Allowance).
◦ Job Abilities Development Allowance – for taking
  training in vocational training institutes
◦ Wide-area Jobseeking Allowance - seeking jobs 50 km
  away from their residence
◦ Moving expenses - move to another place to take
  jobs or training .
   Job-seeking allowance (for full-time workers only)
    ◦ Having worked at least 180 days or more in the 18-
      month period preceding unemployment.
    ◦ Daily basic allowance is 50 per cent of the daily wage
      (base on the last three months).
    ◦ The minimum benefit is 90 %of the minimum wage;
      the maximum monthly benefit is KRW 1.05 million
      (KRW 35000 per one-day or HKD 283). The daily
      minimum wage is KRW 18 072 (HKD 146.6).
Benefit duration
Pension system in Japan
 The system was Bismarkian in nature:
  1871 – retirement allowances for the
  army, 1875 – for the navy, 1882 – for the
  police, 1884 – for the civilian officers.
 In 1961 National Pension Law (國民年金
  法) implemented for all citizens (non-
  working spouse are covered by their
  working counterparts)
 First tier - the basic foundation of which
  is the flat rate National Pension (Kokumin
  nenkin 國民年金).
 Second tier - two schemes, the
  Employees' Pension Insurance or Welfare
  Pension (厚生年金Kosei nenkin) and
  Mutual Aid Associated Pension (共濟
  Kyosai nenkin).
 The basic pension is paid from age 65
  with a minimum of 25 years’
  contributions. However, reduced benefits
  can be received from age 60 (covered all
 Average monthly pension in 2002 is YEN
  51667 (HK$ 4,100) and is non income
  related. Full payment in 2002 is YEN
  67,016 (or HK$ 5,300)
Employees’ Pension Insurance
Scheme (EPI)
   EPI has a flat-rate and an earnings-related
    component. The most important part is
    the earnings-related pension. The accrual
    rate (annual) was 0.75% of lifetime
    average earnings (or 3.6 months a year after
    working for 40 years), gradually falling to
    0.7125%. Past earnings are valorised in
    line with earnings.
 EPI contributions would rise from 2004 until
  2017, when they will stand at 18.3%. (now -
 Benefits, on the other hand, will be slashed to
  50.2% of income from 59.3% over the same
 Premium rate for National Pension is raised by
  YEN 280 (value of 2004) every year from YEN
  13,300 in 2005 to YEN 16,900 (2004 price,
  HK1,350) in 2017 onwards.
   The benefits are related to the
    employee's salary. The average monthly
    benefit for the old age is YEN 176,000,
    which amounts to 56% of the average
    monthly salary of subscribers (1999)
 But in 2007, women will be able to
  receive up to half of the husband's
  entitlements, which for most salarymen
 Easier for divorce
 Now, women can get basic pension
Central Provident Fund - Singapore
 The CPF is a compulsory savings scheme,
  created by the British colonial
  administration in 1953 (and implemented
  in 1955)
 Working Singaporeans and their
  employers make monthly contributions to
  the CPF which go into three accounts:
 Ordinary Account - the savings can be
  used to buy a home, pay for CPF
  insurance, investment and education.
 Special Account - for old age, contingency
  purposes and investment in retirement-
  related financial products.
 Medisave Account - the savings can be
  used for hospitalisation expenses and
  approved medical insurance.
 The contribution was made by employees and
  employers. The total contribution is 40% of
  salary. The employers’ contribution varied
  depending on the economic situations.
 The money was centralized and made available
  for government investment. Interest, instead of
  profit of investments was given to the accounts
 Singapore welfare system grants no entitlement
  or access to benefits to those outside the CPF
  system' (Goodman et al., 1997: 366).
What do we learn from all these
 There are different ways to improve well-beings
  (income + protection + services)
 Geo-politics + cultural background affects the social
  policy characteristics
 Democratization + political process plays an important
  part in recent upsurge of welfare development
 Good social policies mitigate shock of globalization
 Financial sustainability (particularly in rapid ageing
  societies) is crucial – more and better jobs to attract
  people to work in greater number and longer years are

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