Conservative Welfare State Systems in East Asia 9780313073472, 9780275974152

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CONSERVATIVE WELFARE STATE SYSTEMS IN EAST ASIA

CONSERVATIVE WELFARE STATE SYSTEMS IN EAST ASIA CHRISTIAN ASPALTER

Library of Congress Cataloging-in-Publication Data Aspalter, Christian. Conservative welfare state systems in east Asia / Christian Aspalter. p. cm. Includes bibliographical references and index. ISBN 0–275–97415-4 (alk. paper) 1. East Asia—Social policy. 2. Public welfare—East Asia. 3. Welfare state. 4. East Asia—Politics and government—20th century. I. Title. HN720.5.A8A76 2001 361.6′1′095—dc21 2001032909 British Library Cataloguing in Publication Data is available. Copyright © 2001 by Christian Aspalter All rights reserved. No portion of this book may be reproduced, by any process or technique, without the express written consent of the publisher. Library of Congress Catalog Card Number: 2001032909 ISBN: 0–275–97415–4 First published in 2001 Praeger Publishers, 88 Post Road West, Westport, CT 06881 An imprint of Greenwood Publishing Group, Inc. www.praeger.com Printed in the United States of America

The paper used in this book complies with the Permanent Paper Standard issued by the National Information Standards Organization (Z39.48–1984). 10 9 8 7 6 5 4 3 2 1

CONTENTS Tables

iv

Acknowledgments

ix

1. Introduction

1

2. Japan

9

3. South Korea

23

4. Taiwan

37

5. Singapore

49

6. Hong Kong

63

7. Mainland China

75

8. The Future of the Welfare State Systems in East Asia

87

Notes

91

Bibliography

95

Index

109

TABLES Table 1

Table 2

Table 3

Table 4

Table 5

Total Governmental Expenditures as a Percentage of GDP in Japan, South Korea, Taiwan, and Singapore (1977–1993)

6

Total Governmental Expenditures as a Percentage of GDP in Hong Kong, UK, USA, and Sweden (1977–1993)

6

Social Expenditures as a Percentage of GDP in Japan, South Korea, Taiwan, and Singapore (1977–1993)

7

Social Expenditures as a Percentage of GDP in Hong Kong, UK, USA, and Sweden (1977–1993)

7

Composition of Social Expenditures in Japan, South Korea, Taiwan, Singapore, and Hong Kong in percent (1977–1993)

8

viii

Table 6

Table 7

Tables

Comparison of Political/Institutional Factors Behind Welfare State Development in Japan, South Korea, and Taiwan

88

Comparison of Political/Institutional Factors Behind Welfare State Development in Singapore, Hong Kong, and China

89

ACKNOWLEDGMENTS When I attended the year 2000 Annual Conference of the Social Policy Association of the United Kingdom in London, one of my friends made a very wise comment on the paper I had presented—that the paper resembled a book more than a conference paper. Voilà! This book is, to an overwhelming extent, the outcome of a research project conducted by the Institute of Societal and Social Policy of the University of Linz. First, I am grateful for the kind help of Professor Josef Weidenholzer in enabling this research project and for the Jubilee Funds of the National Bank of Austria, who provided the financial means without which this research study would have been impossible. I would also like to thank Professor B. Vivekanandan of Jawaharlal Nehru University in New Dehli and Professor Raymond K.H. Chan of the City University of Hong Kong who inspired me to change the title of this book, replacing the troublesome term “welfare state” with the much more helpful term “welfare state system.” Last but not least, I would like to thank Ms. Xiao Fei-jin who kindly assisted me in preparing this volume! Christian Aspalter Shantou

CHAPTER 1

INTRODUCTION Whenever people from Northern and continental Europe talk about the welfare state, they have the very popular extensive/institutional welfare state systems in mind that are predominant in that region of the world. Whenever people from North America, the British Isles, the Antipodes, and most of East Asia talk about the welfare state, they may think of extensive/institutional and rudimentary/residual welfare state systems, that are to be found in most parts of the developed and the developing world. For most people outside of Europe, the welfare state is understood as a system of redistributive social assistance programs that have became very unpopular throughout the world. It is for this reason that the term “welfare state system” is used in this book instead of the term “welfare state.” When using the term “welfare state system,” unnecessary discussions about what can and cannot be called welfare state can be avoided. Today, more and more people feel uncomfortable with the term “welfare state” because it carries with it the notion of high-income replacements rates of social insurance schemes,

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high transfer payments of social assistance programs, and massive redistribution from richer to poorer income segments of the population. Though this meaning of the welfare state may be prevalent in other languages (especially in Europe), it has become a commonplace in the modern English usage that the term “welfare state” is used to describe not only extensive/institutional welfare states (such as Sweden and Germany), but also rudimentary/residual welfare states (such as United States, Hong Kong, and Australia). However, the new usage of the term “welfare state,” in its broader sense that includes residual welfare state systems, has not been accepted by a great number of people in Europe and Asia. The conclusion here is that the term “welfare state system,” which, in itself, implies the existence of a greater variety of different kinds of welfare states, may be very useful in avoiding seemingly endless and fruitless discussions about the definition of welfare states. Other terms, such as “welfare capitalism” and “welfare capitalism” (Jones, 1985: 335), are useful in welfare state theory, but less so in public discourse since they may be rather confusing for the common person. The term “welfare state regime” has become widely accepted among scholars and students of the welfare state, following the publication of Esping-Andersen’s 1990 book. Thus, the term “welfare state regime” largely reflects the ideas of Esping-Andersen, who tried to understand different models of welfare states by looking for different clusters of welfare states. However, there is no clear definition of the minimum size—the number of welfare states resembling each other—of those clusters. It is, thus, unclear from which size onwards a cluster may be referred to as representing a different welfare state regime. This book contains six country studies of the most developed welfare state systems in East Asia: Japan, South Korea, Taiwan, Singapore, Hong Kong, and mainland China. A political approach has been applied here in analyzing the causal determinants of welfare state development, such as historical factors, political systems, party systems, party politics, the politics of legitimization, the impact of constitutions, state structures, elec-

Introduction

3

tions, and social movements. One of the most interesting aspects of this study was to find out whether or not there is a common trend in the welfare politics in East Asia, and why. The following six case studies show that there is indeed a common trend in East Asian welfare state politics. The welfare state is being extended, and not reduced, since many believe that the process of globalization brings about a worldwide diminution of welfare state institutions. Another aim of this book is to analyze welfare state systems and to classify them according to the state of the art in the theory of welfare state comparison, i.e., the regime theory approach of Esping-Andersen. However, it soon became clear that East Asian welfare state systems resemble, together with other welfare state systems such as those in the United States and Chile, purely conservative welfare states. Since the term “conservative” is inappropriate with regard to welfare states in Germany, Austria, Holland, Belgium, and Luxembourg, the author proposes to use the term “Christian democratic” instead of “conservative” when referring to these continental European welfare states, especially after 1945, in order to distinguish between anti-welfare-oriented conservative social politics in the time of Bismarck and his counterparts in other countries and pro-welfare-oriented Christian democratic social politics that is based on Christian social teachings and determined by the impact of Christian unions who build important factions of Christian democratic parties (see Aspalter, 1998). By doing so, there is no obstacle to the proper classification of welfare state systems west and east of the Pacific, and the construct of ideas left behind by Esping-Andersen is avoided. Esping-Adersen’s findings are the outcome of the unsystematic way—which obviously contradicts the basic rules of conducting social research (cf. e.g., Friedrichs, 1983)—of classifying welfare states according to political parties in the case of Sweden, historical factors in the case of Germany, and cultural factors in case of the United Kingdom and the United States (Esping-Andersen, 1990: 26–7, 1992).

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The analysis of the political determinants of the six case studies included here revealed that it was especially conservative political parties who were pursuing the goals of conservative social politics. In the case of mainland China and Hong Kong, the two exceptions in this respect, it was communist and liberal democratic parties that pursued in essence conservative social politics enriched with pro-welfare state-oriented ideologies. Conservative social policy can be described with the following characteristics: social insurance systems are for the most part divided into occupational classes; social assistance is highly stigmatized and, for the most part, guaranteed only after means tests; and, most important, the state shows a strong disapproval of government financed social welfare policies. It is for this reason that the six welfare state systems examined in this book are representing conservative welfare state systems. The author here clearly identifies conservative social policies of conservative political parties (or political parties that take a “conservative” stand in social policy issues). The similarities among the group of East Asian welfare states examined here and the strong features of conservative social policies found prove the existence of conservative welfare state systems in East Asia. The following study applies a historical/institutional approach, which analyzes the historical and political dynamics of the evolution of social systems. Each country study first examines the development of social policy and, then, the role of institutional/political settings in social policy making. After the tracing of the major reasons of welfare state development by looking at the politics of social policy, the future direction of social policy is predicted in these countries. In the last part of the study, the future course of welfare state development is determined by taking the past record of development and by evaluating the political/institutional determinants of social policy, such as the need of governmental legitimization, party competition in democratic elections and government coalition formation, constitutional provisions, and party politics.

Introduction

5

The six country studies focus on the development of social policy, the changes of political systems and their impact on social policy, the politics of social policy, and the future of social policy. Before concentrating on the details of the country studies, attention is drawn to the overall comparison of welfare states and their structures. Due to lack of reliable and comparable data on mainland China, this first part of the study is restricted to the other five case studies. Table 1 provides us an overall picture of the interference of the state in the countries’ economies. We see, with the notable exception of Taiwan, all other East Asian countries show low levels of government spending when compared to Western developed countries. This fact proves the reluctance of East Asian states in extending state expenditures. When we focus on official data on welfare state expenditure, we need to be aware of the fact that these expenditures are easily manipulated, falsely interpreted, or beautified by national administrations. Even with the best intentions of governments, the best outcomes of such efforts are good estimates rather than one-to-one comparable data. Even in countries of the West, up to 30 percent of total welfare state expenditures are estimates and not factual numbers. Welfare state expenditures in East Asia often include expenditures for environmental protection (such as litter bins and street cleaning), military expenditures (such as housing for military personnel, etc.), propaganda and diverse cultural activities, costs of government administration, and much more. While looking at the numbers in the official statistics in UN, IMF and Asian Development Bank publications (Table 2), we should keep these facts in mind. From the data in Tables 3 and 4 we may conclude that Taiwan, Hong Kong, and Singapore are the highest developed welfare states in East Asia. Especially surprising is the high share of social expenditures in relation to GDP in Singapore, since the social insurance schemes in Singapore are entirely financed by employers and employees. The relative backwardness of the South Korean and the Japanese welfare state in quantitative

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Table 1 Total Governmental Expenditures as a Percentage of GDP in Japan, South Korea, Taiwan, and Singapore (1977–1993)

Source: Ye Su-ke (1996), “Welfare Configuration: The East Asian NICs and OECD Countries Compared,” Dissertation, University of Tasmania.

Table 2 Total Governmental Expenditures as a Percentage of GDP in Hong Kong, UK, USA, and Sweden (1977–1993)

Source: Ye Su-ke (1996), “Welfare Configuration: The East Asian NICs and OECD Countries Compared,” Dissertation, University of Tasmania.

terms is remarkable. The lack of party competition and social movements in these countries may have contributed a great deal to this relative backwardness of social spending in these two countries.

Introduction

7

Table 3 Social Expenditures as a Percentage of GDP in Japan, South Korea, Taiwan, and Singapore (1977–1993)

Source: Ye Su-ke (1996), “Welfare Configuration: The East Asian NICs and OECD Countries Compared,” Dissertation, University of Tasmania.

Table 4 Social Expenditures as a Percentage of GDP in Hong Kong, UK, USA, and Sweden (1977–1993)

Source: Ye Su-ke (1996), “Welfare Configuration: The East Asian NICs and OECD Countries Compared,” Dissertation, University of Tasmania.

Now we want to examine the structure of these welfare states by looking at their composition of governmental social expenditures (Table 5). The state’s engagement in the provision of services, subsidies, and facilities in the field of health, housing, and education is often neglected in welfare state comparison.

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They are, however, vital in determining the state’s efforts to guarantee high standards of social security. While all countries show high governmental spending in education, the governments of Hong Kong and Singapore also invested extensively in the provision of social welfare in the fields of health and public housing. The low government expenditures in social security and welfare in Singapore are explained by the special social insurance system applied, the Central Provident Fund, which does not draw upon the government’s resources (i.e., financial resources collected by taxes). Table 5 Composition of Social Expenditures in Japan, South Korea, Taiwan, Singapore, and Hong Kong in percent (1977–1993)

Source: Ye Su-ke (1996), “Welfare Configuration: The East Asian NICs and OECD Countries Compared,” Dissertation, University of Tasmania.

CHAPTER 2

JAPAN THE DEVELOPMENT OF SOCIAL POLICY IN JAPAN

The foundations of the Japanese welfare state had been laid before World War II. The first significant social legislation was the 1922 Health Insurance Law, which provided health insurance for employees. The motivation for enacting this legislation is found in the Rice Riots of 1918 that raged for two months throughout Japan and represented a major challenge for the government. In 1923, the Great Kanto Earthquake largely destroyed Tokyo and, thus, delayed the implementation of the Health Insurance Law enacted one year earlier. The new health insurance law went into full effect on January 1, 1927 (Yanaga, 1956: 344; Takahashi and Someya, 1985: 135; Anderson, 1993: 48; Gould, 1993: 35–6). Though the need for public assistance soared owing to the 1923 earthquake, the government did not extend or introduce new public assistance programs. It was only in 1929 that the Relief and Protection Law was passed by the Diet. The aim of this new law was to counteract the acute insufficiency of the public assistance scheme, which had been established by the

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Poor Salvation Law in 1874. There were two factors behind the implementation of this new social assistance law: first, the small party of Muto Sanji, a socially minded businessman, which checked the balance of power in the Diet, and second, a nationwide movement of district commissioners who promoted the cause of public assistance. Due to the initial refusal of the Cabinet to provide the financial means for the public assistance scheme, the Relief and Protection Law had only been implemented on January 1, 1932. Public assistance, however, was still limited to unemployable persons, and recipients lost their right to vote. In 1935, the government introduced a minimal scheme to help the unemployed. In the face of the approaching Second Sino-Japanese War in 1937, the government decided to set up a new Ministry of Health and Social Affairs. The war broke out on July 7 and delayed the establishment of the new ministry, which eventually began operations in February 1938. The initiative for setting up the new ministry came from the military, which had been increasingly troubled by the poor health conditions of draftees. A major step forward in the field of social assistance was represented by the introduction of the military assistance scheme in 1937, which was not means- tested. In the same year, the Mother-Child Protection Law, that had been supported by both women’s groups and the government, offered allowances to fatherless families. In 1938, the government introduced the National Health Insurance Law, which enabled the self-employed and especially Japan’s large rural population to join health insurance schemes operated by municipal authorities on a voluntary basis (Garon, 1997: 56–8; Maruo, 1986: 66; Anderson, 1993: 50; Takahashi and Someya, 1985: 136). In the first years of the Second World War, the Japanese social security system developed further. In 1941, the government enacted the Workers’ Pension Insurance Law, which, together with the 1936 Retirement Pension Provident Fund Law, was consolidated into the 1944 Welfare Pension Insurance Law. The new pension system for workers covered the risks of old

Japan

11

age, invalidity, and death. The Workers’ Pension Insurance was the first large compulsory social security scheme. It was only preceded by the Seamen Insurance Scheme enacted in 1939. The Seamen Insurance Scheme is unique in that it comprehends health insurance, unemployment insurance, old age annuity, and workmen’s compensation. After the war, the Supreme Commander of Allied Powers and the Japanese officials shifted their attention to social policy matters, and as a result of this, enacted the National Assistance Law in September 1946. In 1947, two more important pieces of legislation had been passed, the Workmen’s Accident Compensation Law and the Unemployment Insurance Law (Takahashi and Someya, 1985: 136; Chow, 1984: 24; Yanaga, 1956: 344; Maruo, 1986: 66; Collick, 1988: 208). The Japanese social security system was considerably extended in the 1950s. The Livelihood Protection Law of 1950 widened the scope of the public assistance under the 1946 scheme. In 1953, the government enacted a health insurance scheme for day laborers. The next year, workers in firms of five employees and more were incorporated into the Employee Pension System. In 1958, the government approved the New Health Insurance Act that covered all Japanese on a mandatory basis. Medical insurance for all was accomplished by 1961. The National Pension Law of 1959 extended the coverage to the rest of the adult population not covered elsewhere, such as farmers, the self-employed, and workers in small firms, and introduced state-financed noncontributionary, selective pensions for those aged 70 and over, the disabled and widows with one or more children (Gould, 1993: 44; Anderson, 1993: 58–63; JMHW, 2000; Takahashi and Someya, 1985: 138). The 1960s saw no major changes in the field of social policy. The governing Liberal Democratic Party, especially under Prime Minister Sato (1964–1972), had been cautious in expanding social security institutions. Though the Japanese welfare state experienced an important extension of its social security system in the late 1950s, the government kept the expenditure on social welfare

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stable relative to national income at around 2 percent of GNP between 1955 and 1975. Thus, at a time of high rates of economic growth, welfare expenditures rose as well, that is, in absolute terms. Welfare state expenditures, however, were heavily concentrated in the fields of health and pensions (Watanuki, 1986: 261; Goodman and Peng, 1996: 201; Vogel: 1979: 186). In the early 1970s, Japan was on the threshold of a new era in social policy, since the government intended with vigor to implement significant improvements of the social security system. In 1971, the government enacted the Child Allowance Law. The new child allowance scheme started to operate on January 1, 1972, providing allowances for the third child and onwards and only to those who were under the age of eighteen and received compulsory education. The allowance was subject to a means test and amounted to 5,000 yen a month in the early 1980s (cf. Gould, 1993: 42; Chow, 1984: 26). In 1973, Prime Minister Tanaka Kakuei declared the “first year of welfare” and introduced various important welfare reforms in the field of pension and health insurance. The government set high minimum benefits for employee pensions and created a system for cost-ofliving indexing. Furthermore, medical care became free of charge for all aged 70 and over all across the country who met certain income criteria. In Tokyo, free medical care for those 65 and over had already been introduced four years earlier. In 1984, the government reformed the nationwide free medical care system for elderly and introduced a partial self-payment scheme (initially 10 percent with an upper limit of 35,000 yen) in order to curb rising expenditures. In the 1970s, social security spending as share of national income doubled (Anderson, 1993: 55, 76; Maruo, 1986: 66; Hashimoto, 1992: 37). Social security spending in the 1980s stayed rather stable in relation to national income, at around 14 percent. In 1985, the government introduced a new basic pension scheme for all comprising old-age, disability, and survivor’s pensions. The new basic pension was adapted by both the Employee Pension Insurance scheme and the National Pension Insurance scheme.

Japan

13

Beginning in the 1980s, the Japanese welfare state underwent important changes as its focus began to shift from cash-based public assistance to care-based social services. The extension of social and personal care service for the elderly was brought by the government’s Gold Plan of 1989 and the New Gold Plan of 1995. The Gold Plan aimed at increasing and diversifying carerelated services for the elderly, particularly those living in the community. The New Gold Plan increased the planned level of care services for the elderly. In 1997, the government enacted the Chronic Care Insurance Law, which also addresses the rising need for care services for the elderly in a rapidly aging society (Gould, 1993: 40; Peng, 1998: 11,13; Peng, forthcoming). THE POLITICAL INSTITUTIONS, DEMOCRACY AND SOCIAL MOVEMENTS IN JAPAN

After Japan’s defeat in World War II, the Supreme Commander for Allied Powers carried out comprehensive reforms, aimed at establishing a full-fledged democracy in Japan (Koh, 1989: 35). General Douglas MacArthur, on February 4, 1946, set up a “constitutional assembly” of 24 Westerners who worked out a draft version of a new constitution within only five days. With minor changes, the document became the new constitution on November 3 of the same year. The new constitution distributed the power of the state between the Diet (House of Representatives) and the Cabinet. However, in the reality of Japanese politics, it was the Cabinet who designed the legislative bills, and as long as the long-term ruling Liberal Democratic Party (LDP) had a majority in the Diet, the Diet merely sorted out “those pieces of proposed legislation that are to be approved from those that are not” (Baerwald, 1974: 123; Krauss, 1990: 39). From the very beginning, there was one ministry especially designed for health and social welfare. Under the Ministry of Health and Social Welfare, an independent Social Insurance Agency was set up. Thus, the administration of social policy was centralized in these government bodies. In addition, in both

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chambers of the parliament, a number of standing committees were set up for specific purposes and policy areas. The one responsible for social policy is the Social and Labor Committee, with 40 permanent members in the House of Representatives and 21 in the House of Councilors. The members of the committee are chosen from among the parties represented in the parliament according to their proportional strength (Stockwin, 1985: 94, 141; Tsuji, 1984: 30). The dominating party in Japan’s post-war politics was the Liberal Democratic Party, the result of an amalgamation of the Democratic Party (formerly also known as Progressive Party) and the Liberal Party in 1955. Since then, the Liberal Democratic Party has continued to be a coalition of parties and factions, though now under an umbrella of unity. This unity was necessary due to Japan’s electoral system, which is a multimember nontransferable vote system, a SNTV system1 (Ward, 1978: 88; Stockwin, 1985: 112). In 1976, however, six members of the LDP split off and formed the New Liberal Club. The LDP failed to gain a majority of seats in the Diet in the 1976, 1979, and 1983 elections. In the first two cases, the LDP solved the problem by convincing independent members of parliament to join the LDP. In December 1983, the LDP formed a coalition government with the New Liberal Club, which lasted until July 1986 (KANZ, 2000; Woldendorp et al., 1998). The second largest Japanese party, the Japan Socialist Party (JSP), also constitutes a merger of factions rather than a homogenous, unified party. It was founded in 1955 by left-wing and right-wing socialist groups. The JSP did not manage to gain significantly more than 30 percent of parliamentary seats in its best times. The foundation of the small Democratic Socialist Party (DSP), splitting off from the JSP in 1960, did not solve this problem. The political Left in Japan was further weakened by the revival of the Japan Communist Party (JCP) in 1972, when it gained 10.5 percent of votes and 7.7 percent of seats in the Diet. The left was backed by the support of Japan’s two largest trade unions, the Sohyo with 4.5 million members

Japan

15

in affiliated unions and the Domei with 2.1 million members. The Sohyo, the most radical union, which had its strongholds in the public service industry, supported the JSP and partly also the JCP; the Domei supported the DSP. The closeness of the relationship between Sohyo and the JSP may be the key reason for the party’s ideological militancy and failure to broaden its political appeal (Stockwin, 1985: 169–70, 226). The JSP changed its name to the Social Democratic Party of Japan in 1991 and then into Social Democratic Party (SDP) in 1996. The Clean Government Party (Komeito, or CGP) is based on the most energetic and militant religious movement of postwar Japan, the Sokagakkai, or Value Creation Society. This new movement emerged out of the long-established Nichiren sect of Buddhism. The Sokagakkai has joined elections since 1955. In 1964, the Sokagakkai established the Clean Government Party (CGP) and managed to participate in government making from 1993 to 1994. The LPD and the SDP, both gradually losing ground due to the formation of a series of new minor parties, changed the electoral system in 1994 to better serve their interests. The new electoral law set up 300 single-member constituencies plus 200 seats for proportional representation. While the single-member constituencies strengthen the two major parties, the 200 proportional seats leave some leeway for smaller parties. Those parties that were supposed to be eradicated by this new election system, the small and minor parties, defended themselves by forming a new umbrella party, the New Frontier Party (NFP), the Shinshinto. On August 9, 1993, the long-term ruling LDP government was replaced by a coalition of the SDP and the Shinseito party (the Japan Renewal Party, formed in 1993 by 44 LDP members). In 1994, the Kaishin party (the Japan New Party) formed a coalition government with the Komeito and the Sakigake (formed by ten LDP members in 1993) which lasted only 63 days. Then, the LDP managed to form a grand coalition with the SDP and the Sakigake (Woldendorp et al., 1998). The three-party ruling coalition of LDP, SDP, and Sakigake saw the formation of a major rival com-

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posed of a vast majority of opposition parties, while the importance of the SDP declined rapidly. The necessity of the LDP to form coalition governments— even when it is holding significantly more than 50 percent of the seats in the Diet—is caused by the fact that, though having a majority in the House of Representatives and being, thus, able to select the prime minister, the LDP could not obtain a majority in all committees of the House of Representatives when it also wanted to have both the chairperson and a majority in each committee, since the chairperson—who is elected from among the committee members—does not vote, except to break a tie (Baerwald, 1986: 100–1). Since the roots of democracy are relatively weak among the Japanese, and democratic institutions (such as competitive democratic elections, parliamentary decision making, etc.) are less important than in the Western world, social protest has become the “only possible vehicle for effective political participation” (White, 1984: 55). Among the most important social movements in Japan were the religious Komeito movement in the late 1950s, the environmental movement beginning in the 1960s, the women’s movement beginning in the 1960s, the students’ movement of the late 1960s and early 1970s, and minority movements and new middle class welfare movements beginning in the early 1970s. By the 1990s, the Komeito movement became the largest well-organized social movement of the post-war period. From January to March 2000, more than 15 million Japanese signed a series of petitions of the New Komeito Women’s Committee aimed at improving social welfare and environmental protection. The petitions had been presented to the Ministry of Health and Welfare by a CGP party delegation led by the chairwoman of this committee, Ms. Hamayotsu, in April of the same year (Komeito, 2000). When pollution became a major political issue in the late 1960s and early 1970s, the large middle class2 mobilized against the government and the enterprises causing the pollution. These demands of the environmental movement have been addressed, to a large extent,

Japan

17

by local governments (Hayao, 1993: 10; MacDougall, 1990: 164). Japan’s women’s movement emerged out of the need to address the changing situation of women in a fast-changing industrializing society after 1960. Since the number of children born declined sharply from six or seven to two, the labor force participation rate of women rose a great deal from formerly 30 percent in the 1950s to 70 percent in the 1980s. In addition, the average number of family members per household has dropped from over five in the late 1940s to less than four by 1970 (Chizuko, 1989: 167–9). This has reduced the family’s capacity of giving care to the elderly, the handicapped, and the sick. From 1968 to 1970, the Marxist-dominated student movement protested on a large scale against the LDP government. These protests provided the most severe test to the ruling elite in the post-war era (Steinhoff, 1990: 188; Krauss, 1990: 60) and, thus, increased the government’s need for legitimization. The minority movements of the Korean minority and the Burakumin (the outcasts) of the 1970s resulted in central and local programs for better housing and integration in the educational system for these socially excluded groups. The Koreans living in Japan are deprived of the right to vote, and the Burakumin3 had to live in villages separated from the rest of Japan (Krauss, 1990: 61–2). New middle class welfare movements emerged out of the environmental movement and demanded the expansion of social welfare programs from the government (Hayao, 1993: 10). The labor movement, to a large extent, was bound to the fortune of the left-wing political parties. Private industry unions have been represented, to a overwhelming extent, by the third and fourth largest unions, the Churitsu Roren and the Shinsambetsu, with almost one and a half million and almost a million members in affiliated trade unions respectively. These two unions were politically moderate and less influential, since the main basis of union organization was enterprise, and not industry or craft. Furthermore, the organized workforce in Japan’s smaller privately owned compa-

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nies with less than 100 employees (though producing half of Japan’s Gross Domestic Product) only counted for more than 10 percent of the total organized workforce (Shalev, 1990: 69). Thus, the industrial structure together with the political landscape of Japan undermined the labor movement’s prospects of influencing national politics. THE POLITICS OF SOCIAL POLICY IN JAPAN

Japan had already established a residual type of welfare state with meager levels of welfare benefits and a limited range of statutory welfare services and benefits by the end of World War II (cf. Sainsbury, 1996: 13). The reasons for welfare state formation in the pre-1945 period were mainly social and economic crises, natural disasters, and wars. Important events that spurred the government’s welfare state initiatives were the 1918 Rice Riots, the Great Kanto Earthquake, the Great Depression, the Second Sino-Japanese War and World War II. Prior to 1945, Japan was heavily influenced by the German model of social security, since Germany represented a politically and economically powerful industrialized country. With the defeat of the Japanese and German empires in World War II, America became the country that served as the prime model for governmental policies. However, with regard to the Japanese welfare state, other determinants than foreign influences shaped the course of welfare state development in the post-war period. The major extension of Japan’s health and pension insurance systems in the late 1950s was motivated by the Socialist’s appeal for new pensions, increased labor conflicts, and the ruling LDP’s need to secure the support of workers in small firms and farmers (cf. Anderson, 1993: 62–3). In the early 1970s, the LDP lost increasingly its electoral support so that it was compelled to seek support of minority parties in securing a sound parliamentary majority and to undercut the left-wing parties by launching popular social policies. Since Socialist and Commu-

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nist local governments had already implemented free health care services for the elderly before, the government reacted and promoted free health care for the elderly on a national level (cf. Gould, 1993: 42–3). The rising concerns about the needs of the rapidly aging population, combined with an increasingly competitive political system, led to numerous improvements in elderly welfare services. Moreover, the government finally arrived at the conviction that the existing social insurance and social welfare provision was highly inadequate for the elderly and that there was an urgent need for governmental action. Recently, the welfare rights of women have become the second major concern of Japanese authorities. Before, the problem of caring for the elderly, the sick, and the children had been considered as women’s problems, and the state declined to accept any responsibility for social welfare provision in these fields. Though the left could not manage to come into power on the national level, the Liberal Democratic Party felt obliged to react to reform proposals of the Left and to compete with them by proposing new social policies. Other pressures stemming from officials of local and national social welfare authorities as well as nongovernmental pressure groups, such as the women’s movement, also contributed to the will of the government to alter its basically antiwelfare stand and to extend the long-term existing social welfare and social security schemes. By and large, the government, however, tried to avoid financial commitments of the state in the matter of social policy. Until the 1980s, the government successfully shifted the responsibility of providing social security and welfare to the company level. Until today, the Japanese welfare state was characterized by its dualism between the separately administered social security schemes of employees (especially those of large-scale enterprises) and that of the rest of the population. The 1985 pension reform was the first major step toward bringing the two tiers of the Japanese welfare state together in order to form a unified social welfare system.

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Conservative Welfare State Systems

THE FUTURE OF SOCIAL POLICY IN JAPAN

In imperial Japan, social welfare and social security programs had been installed by the sheer will of the government. Though the new constitution of November 3, 1946 provided that “the State shall use its endeavors for the promotion and extension of social welfare and security, and of public health” (CJAP, Art. 25/2), it was the political circumstances of the post-war period that caused welfare state expansions. The Japanese constitution is “American-made,”4 and, therefore, merely serves as a reference once the government has decided to support new social welfare legislation. The LDP again and again searched for means to secure its power bases in the electorate and, hence, the maintenance of its monopoly of power. Since the left-wing parties pursued new social policies, the LDP had to climb on the bandwagon in order to secure its single-party rule. In the 1970s, the economic crises of 1973 and 1979 led to a major re-evaluation of the government’s role in the social welfare system. In 1984, the LDP reintroduced self-payment for care services for the elderly. However, the rising needs of the elderly could not be ignored by the ruling party for long. In 1989, the government took more responsibility serving for the generation that had worked so hard and helped to create the Japanese economic miracle. Although pressure groups were vital in urging the government, welfare state extensions in post-war Japan must be ascribed, by an overwhelming extent, to party competition between the LDP and Socialist and Communist parties, who did extraordinary well at the local government level by winning a great deal of mayoral elections in Japan’s major cities.5 Between 1993 and 1994, the LDP was excluded from two government coalitions. It is for this reason that the necessity of government coalition formation has increased overall party competition in Japan’s political arena. Furthermore, the breaking away of three splinter groups weakened the position of the LDP within the party system, which led to the alliance with the Social Democratic Party and the

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Sakigake Party. In addition, the pressing need of welfare services for and income maintenance of the elderly shook up the minds of core policymakers. Today, key politicians, such as Hiromu Nonaka, the secretary general of the LDP, state openly that the population of twenty-first century Japan “will be the oldest of any in the world” (JIMIN, 2000). The increased party competition since 1993, in combination with the mounting problems of social welfare provision for the elderly, will cause major extensions of the existing welfare state in the years and decades to come, especially in the field of pensions and welfare services for the elderly.

CHAPTER 3

SOUTH KOREA THE DEVELOPMENT OF SOCIAL POLICY IN SOUTH KOREA

The Korean welfare state is built on contributory social security schemes and a noncontributionary public assistance scheme. The four contributionary social security schemes are the Industrial Accident Compensation Insurance Scheme (IACI), the National Health Insurance Scheme (NHI), the National Pension Insurance Scheme (NPI), and the National Employment Insurance Scheme (NEI). At the beginning, the state merely regulated social security, and social assistance was confined to the very poor only. Later, the state introduced compulsory health insurance schemes to the better-off workers and employees. The government tried to avoid a situation where it would have to subsidize social security programs and, thus, excluded farmers, fishermen, workers of small and medium-sized enterprises, and the self-employed from the compulsory health insurance scheme. Only at the end of the 1980s, did the government turn the National Health Insurance scheme into a universal scheme and the National Pension Insurance Scheme into a quasi-universal scheme. With these new changes, the govern-

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ment took up increasingly the role of a social security provider as government spending rose a great deal in the field of social security (cf. S. Kwon, 1993: 232). The Industrial Accident Compensation Insurance scheme was the first compulsory social insurance scheme in Korea. The Industrial Accident Compensation Insurance Law was enacted in 1963. The new social insurance scheme started to operate one year later in 1964. The insurance scheme guaranteed the formerly uncertain employers’ compensation for industrial accidents of their employees. The scheme was financed solely by employers’ contributions. The Industrial Accident Compensation Insurance scheme provided both benefits in-kind and benefits in-cash (S. Kwon, 1993: 167). Financial help of the government was very restricted—it provided governmental funds in the first two years to set up the scheme, and from 1978 onwards, it sponsored about one percent of the scheme’s expenses. In the beginning, the scheme was operated by the Ministry of Health and Social Affairs and, afterwards, by the Ministry of Labor (H. Kwon, 1999: 81). The first piece of legislation concerning health insurance, the Health Insurance Law of 1963, only permitted voluntary health insurance schemes. Two years later, the government began to implement eleven pilot health insurance programs: four insurance associations run by employers and seven by nonprofit community-based co-operatives. These experimental health insurance schemes started with 340 insured people in 1965. This number increased to 63,455 in 1977. In 1970, the government amended the Health Insurance Law so as to turn it into a compulsory scheme. However, the new legislation was not put into effect as the president refused to sign it. Finally in 1976, the new law for compulsory health insurance programs was enacted. On July 1, 1977, health insurance became obligatory for employees and dependants in large firms with 500 workers or more. For those working in firms with less than 500 employees, the scheme stayed optional. In addition, the government promulgated the Medical Protection Law in 1976. The Medicaid

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scheme provided benefits in-kind and was destined especially for low-income earners. The assistance scheme also commenced in 1977. A second health insurance scheme was created by the Civil Servants and Private School Teachers Law in 1977. In 1980 and 1981, the coverage of the health insurance scheme was extended to include dependants of military personnel and pensioners, respectively. The development of the health insurance scheme saw continuous improvements over time. The scheme started to operate on January 1, the next year. The compulsory coverage requirement for industrial workers had been subsequently lowered to firms with 300, 100, 16, and 5 or more employees in the years 1979, 1981, 1983, and 1988, respectively. After having tested regional health insurance programs in three rural sites in 1981, the government introduced such regional health insurance programs for all rural residents—farmers, fishermen, the self-employed, and their dependants—in 1988. On July 1, 1989, health insurance became mandatory for the urban dwellers as well (S. Kwon, 1993: 167–8, 253–4; H. Kwon, 1999: 89–90). In 1998, the government changed the system of national health insurance by merging the schemes for public sector employees and private school teachers with those for farmers, informal workers, and the self-employed. Low-income earners, thus, pay less contributions than before the restructuring of the health insurance system took place (H. Kwon, forthcoming). The existing pension system is based on four different pension programs. Three are specially designed for occupational groups and one for the population at large. Social legislation for pension insurance schemes began in 1960 with the Civil Servants Pension Law (cf. also Moon, 1995). The Military Personnel Pension Law and the Private School Teachers Pension Law followed in 1962 and 1973, respectively. In case of the civil servants and military personnel pension schemes, the schemes took up operations one year after the new laws became enacted. The private school teachers scheme commenced in 1975. In 1980, 567,000 public employees, 150,000 military personnel,

26

Conservative Welfare State Systems

and 79,000 private school teachers received pensions under these occupational pension schemes. The National Pension Insurance scheme was designed for the working population that had been left out by these occupational schemes. The national pension scheme was supposed to be enacted in 1973. However, after the Parliament passed the National Pension Law the president refused again to sign the new legislation. In the run-up to the 1988 elections, President Rho promised the introduction of the National Pension Insurance. In the first stage, only salaried employees in firms with five or more employees were included in the pension scheme. The National Pension Law of 1986 was revised in 1989 in order to incorporate workers in workplaces with ten or more workers. Other segments of the working population, such as farmers, fishermen, the self-employed, and the informal sector employees, can join the scheme on an optional basis (S. Kwon, 1993: 101–2, 167; Chang, 1985: 187; H. Kwon, 1999: 95–7). In 1995, the government set up the National Employment Insurance scheme. The government, still perturbed about possible work disincentives arising from an unemployment insurance scheme, preferred the name “employment insurance” to the commonly used name “unemployment insurance.” The National Employment Insurance scheme offers unemployment benefits to employees who lose their jobs, training grants to public and private training institutions that train unemployed people, and job security grants to employers who keep employees instead of laying them off. The premiums for unemployment benefits are paid by both the employers and the employees. Job security payments and training grants, however, are financed by employers’ contributions alone (H. Kwon, forthcoming). The noncontributionary Public Assistance Program (PAP) today comprises three different assistant schemes: livelihood assistance, disaster relief assistance, and medical assistance. The livelihood assistance scheme was established in 1965 on the basis of the Public Livelihood Protection Law of 1961. The livelihood assistance scheme is means-tested and accords several

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types of special needs, such as education, housing, maternity care, and funeral services. The livelihood assistance scheme is designed to assist those unable to work (because of age and disability), the working poor, and the underprivileged. These are the elderly, handicapped persons, homeless children, and deprived women. In 1962, the government created a new assistance for disaster relief and started the scheme the same year. Besides livelihood and disaster relief assistance, the PAP also provides means-tested medical assistance under the Medicaid scheme. Whereas the livelihood assistance and the disaster relief assistance schemes offer benefits in-kind and in-cash, the medical assistance scheme only provides in-kind benefits. In 1990, 0.98 percent of the population who had no earning ability and lived either in public residential institutions or at home received livelihood assistance benefits; 4.28 percent of the population belonged to the group that lives in poverty, and therefore, receives livelihood assistance. About 7.7 percent of Koreans profited from the Public Assistance Program. Three different laws provide for social assistance under the Public Assistance Program: the Public Livelihood Protection Law, the Disaster Relief Law and the Medical Protection Law (S. Kwon, 1993: 102, 168; H. Kwon, 1999: 84–5; Ramesh, 1995: 232; Palley and Usui, 1995: 248). THE POLITICAL INSTITUTIONS, DEMOCRACY AND SOCIAL MOVEMENTS IN SOUTH KOREA

Since 1948, the political system of the Republic of Korea has undergone manifold changes. In the First Republic (established on August 15, 1948), a pseudo-democratic and increasingly authoritarian regime under the leadership of President Syngman Rhee governed the country. Though the constitution provided a bicameral parliamentary system, only one, the National Assembly, had been installed in the First Republic. However, the National Assembly had to submit to the will of the president. Syngman Rhee did not allow any rivals with salient

28

Conservative Welfare State Systems

political weight behind them. The problem of political rivals had been solved by means of assassination, death penalties, and ban on political activities of certain opposition politicians (Choy, 1982: 279–82; Cotton, 1993: 29). Mounting protests led to the fall of the dictator-like rule of Rhee in 1960. The Second Republic installed a cabinet system and a bicameral parliamentary system. On August 12, 1960, Yun Po-son was elected president by the National Assembly. The National Assembly dismissed the president’s first choice for prime minister, Kim To-yon, and subsequently, the president nominated Chang Myon, the choice of the National Assembly for prime minister. In the Second Republic, the president was merely a figurehead of the state. Chang Myon could not decide to prefer one of the opposing factions in his party over the other as he changed the government twice by the end of January 1961 (Han, 1974: 123–35). With virtually no resistance, a military coup d’état put an end to the first democratic government in Korean history on May 16, 1961. The rule of the military junta lasted two and a half years until December 1963, when the newly formed Democratic Republican Party (DRP) won the presidential and National Assembly elections in late 1963. However, it was not a civilian government that took over the control of the government, as the DRP was established and led by the same military revolutionaries who snuffed out Korean democracy in 1961. The military leaders simply claimed that they were “more capable of achieving the same social and economic goals than Chang or any other leadership” (Lee, 1975: 29–30). General Park Chung-hee became president and ruled the country with an iron fist from 1961 to the day of his assassination on October 26, 1979. Until the end of the Third Republic, the legislature was thoroughly emasculated. The reform of the constitution in 1972, which had become known as the Yushin Constitution, gave the president absolute power to prevent any dissent (Steinberg, 1995: 380) and marked the beginning of a highly authoritarian regime and, thus, the Fourth Republic. The authoritarian rule under the Third and Fourth Republics was

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based on the tight control of politics and society by the Korean Central Intelligence Agency (KCIA) and the military. Ironically, these were also the institutions that put an end to the Park era. Kim Jae-kyu, the head of the KCIA, opposed a softer stand toward demonstrators and killed President Park and some of his closest associates. Subsequently, the Democratic Republican Party and the new civilian government headed by President Choi Kyu-ha were left in a sort of limbo. After a successful intra-military coup d’état in December 1979, General Chun Doo-hwan placed his supporters in all key posts of the government and, thus, brought the government under his control. Eight months later, Chun took over the presidency. In May 1980, students demanded the release of a popular opposition candidate, Kim Dae-jung, and the resignation of General Chun in Kwangju, in the province of Cholla. The Chun government brought in special forces to dissolve the protests. The Kwangju incident left around 200 students dead, and hundreds injured (Yun, 1997: 151–2; Steinberg, 1995: 382–3). The cruel rule of President Chun continued until 1987. The increasing confrontation between the opposition forces—made up of the combined forces of the student, the Christian and the workers movements, and the main opposition party, the New Korea Democratic Party (NKDP)—and the authoritarian regime led to the capitulation of Chun Doo-hwan in June 1987 and the birth of the Sixth Republic in October 1987 with the approval of a new constitutional amendment by popular referendum (Kang, 1990b: 343; MacDonald, 1990: 151). The Korean political party system experienced the coming and going of a large number of parties. Parties were adjunct to their leaders; in most cases, when the leader of a party formed a new one, or joined another, the core of the party went with its leader. Factions were common and played a key role in the frequent changes of the Korean party system. By and large, the differences between factions rested on “personal links and consideration of immediate personal interests rather than on different ideological orientation or social and economic posi-

30

Conservative Welfare State Systems

tion” (Han, 1974: 105). Compared to parties in the Western world, Korean parties, in general, last no longer than a couple of years. The longest lasting parties that have carried political weight are: the Liberal Party (governing party), the Democratic Party (main opposition party) in the First Republic, the Democratic Republican Party (governing party) and the New Democratic Party (main opposition party) in the Third and Fourth Republic, the Democratic Justice Party (governing party), and the New Korea Democratic Party (main opposition party) in the Fifth Republic. (Hahn, 1975: 85; Bedeski, 1993: 62–3; Kang, 1990a: 63). Since 1987, nearly every new parliament has brought the emergence of new political parties. After the 1987 presidential election, Roh Tae-woo—also being a former military general— won the presidency. He also succeeded Chun Doo-hwan in the leadership of the Democratic Justice Party (DJP). Roh Tae-woo greatly profited from the split of the opposition between Kim Dae-jung and Kim Young-sam. In 1987, the Reunification Democratic Party split off from the New Korea Democratic Party on May 2, 1987. The Reunification Democratic Party (RDP) was led by two well-known opposition leaders of the 1970s and the 1980s, Kim Dae-jung and Kim Young-sam. The new party pulled away 66 out of the 90 National Assembly members from the NKDP. Just a few months later, on November 11, Kim Dae-jung left the RDP and formed his own party, the Party for Peace and Democracy (PPD) (Kang, 1990a: 62–3). The 1988 National Assembly election introduced a competitive four-party system. The longterm ruling party, the Democratic Justice Party, lost its parliamentary majority. The new parliamentary system was called the “Yoso Yadae” (ruling minority and opposition majority). The opposition parties were the RDP, the PPD, and the New Democratic Republican Party (NDRP) led by Kim Jong-pil, the former Prime Minister in the late Park Chung-hee government (Kang, 1990b: 62–3; Park, 1993: 139). In January 1990, the ruling party and two opposition parties, the RDP and the

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NDRP, merged into a single megaparty, the Democratic Liberal Party, the DLP (Park, 1993:139–43; Bedeski, 1993: 66–8). Kim Young-sam won the DLP nomination for the 1992 presidential election and became the new president of the Republic of Korea. Kim Dae-jung, after having changed the PPD into the New Democratic United Party (NDUP) in April 1991, and after having joined the ranks of the Democratic Party for a while, established the National Congress for New Politics (Sae Jungchi Kukmin Hoiee, or NCNP) in September 1995 (Lee, 2000). In 1995, Kim Jong-pil left the ruling party and formed the United Liberal Democrats (ULD). In December 1995, the DLP was renamed the New Korea Party (NKP), marking the unchallenged leadership of Kim Young-sam in the ruling party (Leuthold, 1997: 5–6). In 1997, the New Korea Party merged with the Democratic Party, a smaller opposition party, and created the Grand National Party, the Hannara Dang (HD, 2000). In 1997, Kim Dae-jung won the presidential election and installed a coalition government with Kim Jong-pil of the ULD as prime minister. In August 1998, the NCNP merged with the oppositional New People’s Party of Rhee In-je (CIA, 2000; ASK, 2000). In January 2000, Kim Jong-pil was succeeded by Park Tae-joon (ULD), and President Kim Dae-jung founded his fifth party, the Millennium Democratic Party, the MDP (Lee, 2000). In the April 2000 National Assembly elections, the Grand National Party won 39 percent of votes, the MDP 35.9 percent, and the ULD 9.8 percent (ASK, 2000). The MDP, then, faced a tough time to work out a majority in the National Assembly with ULD and independent members (KT, 2000). In addition to the heavy competition from political opposition parties, Korean governments in the post-war period had to cope with the intense opposition stemming from student, worker, and Christian movements. These were the three largest nonpolitical groups who pushed for democratic reform. The strongest and most successful social movement was the student movement which toppled the Syngman Rhee government in 1960, helped to bring about the fall of the Yushin system in Oc-

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Conservative Welfare State Systems

tober 1979, and led the popular uprising in June 1987 (Kang, 1990b: 68). After the 1960 presidential elections, the people of Masan protested against an election fraud and demanded new elections. The police killed seventeen, out of which seven were high school students. As a consequence, more than 3,000 students from the Korea University protested in the streets of Seoul. On their way back to the campus, students were attacked by political hoodlums, and about a dozen students and reporters were injured. The next days, thousands of students protested in the capital. Police, then, were killing dozens of students every day and injuring hundreds. Then, about 250 professors joined the demonstrations which gave the final blow to Rhee’s bloody rule (Choy, 1982: 304–12). The second major tragedy occurred after the military takeover in 1980. In May, 5,000 students and several thousand citizens of Kwangju demanded the resignation of General Chun. As already mentioned, this incident resulted in the deaths of 200 students. Far from dissolving the student movement, the brutal repression of it resulted in increasing challenges to the ruling regime. Other social movements, however, were virtually paralyzed (Kang, 1990b: 308–9). Student protests continued in the following years. In the 1980s, the three major movements increasingly showed joined efforts in demanding democratization. Former students were organizing labor protests, along with the Church. Another impetus behind the rise of the social movements was the formation of the Minjoong Democracy Movement in June 1984. In addition, the major opposition party, the NKDP, which under the leadership of Kim Young-sam and Kim Dae-jung fought for democratization and the end of the cruel Chun regime, helped to strengthen civil society in the 1985 National Assembly elections6 (Kang, Kang 1990b: 387–9). In 1987, the death of Park Jong-cheol, a student who was tortured to death by the police, initiated nationwide rallies against the ruling regime, which led to the fall of the Fifth Republic.

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THE POLITICS OF SOCIAL POLICY IN SOUTH KOREA

In the post-war period, Koreans saw the coming and going of more republics than their counterparts in the Western world and in the developed countries of East Asia. With the exception of the Second Republic, which lasted only several months, Koreans were governed by authoritarian regimes until 1987. Contrary to other countries examined in this study, Korea was governed by single leaders with the mere support of the military, not by political parties, their central committees, and their leading factions. Though names of parties changed frequently, their leaders guaranteed a relative continuity in the Korean political arena. The abrupt changes of political regimes and the highly politically active student and workers’ movements boosted the need of Korean political leaders to legitimize their rule. Social policy had become important for the authoritarian rulers, as they could not solely rely on repressive measures to maintain their grip on power (H. Kwon, 1999: 38). All in all, Korean governments were highly reluctant to implement new social policies and gave priority to economic development rather than social development. The social welfare policies implemented in the early period were reckoned to impose no financial burden to the government and not too great a burden to employers. Therefore, the implementation of the accident insurance scheme, early trial programs for health insurance, and the livelihood assistance scheme went smoothly as the government managed to avoid any major financial commitments to subsidize social welfare (cf. H. Kwon, 1999: 80, 84, 88; S. Kwon, 1993: 253). It is for this reason that the implementation of the Health Insurance Law of 1970 and the National Pension Law of 1973 were postponed (seven and fifteen years respectively) by the refusal of the president to sign and, thus, enact the new legislation of the National Assembly. Meanwhile, the economic progress of the 1970s and the 1980s had become the main pillar of the government’s legitimization in the highly authoritarian Fourth and Fifth Republics. However, the promise of military govern-

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Conservative Welfare State Systems

ments to free the people from absolute poverty still became the major factor that affected the development of social policy in Korea (Chang, 1985: 181–2). With the introduction of democracy, the driving force of party competition between ruling and opposition parties came to light. Election promises rather than voluntary introductions of new social policies determined the course of state welfare, which has come to be increasingly inclusive, that is, incorporating the middle classes in welfare state provisions. The National Pension Insurance scheme of 1988, the extension of the National Health Insurance scheme of 1988, and the National Employment Insurance scheme of 1995 serve as prime examples of the impact of electoral competition, as these three programs, which brought a major extension of the Korean welfare state, were all grounded in election promises of the major politicians of political parties, either in government or the opposition. THE FUTURE OF SOCIAL POLICY IN SOUTH KOREA

The Korean welfare system emerged during the first years of the Third Republic in the early 1960s. The military junta that overthrew the democratic Second Republic turned into a civilian government under the iron rule of President Park Chung-hee. These political circumstances induced a series of new social welfare legislation that was aimed to legitimize the rule of the new government. In 1972, Park established a highly authoritarian regime under the Yushin Constitution. Though the parliament passed two important pieces of legislation regarding the extension of the National Health Insurance System and the introduction of a National Pension System, President Park refused to ratify them. The health insurance system gradually extended over the years while the pension system was left to be implemented in the late 1980s. The presidents of the Third, Fourth, and Fifth Republics, Park Chung-hee and Chun Doohwan, gave priority to economic development and avoided any major governmental commitments in social security that might

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have hampered work incentives and economic growth. Since the 1960s, the political spectrum of major parties reached from extreme conservatism to moderate conservatism. No ruling party ever supported the ideas of mass redistribution and high-level income substitution by means of social security and social welfare programs. Whereas in the authoritarian period social policy had been the outcome of government’s need of legitimacy, welfare state extension in the democratic era has become the product of party competition in democratic elections and the people’s demand for social welfare. The future of Korean social policy will be determined by democratic elections that cause welfare state extensions. Political parties and their leaders will continue to resort to social policy in competing for votes. It is for this major reason that future Korean governments have to address the rising need of social welfare, especially social welfare of the elderly.

CHAPTER 4

TAIWAN THE DEVELOPMENT OF SOCIAL POLICY IN TAIWAN

The Taiwanese welfare state began to evolve in the 1950s. Between 1950 and 1958, the government tested the implementation of a national labor insurance scheme by introducing it on a voluntary basis under the auspices of the provincial government. The Labor Insurance scheme allowed industrial workers employed by the government and by private factories and mines with more than 20 workers to join the governmental labor insurance scheme. The coverage has been extended to include workers in private factories employing ten employees and over, as well as craft workers in 1951 (H.G. Chan, 1985: 326). In 1953 and 1956, the government also incorporated fishery workers and sugarcane farmers, respectively. The new Labor Insurance scheme covered a wide range of social risks, such as maternity, injury and illness, disability, old age, and death. The scheme provided exclusively cash benefit payments. With the introduction of the medical benefit for industrial workers in 1956, the scheme also provided in-kind benefits in the form of free hospitalization. In 1953 and 1958, the government launched

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Conservative Welfare State Systems

a separate Army, Navy and Air Force Servicemen Insurance Program and the Government Employees’ Insurance Law, respectively. On July 21, 1958, the Legislative Yuan passed the Labor Insurance Act and transformed the Labor Insurance into a statutory insurance scheme and turned it into a national scheme as, from then on, the central government, took over the administration of the scheme. Thus, the Labor Insurance scheme became a national scheme (BLI, 1997; CLA, 1997; H.G. Chan, 1985: 326). In 1965, manual workers, drivers, and mechanics employed by governmental and public schools were approved to join the Labor Insurance scheme. In 1970, the amendment of the Labor Insurance Act broadened the compulsory coverage of the scheme so that it included manual workers and staff members working in commercial firms and shops, ranches, and pastures that employed ten or more workers. In addition, journalists, cultural workers, private school teachers and staff members, as well as employees of co-operatives and nonprofit organizations, civic bodies, and department stores could join the scheme on a voluntary basis. In 1979, the amendments of the Labor Insurance Act extended the compulsory coverage of the scheme a great deal: (1) its coverage was extended to all workers in private firms with more than five employees (BLI, 1997; H.G. Chan, 1985: 327), and (2) those who were allowed to join the scheme on a voluntary basis before, that is, staff employed by governmental agencies and public schools under contract; employees in journalistic, cultural, nonprofit organizations and co-operative enterprise; as well as skilled workers receiving practical training, now were subject to compulsory participation in the scheme. In addition, workers formerly outside the scope of the Labor Insurance Act could join the scheme on an optional basis. In 1988, labor insurance became compulsory for full-time employed fishermen. Both the 1979 and the 1988 amendments also liberalized the eligibility requirements and provided more generous benefits to the members of the Labor Insurance scheme (BLI, 1997).

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The Kuomintang (KMT) government continued to set up separate social insurance programs for its special clientele. In 1964 and 1980, the government introduced the Insurance Plan for Retired Government Employees and the Insurance Provisions for Teachers and Employees of Private Schools respectively. In the early 1980s, the KMT began to enforce health insurance programs, such as the Health Insurance Plan for Family Members of Government Employees in 1982; the Health Insurance for Retired Government Employees in 1985, the Health Insurance for Spouses of Retired Government Employees in 1985; and the Health Insurance for Spouses of Retired Private School Teachers, Employees, and Their Spouses in 1985 (Aspalter, forthcoming a). On the eve of the lifting of martial law, the KMT decided to incorporate farmers into the social insurance system. This was the first step toward universal integration of the population into Taiwan’s welfare state programs that by then were exclusively designed for core groups that were of vital interest to the KMT regime, that is, military personnel, government officials, and teachers. The Temporary Provisions for Farmers’ Insurance in 1985 was an experimental program that covered farmers who were heads of farming households (Ku, 1995: 52). The Farmers’ Health Insurance Law was implemented in 1989. Owing to the increased importance of local chiefs in ensuring the ruling party’s support in competitive democratic elections, the government also introduced a health insurance scheme for local representatives and heads of villages, districts, and neighborhoods the same year. Furthermore, the government introduced one for family members of teachers and employees of private schools. In 1990 and 1991, the government introduced for the first time health insurance schemes that were designed for groups other than their specific KMT clientele, such as low income families and the handicapped. In 1987, Premier Minister Yu Kuo-hua declared the government’s intention to introduce a national health insurance scheme by the year 2000. Under pressure, the target was soon

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Conservative Welfare State Systems

altered to 1995. On July 19, 1994, the parliament passed the Health Insurance Law so that the National Health Insurance Scheme could start on March 1, 1995 (Ku, 1995: 52; Hwang and Hill, 1997: 89). The national health insurance scheme is the first Taiwanese insurance scheme that incorporates the entire population. Nonetheless, under the National Health Insurance Scheme there exist six main brackets with sub-brackets having different contribution rates for employees, employers, and the government. The first sub-bracket of the first main bracket includes public servants, persons employed by the government, and private school teachers. The employee comes up for 40 percent of contributions and the employer (i.e. the state) for the rest of 60 percent. In sub-bracket two, the contribution shares for private school teachers are 40 percent for the employee, 30 for the employer, and 30 for the state. In sub-bracket four, self-employed persons have to pay 100 percent of the contributions by themselves. Industrial workers that are classified in main bracket two have to pay 60 percent by themselves. Their employers pay nothing and the state 40 percent. Farmers and fishermen of main bracket four have to pay 30 percent; the state sponsors 70 percent. For low-income people and military servicemen of main bracket five and six, respectively, the state pays 100 percent. The highest premium rate has to be paid at an income of 48,001 New Taiwan dollars or more (approx. US $1,560). Additional premium fees are collected for each dependent of the insured (Chen, 1995). Thus, the redistributive effects of the new National Health Insurance are rather limited. The Taiwanese health insurance system, therefore, is clearly a product of the conservative social policy stand of the KMT government, which implemented the scheme. Today, 96.13 percent of the population is incorporated in the scheme (NHIB, 2000). On December 28, 1998, the government enacted the Rules for the Implementation of Unemployment Benefits under the Labor Insurance Program. The new unemployment benefit scheme started to operate on January 1, 1999 (BLI, 2000). Due

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41

to election promises in the 1997 county commissioner and city mayor elections, the government was to introduce a national pension scheme. The implementation of the National Pension Plan, however, was delayed by the lack of funds and the Earthquake on September 21, 1999. The then-ruling KMT government planned to implement the pension system by the year 2001. But, after the earthquake, the plan was put on hold for budgetary reasons. The current premier minister, Tang Fei, noted that the pension system will be introduced as soon as possible before 2004; the changes for the pension system being implemented in 2001 are, however, very meager, since raising taxes is a taboo. Meanwhile, President Chen Shui-bian introduced an old age allowance system for the elderly of NT 3,000 a month since he promised it in the election campaign for the March 2000 presidential elections (Low, 2000; Sung, 2000; Lin, 2000). Besides the social insurance system, the Taiwanese welfare state has also developed a strong social assistance system. Social assistance has been available as early as the 1960s. However, benefits were provided on a piecemeal basis. As a reaction to the War on Poverty policy of the 1960s in the United States, the Taiwanese government implemented two major social assistance programs, the Shao-Kang and the An-Kang schemes, on provincial and city levels. In 1980, the government enacted the Social Assistance Law (Lin, 1991: 175–6; H.G. Chan, 1985, 327–8). Since then, means-tested social assistance allowances of the Social Assistance Law have been classified into three different groups according to the degree of need, that is, life care allowances, life assistance allowances, and temporary assistance allowances (cf. MOI, 1997). The year 1980 marked a new beginning in the field of social welfare provision as the government launched a series of new welfare programs for disadvantaged groups, such as the elderly, the handicapped and the poor (Chan and Yang, forthcoming).

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THE POLITICAL INSTITUTIONS, DEMOCRACY AND SOCIAL MOVEMENTS IN TAIWAN

The Cairo Declaration in 1943 stipulated that Taiwan—a Japanese colony since 1895—fall to the Republic of China at the end of the war. Since the Communists defeated the Nationalists, the Kuomintang (KMT), in the Chinese civil war of the late 1940s, Taiwan represented the last place of refuge for the Nationalist forces. In days of raging civil war with the Communists, the Nationalist government promulgated a new constitution on New Year’s Day in 1947. The new constitution was firmly based on the teachings of Dr. Sun Yat-sen who was the founding father of the Republic of China and the Kuomintang in 1911. In May 1948, the national government promulgated provisional amendments of the constitution, called the Temporary Provisions Effective During the Period of National Crisis (TP, 1948). Empowered by these Temporary Provisions, President Chiang Kai-shek proclaimed martial law without being subject to approval of the lower chamber of the parliament, the Legislative Yuan. Martial law was lifted four decades later, on July 15, 1987. Under the 1947 constitution, the governmental system of the Republic of China could be either a cabinet system or a presidential system (Zhao, 1996). When the president simultaneously also holds the leading posts of the party and the military, then the governmental system clearly is a presidential one, and the party of the president has a majority in both chambers of the parliament. The Taiwanese government, therefore, represented a presidential system of government for the most part of the post-war period. The president appointed the prime minister and the ministers of the executive branch of government, the Executive Yuan (CROC, Art. 55, 56). Since the year 2000, the Legislative Yuan has been dominated for the first time by the opposition party. Thus, the cabinet has become more independent from the president, as it is backed by a coalition of parties and not just the party of the president. Until the late 1960s,

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the party was the prime policy maker in Taiwan politics. Only after 1969, the KMT took on the role of a policy coordinator and passed the role of policy maker to the cabinet (Jiang and Wu, 1992: 84). The executive power with regard to social policy had been split among various ministries, which aggravated difficulties in the making of social policy. The Health Department operates the national health insurance; the Ministry of Interior administrates social aid and welfare programs; the Council of Labor Affairs administrates labor and unemployment insurance programs and labor welfare; and the Council of Agriculture, the Ministry of Defense, and the Ministry of Examination are in control of the farmers’ health insurance; insurance for military servicemen, and insurance for government employees, respectively. Finally, the Council of Economic Planning and Development under the Ministry of Economic Affairs is in charge of planning the national pension system (Aspalter, forthcoming a). By and large, the bills are first drafted by these governmental bodies and then presented to the Legislative Yuan. The KMT dominated Taiwanese politics from 1945 to 2000. Under martial law, the KMT prohibited the formation of new political parties. Opposition leaders were heavily punished with long-term prison sentences and the death penalty (cf. Lu, 1997). Political murder was an instrument that was often applied to suppress the opposition movement; oppositionists were killed, and their family members were also systematically killed and maimed (Aspalter, forthcoming a). The entire elite of Taiwan’s first opposition party, the Democratic Progressive Party (DPP), was arrested following the Kaohsiung incident, a demonstration that turned violent.7 The second generation of opposition leaders, that is, the family members and the lawyers of those in prison, took on the battle for justice and democracy. In the light of growing international isolation, the ruling KMT finally gave in to these pressures emerging from the opposition movement (Tien, 1992). Chiang Kai-shek’s son, President Chiang Ching-kuo, reformed the party and incorporated for the first time KMT members who had been born in Taiwan

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(Tien, 1996: 10; Dickson, 1996). The old ruling KMT elite, the mainlanders who were born in China and fled to Taiwan with Chiang Kai-shek in 1949, heavily opposed the diffusion of power, but this was in vain (Huang, 1996). The designated predecessor of Chiang Ching-kuo was Lee Teng-hui, a Taiwanese, who carried on the democratization of the country, released the last imprisoned opposition leaders, and turned the KMT into a Taiwanese-dominated party. The New Party (NP) was formed by mainlanders within the KMT in 1993 and became the third party to play a significant role in Taiwan’s politics (Lin and Zhang, 1998). Based on the constitutional amendment of 1994, Lee Teng-hui became the first directly elected president of the Republic of China (ROC), that is, Taiwan’s official name, in March 1996, with 54 percent of votes. Since the late 1980s, electoral competition had been intensified, as the DPP began to win first big victories in local elections. In 1989, the DPP candidate You Ching became county commissioner in Taipei county, Taiwan’s largest constituency. In 1994, Chen Shui-bian was the first opposition leader who became mayor in Taipei. In the 1997 county commissioner and city mayor elections, the DPP won, for the first time, more votes in islandwide8 elections than the ruling KMT. The KMT only won in 8 counties out of 23 counties and cities. With this election, the KMT lost most of its power bases, and the victory of the DPP in national elections was merely a matter of time. In 1998, the DPP lost the Taipei mayoral election but won that of Kaohsiung, Taiwan’s second largest city, instead. In March 2000, former KMT provincial governor, James Soong, established the People First Party (PFP) having come in second behind Taiwan’s new President Chen Shui-bian from the DPP in the year 2000 presidential elections. Other smaller parties established since the late 1980s do not play a salient role in Taiwan politics. The new Cabinet under Chen Shui-bian is headed by a KMT Prime Minister and is composed of politicians coming from all major parts of the political spectrum.

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Besides the political opposition movement of the Democratic Progressive Party, there were also a series of important social movements that challenged the authority of the state and pushed for the improvement of social welfare. Between 1980 and 1986, the consumer’s movement, various environmental protection movements, the women’s movement, and the student movement spearheaded the new wave of social movements (Hsiao, 1992: 153–4). In year 1987, there were three new social movements that posed a significant challenge to the ruling KMT, namely, the labor movement, the farmers’ movement, and the veterans’ welfare protest movement (Hsiao, 1991: 138). Subsequently, a series of social welfare movements demanded the expansion of existing social welfare programs as well as the introduction of new social legislation. The most important social welfare movements were the disabled movement, the women’s welfare movement, the elderly welfare movement, the children’s welfare movement, and the youth welfare movement. The methods used to push the government to support the cause of the social movements were very comprehensive. These included public persuasion by lobbying and meeting those in government, the legal profession, and those popular idols responsible for forming popular opinion; grass-roots movements, including schools, churches, and local communities, and speeches at Rotary Society meetings; full use of mass media by capitalizing on topical themes, including co-operative efforts with makers of variety shows and soap operas in pursuit of propaganda objectives; street protest; legislative lobbying; creation of focus issues by using press conferences, public hearings, and other activities to attract media attention; and integration of civic organizations into the social movements (Hsiao, forthcoming). These social movements emerged independently from political movements (Chang, 1997) and added to the government’s pressing need of legitimization.

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THE POLITICS OF SOCIAL POLICY IN TAIWAN

The Taiwanese welfare state emerged in the 1950s. After the Nationalist Chinese government moved to Taiwan, it hurried to implement policies aimed at ameliorating the social and economic well-being of the people. The Kuomintang had drawn a great deal of lessons from the defeat in the Chinese civil war, since it successfully implemented a comprehensive, model-like land reform between 1950 and 1953 in Taiwan and started right away with the implementation of the major social security schemes. The government, however, did not want to endanger economic development by any financial commitment of the state in the field of social security and social welfare. Welfare state development in Taiwan (besides Singapore and China) could rely on both the constitutional provisions for social insurance (CROC, Art. 155) and the government’s full commitment to these provisions. Since the constitution was designed after the Three Principles of People of Dr. Sun Yat-sen (the founder of the KMT and the Republic of China), constitutional provisions regarding the development of a welfare state were taken very seriously (Aspalter, forthcoming a). Until the lifting of Martial Law in 1987, the welfare state— with the exception of the labor insurance scheme and social assistance to the very poor—heavily focused on occupational groups that were of special importance to the ruling KMT regime. These were soldiers, government employees, and public and private school teachers, as well as their spouses and family members. Only with the coming of democracy in the year 1987 and thereafter did the KMT extended existing welfare state arrangements to farmers, the poor, the handicapped, and the rest of the population. Today, Taiwan is one of the highest developed democracies in East Asia and has a unique record of social welfare movements that pushed for social legislation and social welfare programs for their particular needs (cf. Hsiao, forthcoming). Party competition and electoral competition between candidates in national and local elections has been a second im-

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portant factor behind welfare state development since the mid-1980s (cf. Aspalter, forthcoming b). THE FUTURE OF SOCIAL POLICY IN TAIWAN

In historical perspective, the Taiwanese welfare state has been the fastest growing of the group of countries covered in this study. The coverage of the labor insurance system has been raised significantly in the 1980s and early 1990s (from 4 to over 8 million insured persons). In the late 1980s and early 1990s, the farmers’ health insurance became the second largest scheme, with 1.7 million insured. The new health insurance scheme for family members of government employees became the third largest scheme, reaching a membership of 1 million by the early 1990s (Chan and Yang, forthcoming). The 1995 national health insurance system extended the coverage of existing health insurance schemes to 96 percent of the population. The next years will see major changes in Taiwanese social policy: (1) the government has promised to set up a national pension system and a means-tested, monthly old age allowance system for those not eligible for pensions under the new system (which began to operate in July 2000); and (2) the national health insurance system is chronically underfunded and needs to be reformed by means of, for example, increased contribution rates or increased government subsidies. When taking into account the policy stand of political parties, we may note that the major political parties do not differ in their policy proposals. Both major political parties in Taiwan, the Kuomintang and the DPP, in essence are conservative parties. Nonetheless, the DPP can be characterized as being conservative in economic policy making; however, in social policy making, there are also strong liberal, even social democratic, influences. The party finances of the DPP heavily rely on the support of small and medium-sized enterprises, the backbone of the Taiwanese economic miracle. Thus, higher taxes in order to finance social policies are taboo. Therefore, we may expect a

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hefty increase in contributionary social security systems and a continuous emphasis on means-tested social assistance schemes in the years to come.

CHAPTER 5

SINGAPORE THE DEVELOPMENT OF SOCIAL POLICY IN SINGAPORE

In Singapore, there are no civil rights that guarantee social welfare. Instead, Singaporeans have the right to benefit from a mandatory membership in the Central Provident Fund (CPF), a fully funded social security scheme that is based on the payas-you-earn principle. The Central Provident Fund, in essence, represents four different personal savings accounts that are designed to provide financial resources in times of need—especially after retirement, but also in times of home purchase, sickness, accident, death, and enrollment in tertiary educational institutions. The fully funded principle that is one of the key aspects of the Central Provident Fund implies that welfare state expenditures in Singapore are marginal in comparison to traditional, Western welfare states. The government acts merely as the regulator of public welfare, not as the provider. The social security schemes that are incorporated in the Central Provident Fund rely almost exclusively on employees’ and employers’ contributions.

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The Central Provident Fund embraces various different schemes that are connected to four personal savings accounts of CPF members. In the beginning, there was just one account for the contributions of members and their employers. In 1977, the government decided to reinstall old age security and to raise the balances of CPF members’ accounts after massive withdrawals had heavily reduced average CPF savings due to the very successful CPF housing schemes of the late 1960s. Hence, the government created two separated accounts, the Ordinary Account and the Special Account (Nga, 1995: 268). The Special Account’s function was set up in order to provide better old age security by separating a fixed share from the Ordinary Account and to cover costs in case of special contingencies. In April 1984, the government responded to the increasing problem of health care costs of the elderly and installed a third account, the Medisave Account. For three months, the Special Accounts were deactivated and the savings were transferred to the Medisave Account. In July 1984, the Central Provident Fund Board re-established the Special Account (Nga, 1995: 272). Contributions in excess of the maximum balance of the Medisave Account are shifted into the Ordinary Account. In 1987, the fourth account of the Central Provident Fund, the Retirement Account, came into existence with the establishment of the Minimum Sum Scheme, which tried to secure the accumulation of sufficient funds at the age of retirement. The Retirement Account is operated under the Minimum Sum Scheme, which sets aside a certain amount from the members’ accounts at the age of 55 in order to ensure the members’ capability of meeting their most basic welfare needs. Of the employees’ and employers’ contributions, that is, 20 percent of members’ income each, three-quarters are credited into the Ordinary Account. Out of the remaining ten percentage points, six are assigned to the Medisave Account and four to the Special Account (CPFB, 1996: 13). The development of the Central Provident Fund can be divided into four stages. The first stage, from 1955 to 1964, is

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characterized by the concentration of social security on provision of social welfare during old age and in case of disability. The Central Provident Fund was indeed successful in reducing the need for public assistance arising from old age and incapacity (Chow, 1981). The second stage in the development of the CPF was initiated by the government’s first attempt to promote private homeownership. The government set up two homeownership schemes in 1964, the AHS and the ARPS by the Housing and Development Board (HDB), which was established in 1960. Due to lack of legal power and financial assets, these schemes failed to realize their objective to increase the provision of public housing. The great breakthrough in public housing came in May 1968, when the new public housing scheme was installed. The new scheme enabled CPF members before the age of 55 to use their CPF savings to pay off monthly installments for both HDB flats and privately built flats mooted in the presidential address. Four months later, in September 1968, another scheme was introduced that also allowed CPF member to use their entire savings for purchasing low-cost HDB flats. Flats could be leased for a maximum period of 99 years (Nga, 1995: 268, 282). This enabled a large part of the population to become de facto homeowners, but not real homeowners. This arrangement not only enabled large-scale social amelioration, but also increased the loyalty of the Singaporean people to their nation and their government. In the succeeding decades, the scope of these housing programs has been continuously extended. In June 1981, the Approved Residential Properties Scheme (ARPS) also allowed the purchase of private houses (Nga, 1995). The third stage in the development of the CPF was initiated by the establishment of the Medisave scheme in 1984. The new Medisave scheme covered hospital expenses, certain outpatient charges, and hospitalization fees (Low and Aw, 1997). The integration of a health care scheme into the CPF was the result of the government’s concern about rising health care costs and old age adequacy. From 1990 to 1996, a series of health care

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programs have been established. In 1990 and 1994, two health insurance schemes, Medishield and Medishield Plus, were introduced to cover additional health risks, especially major illness. In 1996, the government implemented two top-up schemes of members’ Medisave Accounts, the Medisave and Pre-Medisave Top-up Schemes. These schemes, in fact, represent small government subsidies for CPF members. The year 1987 represented the beginning of the last stage in the evolution of the Central Provident Fund. After the age of 55, each member of the Central Provident Fund may withdraw his or her CPF savings in the Ordinary Account and the Special Account (which was primarily established for old age security). The introduction of the Minimum Sum scheme in 1987 aimed at safeguarding income maintenance of the elderly by binding a certain amount of their savings at the age of 55 (CPFB, 1996: 7–17). This CPF scheme had become necessary, because of the large withdrawals for purchasing homes and the rising average life expectancy. In this most recent stage in the development of the CPF, the question of welfare provision of the elderly had again moved to the center of the government’s attention. After the solution of the acute housing problems of the 1960s and the health care problem in the 1980s and early 1990s, the Peoples Action Party government has now yet to solve the biggest problem of all: the problem of old-age welfare provision for a fast-aging society. The Singaporean welfare system relies on the comprehensive social security provisions of the CPF. Social assistance schemes had, for the most part, been avoided by the Singaporean government. The long-term policy of the Singaporean republic was the encouragement of “workfare” and the avoidance of comprehensive non-contributionary welfare programs. The rejection of welfare programs that strengthen the dependency of the individual on the state and discourage personal work initiatives, hence, also determined the fate of the Singaporean welfare state. Lee Kuan Yew, Singapore’s long-term president, frequently expressed his aversion to tax-financed social welfare

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services. He noted that “hard work and high performance must be encouraged and rewarded. No one should get away with enjoying services, subsidized through the hard work of others, without making his own contribution to the best of his ability and capacity” (Chow, 1981: 359). Social welfare provision in Singapore dates back to 1946 when the colonial government established the Social Welfare Department (SMCI, 1985). Those who are destitute, unemployable,9 and without any means of support are eligible for an allowance under the Public Assistance scheme. Able-bodied and employable persons are assisted with suitable jobs by the Ministry of Labor (SMC, 1982, 1980). In 1966, social assistance had been granted to 22,000 destitute people who were either too old or too sick to work. Then years later, although the population had increased by 400,000 to 2.2 million, the number of social assistance recipients had fallen to 7,300 (Josey, 1979: 118). In Singapore, social assistance benefits are dependent on the number of family members. The Singaporean social assistance scheme, contrary to social assistance schemes of most other welfare states, is characterized by social assistance maxima instead of guaranteed minima. These maximums range from S$ 300 for a single adult household to S$ 570 for a household with four adults (Low, 1998: 163). Another characteristic of the Singaporean social assistance system is the emphasis on self-help. The self-employment assistance scheme, for example, encourages part-time work instead of keeping people away from the labor market by punishing work initiatives of unemployed with the reduction or cancellation of welfare benefits. The Singaporean government also grants small interest-free loans up to approx. USD 500 in order to set up a small business. The government also provides free medical treatment at government hospitals and clinics, and children are eligible for remission of school fees and free textbooks. Social assistance recipients may also apply for support in cash, or in kind, from various charitable funds established by the Ministry of Social Affairs, as well as voluntary welfare orga-

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nizations (Josey, 1979: 118; SMC, 1980; SMCI, 1985). Those who are not eligible for benefits of the Public Assistance scheme may apply for benefits of the Rent and Utility Assistance scheme, which is also subject to an income criterion. However, at the end of 1996, only 389 households were assisted under this scheme. Recipients of both, the Public Assistance and the Rent and Utility Assistance schemes, also often rely on the support provided by voluntary welfare organizations (Low, 1998: 153, 163). THE POLITICAL INSTITUTIONS, DEMOCRACY AND SOCIAL MOVEMENTS IN SINGAPORE

The history of Singapore goes back to the arrival of the British East India Company in 1819. In 1826, Singapore became part of the Straits Settlements Colony, which encompassed Pinang and Malacca (ENC, 2000). In 1867, the Straits Settlements became a crown colony. After World War II, from September 1945 to March 1946, Singapore came under British Military Administration. In April 1946, Singapore became a separate British Crown Colony. In July 1947, the colonial government set up executive and legislative councils. After an attempt by Communist forces to take over Singapore, a state of emergency was declared in June 1948. The Rendel Constitution of 1955 granted Singapore internal autonomy and transferred a large degree of power from the colonial government to the Legislative Assembly. The 1955 Legislative Assembly elections returned a coalition government composed of the Singapore Labor Front, (winning 10 out of a total of 25 popularly elected representatives), the United Malays National Organization, and the Malayan Chinese Association. The Peoples’ Action Party (PAP) that had been established only on November 21, 1954 won three seats (Landow, 2000; Chan, 1976: 34). In the May 1959 general elections, the Peoples’ Action Party won 53.4 percent of votes and 43 of 51 seats in Singapore’s first fully elected Legislative Assembly. Singapore attained the status of a self-governing state within the British Commonwealth on

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June 3, 1959, with the promulgation of a new constitution. Two days later, Lee Kuan Yew of the Peoples’ Action Party was sworn in as Singapore’s first prime minister (Landow, 2000; MYM, 2000; Chan, 1976: 34). On September 16, 1963, the Federation of Malaysia was formed with Singapore as a constituent state. In 1964, the July and the September Riots between different racial communities in Singapore cost the lives of 36 people and injured 560 (Neher and Marlay, 1995: 143; Lau, 1998: 175, 197). On August 9, 1965, Singapore was separated from the rest of Malaysia and became a sovereign, democratic, and independent nation. On December 22, Singapore became a republic with Yusof bin Ishak as its first president. However, the post of the president as head of the state was largely a ceremonial office. Until 1991, the president was elected by the ruling party, with the prime minister having the final word in determining the president (SGV, 2000; Surin 1996: 106). In August 1993, Ong Teng Cheong became the first directly elected president of Singapore; the two opposition candidates were not nominated by the presidential election committee (Mutalib, 1997: 179). In 1999, S.R. Nathan was declared the sixth president of the Republic of Singapore without election when he was certified the only candidate eligible to run in the elections, since the presidential election committee decides whether a candidate fulfils the wide-ranging requirements10 for the nomination of a presidential candidate (CSIN, 2000: Art. 18, 19). Article 38 of the constitution (CSIN, 2000) provides that the legislature should consist of the president and the parliament. However, it is the cabinet, and not the legislature, that is—either acting on its own or on the advice of senior civil servants—the main source of legislation and that defines the government’s priorities and the areas of discussion (H.C. Chan, 1985: 75). In 1959, a separate Ministry of Health was established. Two years later, the government set up the Ministry of Social Affairs to take over the former Social Welfare Department from the Ministry of Labor and Law (Quah, 1984: 289).

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In 1912, the first legal political party in Singapore was the Kuomintang; however, it was banned by British rule only two years later. The first political party that was formed after World War II was the Malayan Democratic Union (MDU). It was dissolved together with the Malayan Communist Party (MCP) in 1948. Other parties that emerged in the late 1940s were the Malayan Nationalist Party (MNP), the Singapore Progressive Party (SPP), and the Singapore Labor Party (SLP). In 1952, Lim Yew Hock was expelled from the SLP, and the SLP split asunder. In April 1954, this split resulted in the formation of the Singapore Socialist Party (SSP). The two socialist forces reunited again in order to run as a unitary front against the SPP. The new party was first named People’s United Front, then Singapore Labor Front (SLF). After the 1955 elections, the new SLF government began to oust Communists. This led to the reduction of dominance by Communists in Singapore’s political arena and also within the recently formed People’s Action Party (Yeo, 1973; Nair, 1995). Since 1959, the PAP controlled Singapore and ensured the maintenance of power by virtually all means. The only major setback was the expulsion of thirteen members of the Legislative Assembly from the PAP on July 21, 1961. This group later formed the socialist Barisan Sosialis (BS). On July 3, 1962, Ho Puay Choo resigned from the PAP and later joined the BS. With the leaving of these PAP legislators, the government party lost its formerly comfortable majority in the Legislative Assembly.11 The situation was extremely precarious for the ruling party to avoid the loss of power by a motion of confidence and to secure the passage of important legislation. The 1963 election was crucial for the maintenance of the PAP in government and the future installation of a one-party rule. The political right represented by the Singapore Alliance (SA)12 was utterly defeated. The People’s Action Party of Lee Kuan Yew won 72.5 percent of parliamentary seats with 45.6 percent of total votes. The Barisan Sosialis secured only 25.5 percent of seats with 32.9 percent of votes. The defeat of the Barisan Sosialis was not long in coming. From 1968 to

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1981, the PAP managed to establish a one-party parliament, holding 100 percent of parliamentary seats. The Anson byelection broke the PAP’s monopoly of parliament on October 31, 1981 (Lau, 1998; Quah, 1991: 386). In the first decades of PAP rule, the government’s first priority was the building of a Singaporean nation. The political reforms and economic, social policies of the PAP pursued this goal. The maintenance of political stability, economic prosperity, and social well-being was crucial for the political survival of the PAP and the Singaporean nation as a whole. Contrary to the predictions in many other Asian countries, Singapore did not suffer from legitimacy crises but enjoyed a high level of legitimacy (Yen, 1990: 273; H.C. Chan, 1991: 159). From 1959 to 1980, the People’s Action Party won additional shares of votes13 in general elections, rising from 53.4 percent to 75.5 percent, respectively (Quah, 1991: 386). In the 1984 Legislative Assembly elections, the PAP lost 13 percent of the popular vote. Though such election results would still be interpreted as landslide victories in most of Asia and the Western world, the PAP responded to these minor losses in electoral support as if it had been badly beaten. This is partly a result of the communitarian ideology of the ruling party (Chua, 1994: 194). Lee Kuan Yew did not allow a significant political opposition. The practice of bringing a libel suit against political rivals was a commonplace. In 1986, the Parliamentary Privileges Committee amended the Parliamentary Act to increase the possible fine for a member of the Legislative Assembly who is “found guilty of dishonorable conduct, abuse of privilege or contempt.” This amendment also gave the parliament the right to imprison a member for the remainder of a parliamentary session, as well as the right to remove a member’s immunity from civil action for a specific period. In addition, electoral reforms in 1988 made it even more difficult for opposition parties to secure parliamentary seats (Tremewan, 1996: 165–70; Perry et al., 1997: 73–5). From 1968, the Singaporean political system lacked salient electoral competition and the politics of Singapore were deter-

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mined solely by the long-term ruling party, PAP, under the leadership of Lee Kuan Yew. The PAP increasingly sought to expand the political participation of the people in order to avoid social discontent and protests of any kind. In 1986, government parliamentary committees were introduced to improve the quality of parliamentary debate by incorporating younger members of parliament in policymaking processes that had almost exclusively lain in the hands of the cabinet before. In 1988, the parliament adopted six advisory councils each headed by a cabinet minister in the areas of culture and arts, sports and recreation, family and community life, youth, the handicapped, and the aged. These advisory councils contacted voluntary organizations and individuals and listened to their proposals for policy reform. In the same year, the government proposed the establishment of town councils for better integrating citizens and community leaders in local decision making (Quah, 1991: 392–4). Social movements did not influence politics significantly after Singapore’s independence from Malaysia because of the high legitimacy of the ruling elite; the fact that most residents lived in flats built by and leased from the government; and because of the past achievements of the PAP government regarding political stability, economic prosperity, and social well-being. The period of intensive labor unrest ended in 1963, and decreased further after 1968 (Deyo, 1997: 355). Lee Kuan Yew grew out of the labor movement in the early 1950s and has successfully accommodated the demands of the labor movement since the late 1960s. Finally, we need to note that in order to understand the absence of social movements one has to look at the great prosperity that secured a happy living for Singaporean citizens in comparison to other countries in Southeast Asia. THE POLITICS OF SOCIAL POLICY IN SINGAPORE

The special political, economic, and social circumstances of Singapore after its independence need to be taken into consid-

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eration when assessing the success and the political will behind the construction of the Singaporean welfare state. Politically speaking, the Central Provident Fund had many advantages not only for the country, but also for the ruling political elite. The political situation of the newly independent city state in the year 1959 was not very promising. There were huge threatening neighbors north and south of Singapore. The size of Singapore; the distinct ethnic composition of its population, that is, the clear majority of ethnic Chinese; and the predominance of nonIslamic religions in Singapore contributed to a strengthened awareness of the uncertain geopolitical situation of the Singaporean nation. Disunity, social discontent, and protests would have given its neighbors a sufficient excuse for political intervention and even may have been responsible for a possible annexation of Singapore to one of its two giant neighbors, Malaysia and Indonesia. In the beginning, the ruling People’s Action Party under the leadership of Lee Kuan Yew had to compete for political dominance with local Communist forces. Frequent labor unrest and the ascent of a Communist party clearly posed major problems to PAP as the leading party. Moreover, ethnic clashes inside Singapore in the 1950s and 1960s (Hill and Lian, 1995: 116) fostered an awareness that emphasized the need for political hegemony in difficult times. Regarding economic survival, Singapore was very vulnerable to external isolation and conflicts owing to the lack of a sizeable domestic market and primary resources, such as raw materials and energy supplies. The Central Provident Fund was crucial in solving, or at least contributing the solution to, all major problems of the young Singaporean nation (cf. Low and Aw, 1997). The nation-building process of the Singaporean state was almost entirely connected to the establishment of a Singaporean welfare state model based on an extended and comprehensive form of a provident fund that had been left by the British colonial government. The success of the CPF was crucial for ensuring Singapore’s political hegemony ever since the day of its

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independence. Elections had been won, the loyalty of the people to its government increased (owing to extensive public housing programs funded by the capital of the CPF), large parts of the working class had been transformed into a new middle class, racial mixing of the housing programs evaded the formation of ethnic ghettos, and Singapore remained one of the most attractive destinations for direct foreign investments. THE FUTURE OF SOCIAL POLICY IN SINGAPORE

With the introduction of the Medisave scheme in 1984 and the Minimum Sum scheme in 1987, the government responded to the changing demography of Singapore’s population. Nowadays, the share of the elderly has risen to such an extent that the government has completely refocused its policies regarding the CPF. The government has come to the conclusion that the “nest egg” for the elderly is in danger because of increased longevity, the shifting age structure of the population, and the rising costs of medical treatments for the elderly. The median age of a Singaporean rose from 19.7 years in 1970 to 32.2 years in 1996. The group of less than 15 years old decreased from 39.1 to 22.8 percent in the same period. At the other end of the spectrum, the group of the elderly 60 years and over grew from 4.9 percent in 1970 to 7.5 percent in 1996, and again to 10.23 percent in 1998 (Cheung, 1999: 202; cf. SDS, 1999). As Chee writes (1994: 77), the Central Provident Fund, is “woefully inadequate.” He stresses that, at the year 2000, 19 percent of men and 34 percent of women reaching the age of 60 will have no CPF to rely on. “Even if withdrawals for housing purchases are included, about one-quarter of all contributors have balances of only S$10,000 while three-quarters of all contributors have balances of S$60,000 and below” (Chee, 1994: 77). In 1993, a survey by a marketing and research consultant revealed that three in ten Singaporeans do not save anything beyond what goes into their CPF account, and for those who

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earn less than S$1,000 a month, almost half do not save because they are barely able to cope with daily living expenses. Therefore, it is even more important to safeguard sufficient CPF saving deposits to ensure individual old-age income maintenance (Mooi, 1994: 2). As a result of the increasing demand for social welfare, the government has continuously raised the required minimum sum that is deposited in an individual’s retirement account, extended the reach of health care schemes, and introduced a series of top-up schemes of the Retirement and the Medisave accounts. In the years to come, the Singaporean government will certainly have to display a greater emphasis on the social security system with regard to old age security by implementing new regulations that will cause a substantial increase of CPF savings that go into the Retirement Account.

CHAPTER 6

HONG KONG THE DEVELOPMENT OF SOCIAL POLICY IN HONG KONG

The Hong Kong welfare system is based on noncontributionary social security systems and on social welfare services run by nongovernmental organizations (NGOs) that are financed by the government. The level of governmental expenditures is comparatively low in Hong Kong when compared to its Western counterparts, since only the very needy profit from the welfare state. With respect to social security and welfare services, the middle class is, for the most part, excluded from the welfare state in Hong Kong. The Hong Kong government set up a noncontributory social security system that is aimed at the provision of basic and special needs for the elderly, the sick, the disabled, single parent families, the unemployed, and people with low incomes. The two largest schemes providing social security are the Comprehensive Social Security Assistance Scheme (CSSAS) and the Social Security Allowance Scheme (SSAS). Today, the Social Security Assistance Scheme offers aid to all these social groups. The CSSAS is a means-tested assistance

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scheme. In 1971, the Public Assistance Scheme (replaced by the CSSAS in 1993) covered food costs only, but it then raised its benefit levels and enlarged its range of benefits. The improvements included the revision of basic rates to cover essential household expenditures; the introduction of supplements for the elderly; assistance for the disabled, children, and persons with long-term needs; provision for disregarded earnings; and the introduction of a wide range of special grants (HKGOV, 1996b: 2). Since 1976, assistance to the elderly has added up to an average of 60 percent of all cases served. Low earnings accounted for 16 percent of all cases assisted in 1976. Before the 1980s, the percentage of low-income citizens that were supported dropped under the 5 percent mark due to the booming economy of the 1970s. The share of cases of assistance to the unemployed, single parent families, and the mentally ill increased during these two decades. The second large social security scheme, the Social Security Allowance Scheme (SSAS), known as Special Needs Allowance before 1993, grants monthly allowances to the elderly and the disabled exclusively. The share of old-age allowance cases of the SSAS has risen over the past two decades from 79 percent in 1976 to 86.3 percent in 1996. Everybody who meets the criteria of being older than 65 years and having an income that does not exceed a certain amount is entitled to the benefit. For example, those aged between 65 and 69 with an income of 530 HK dollars for single persons and 832 HK dollars for married couples receive 67 HK dollars per month. Recipients of the Comprehensive Social Security Assistance scheme cannot apply for allowances of the SSAS. The higher old-age allowance, for people over 70 years, is USD 76. Disabled persons usually receive USD 135; the severely disabled twice as much (HKGOV, 1984: 205, 1994: 254, 1996c: 12–6). Bearing these amounts in mind, it is clear that it was the policy of the Hong Kong government not to establish any kind of an extensive welfare state. Hong Kong’s non-contributory social security system alone cannot cope with the needs of people. Therefore, the state relies mostly on the private and volun-

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tary sector to provide social services. The mounting problems of the elderly population in Hong Kong have led to growth in social security expenditures. Governmental expenditures for the CSSAS and the SSAS rose by an average 24.85 percent per year between 1993 and 1996. Other components of Hong Kong’s social security system are: the Traffic Accident Victims Assistance scheme (110.7 million HK dollars in 1995–1996), the Criminal and Law Enforcement Injuries Compensation scheme (12.5 million HK dollars in 1995–1996), emergency relief, and other services, such as the Social Security Appeal Board and Legal Aid (HKGOV, 1996c: 9–23). After the end of World War II, more than one million refugees fled to Hong Kong. The first two decades after 1945 are known as “the emergency period.” The housing problem, the sanitation situation, and the shortcomings of the educational system were the major social welfare concerns of politicians during this period. The influx of political refugees into Hong Kong brought an enormous increase in capital and labor resources, a great part of which was soon allocated to the booming manufacturing sector. As a result, dire poverty had largely disappeared by the mid-1960s, and voluntary welfare organizations took up new roles in welfare provision. Instead of bringing in overseas relief for the very poor and the disadvantaged, these organizations began to act as an “agent” of the government in providing social services. Until 1965, social welfare was mainly provided by religious and welfare organizations. These NGOs filled the gap between the welfare needs of the people and disposable public welfare. Most welfare agencies that supplied social services to the unfortunate and the poor were branch organizations of internationally operating NGOs. In the early 1970s, the welfare ideologies responsible for the engagement of voluntary organizations began to change. The ideals of various religious and humanitarian beliefs were gradually replaced by an ideology of social justice and equality. NGOs demanded that every individual have the opportunity to realize his or her potential. This appeal for a more equal society echoed the ideas

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of the British Fabian society (Chow, 1994: 324–7). The social workers of Hong Kong, a strong social pressure group, were largely attracted by the ideal of social equality as the fast growth of Hong Kong’s economy was accompanied by a degenerating income distribution.14 Nonconformist welfare organizations joined social workers in their appeal for extended welfare provisions and larger budgets for social services. In 1973, the White Paper on Social Welfare (HKGOV, 1973) initiated the close co-operation between the government and nongovernmental welfare organizations in provision of welfare services. This year brought a change towards greater participation by the NGOs in running social services and a close partnership between the government and NGOs in planning, provision, and development of social welfare and rehabilitation services (HKCSS, 1996a). In the mid-1960s, the key source of income of voluntary welfare organizations had been overseas donations, which accounted for 50 percent of total NGO revenues. After 1973, the NGOs became the most important supplier of social services, especially in the services for young people and the elderly, through a system in which government subventions provided most of financial resources needed by the NGOs (Chow, 1994: 325). However, by the year 1987, up to 70 percent of these agencies relied solely on public funding (HKCSS, 1996b). The increased importance of NGOs stemmed from the rising needs of the people. The demand for social services grew because of changes in the age structure of the population, decreasing labor force participation rate by the elderly, and the abandonment of traditional family structures. THE POLITICAL INSTITUTIONS, DEMOCRACY AND SOCIAL MOVEMENTS IN HONG KONG

The Treaty of Nanjing of 1842 and the Convention of Beijing in 1860 ceded Hong Kong Island and parts of the Kowloon Peninsula to Great Britain. In 1898, the New Territories had been leased to the British Empire for 99 years. In the early

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1980s, the issue over the 99–year lease led to negotiations between British and Chinese authorities over the future of Hong Kong (Ngan, 1986: 90). On December 19, 1984, a joint declaration was signed in which the date and the basic conditions were agreed upon for the handover of Hong Kong to China on July 1, 1997. Hong Kong became a Special Administrative Region (SAR) directly under the authority of the Central People’s Government of the People’s Republic of China. Under the new constitution, the Basic Law, the social and economic systems were to remain for 50 years following Hong Kong’s handover to Chinese authorities. The joint declaration stipulated that Hong Kong would have executive, legislative, and independent judicial power. Hong Kong was ensured a high degree of authority, with the exception of foreign and defense affairs (HKJD, 1984: Art. 1–5). The Basic Law provided that the chief executive of Hong Kong SAR should be selected by election, or through consultations held locally, and be appointed by the Central People’s Government (CPRC, 2000: Art. 45/1). The chief executive may appoint principal executive authorities, members of the Legislative Council, and public figures to become members of the Executive Council, which assists the chief executive in policymaking. The power within the Legislative Council (Legco) has shifted since 1997. Before 1997, liberal, pro-democratic forces—who captured a secure majority of seats in the Legco in the 1991 and 1995 elections—dominated the legislation. After 1997, however, their significance in policymaking has been highly curtailed, since amendments to government bills, now, must be passed by a majority of both the 30 members of parliament elected by geographical constituencies and the members of parliament not elected by geographic constituencies (i.e. elected by functional constituencies or appointed by the chief executive). In the September 2000 Legislative Council election, there were 24 members elected by geographic constituencies and six members appointed by the chief executive. In 2004, there will be no appointed members, and the number of geo-

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graphically elected members will increase accordingly. Conservatives, who are mostly business representatives, hold a majority of functional members. Their significance increased, since only 16 functional members are enough to reject amendments of the Legislative Council to bills proposed by the government (Lo and Yu, 1996: 99; HKE, 2000; Miners, 1998: 152–3). The first political organizations formed in Hong Kong after 1945 were conservative organizations, such as the Reform Club in 1949 and the Civic Association in 1954, which were considered quasi-political parties as they have set up candidates for urban council elections since 1952. In the 1970s, new political organizations emerged, such as the People’s Council on Public Housing Policy and the Society for Community Organization. Contrary to their conservative predecessors, these organizations could rely on mass support (Lam and Lee, 1993: 64). The early 1980s saw a new wave of political organizations, most of which were liberal and pro-democratic, such as the New Hong Kong Society in 1982; the Meeting Point in 1983; and the Hong Kong Affairs Society; the Hong Kong People’s Association; and the Hong Kong Policy Viewers in 1984. Since the second half of the 1980s, a series of new liberal, pro-democratic political parties have been formed: The Hong Kong Association for the Promotion of Democracy and People’s Livelihood (ADPL) in 1986, the Hong Kong Democratic Foundation in 1989, and the United Democrats of Hong Kong in 1990 have been most influential on the pro-democratic side. The United Democrats of Hong Kong, which was formed by members of the Hong Kong Affairs Society, joined with the Meeting Point in 1994 and formed the Democratic Party, the leading democratic party in Hong Kong. The democratic movement of the 1980s represented the newly emerging educated middle class. The conservative camp established the New Hong Kong Alliance in 1989 and the Co-operative Resource Centre in 1991, which was transformed into the Liberal Party in 1993. The pro-China camp gained momentum with the formation of the

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Association for the Betterment of Hong Kong in 1990. Together with members of the Hong Kong Citizen Forum, this party formed the influential Democratic Alliance for Betterment of Hong Kong (DAB) in 1992, which was supported by left-wing trade unions. The DAB thus represents middle and working class interests with pro-Chinese government political orientations (Leung, 1998: 87–90; Lam and Lee, 1993: 69–73; Li and Newman, 1997: 216–8). The franchise of Hong Kong’s urban council elections between 1952 and 1981 was highly limited since only less than 1 percent of the population had the right to vote. In 1982, the Hong Kong government first introduced universal suffrage for district-level elections. The newly founded political organizations of the early 1980s were only loosely organized opinion and discussion groups. By 1987, however, these groups coalesced into the Committee for the Promotion of Self-Government, which comprised 95 grass-root organizations. This group managed to turn the democratic movement into a highly effective political force by launching a signature campaign for the introduction of direct election to the Legislative Council in 1988. This campaign managed to collect 230,000 signatures and led the government to publish its White Paper, “The Development of Representative Government: The Way Forward,” in February 1988, which proposed that in 1991, ten seats of the then indirectly elected district boards would be directly elected from district-based constituencies. The democratic movement succeeded in pushing the government toward reform. The three most important pressure groups of the democratic movement, the Hong Kong Affairs Society, the Meeting Point, and the Hong Kong Association for the Promotion of Democracy and People’s Livelihood, gained high electoral support in the 1988 district board elections (Lam and Lee, 1993: 67; Leung, 1990: 58). The first popular elections to the Legislative Council were held in 1991. Only 18 of the total 60 members of the Legislative Council were elected by dual member geographic constituencies. The United Democrats of Hong Kong won 12

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seats (and 45.1 percent of votes), the Meeting Point 2 seats, and the ADPL and a pro-democratic independent one seat each in the geographic constituencies. Thus, pro-democratic forces gained 89 percent of geographically elected seats. In the 1995 Legislative Council elections, the pro-democrats won 16 out of 20 seats, still holding 80 percent of geographically elected seats. The Democratic Party obtained 12 seats with 42.3 percent of votes (Li and Newman, 1997: 220–3). Hong Kong’s major social movements preceded the democratic movement in urging the colonial government to change its policies and to introduce reforms. The first significant movement that was of concern to the government was the labor movement. The heyday of the labor movement after World War II only lasted until 1953. Then, the level of strikes fell significantly, and by 1968, the level of labor strikes dropped a second time (Leung, 1996: 153). Hong Kong’s labor unions were sharply divided between the affiliated Federation of Trade Unions (FTU) and Trade Union Congress (TUC). The FTU was affiliated to the Communist Party of China and the TUC to the Nationalist Kuomintang. The Communist labor unions of the FTU represented the majority of laborers. In 1975, the Communist labor unions had 268,243 members. The Taiwan-oriented TUC only represented 36,422 members. In addition, there were also 54,787 independent union members (Baumann, 1983: 244). Meanwhile, independent labor unions experienced considerable growth. In 2000, the Hong Kong Confederation of Trade Unions (established in 1990) became the largest independent trade union with 145,000 affiliated members (HKCTU, 2000). In 1967, the FTU, together with other pro-Communist organizations, set up struggle committees. These committees launched and co-ordinated a territorywide anti-colonial struggle. This movement was inspired and ideologically supported by the Cultural Revolution on mainland China. In the beginning, the struggle committees organized large-scale industrial actions, such as a joint strike (lasting from June 10–15); a gen-

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eral strike (from June 24–28), and a trade suspension (June 29–July 2). When the government had resisted these strike actions, the struggle committees resorted to extreme measures, such as terrorism and bomb attacks. However, by December, the struggle of the anti-colonial movement ended in failure since the public strongly opposed these measures (Leung, 1996: 145–6). The 1967 riots initiated the formation of the student movement. This movement gained momentum after a two-day sit-in at Chu Hai College in February 1969 in order to protest against the dismissal of twelve students because of the content of their student publications. After the rise of the Tiao Yu Tai issue, the claim of the Tiao Yu Tai Islands by China and Japan, nationalism became the major concern of the student movement. By the end of the 1970s, the student movement had lost its political influence (Leung, 1996: 155–6). THE POLITICS OF SOCIAL POLICY IN HONG KONG

The colonial government of Hong Kong, with the exception of the second half of 1967, never experienced a threat to its rule. Although the first two decades after World War II were the most devastating with regard to social conditions, it was in this period that governmental efforts in the field of social policy were the least. Only after the 1967 riots, which made very real the possibility that the Cultural Revolution could spill over from mainland China to Hong Kong, the government began to implement social security systems for the most needy and to co-operate with nongovernmental organizations to secure the provision of social services. With the governance of Governor MacLehose from 1971 to 1982 (Chan, 1996), the government saw a vital interest in promoting new social policies, such as new social security schemes; the extension of the subvention system to NGOs; and expanded governmental efforts in the fields of health, education, and housing. During this period, the colonial government implemented a Hong Kong-type of welfare state, that is, a residual type heavily relying on noncontributionary so-

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cial security schemes and social welfare provision secured by a partnership between NGOs and the government. Although residual in the beginning, the welfare state in Hong Kong has continually expanded ever since. With the rise of the new middle class and social pressure groups, such as social workers, in the 1970s, the government has continuously pushed to extend the existing welfare system. In the 1980s, new political organizations and existing political parties joined the social pressure groups in demanding new social welfare schemes and services. Then, in the early 1990s, the rise of new powerful political parties in favor of social welfare and a lack of government legitimacy added to the pressure of the government to increase its welfare efforts and, subsequently, to spend more money on social welfare. The rise of pro-democratic political parties that won 89 and 80 percent of total votes in geographic constituencies in the 1991 and 1995 Legislative Council elections, respectively, as well as the rise of working-class and middle-class pro-China political parties urged the government to rethink its stand on social policy. Before, the government shared the view of the business elite in Hong Kong, which tried to prevent any governmental commitment in social policy. After the handover of Hong Kong, the position of conservative forces in policymaking was strengthened again and that of the pro-democratic, pro-welfare forces weakened. The consequences of this new situation with regard to the development of Hong Kong’s welfare state still remain to be seen. THE FUTURE OF SOCIAL POLICY IN HONG KONG

Hong Kong’s welfare state development reflects its unique historical and political context. Its history of mass migration shaped a welfare system different from others. The gap between welfare needs of the people and the level of governmental welfare provisions had to be filled by, first, international NGOs and, second, local NGOs. As a consequence, Hong Kong’s wel-

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fare system is built around the provision of welfare services by voluntary welfare agencies, which rely for the most part on governmental financial support. Beginning in the 1970s, Hong Kong also set up noncontributionary social security schemes with low levels of benefits. Hong Kong’s welfare state is embedded in a society where most people are former refugees. There was no strong labor or welfare movement, and for decades, company bosses formed the only powerful political interest group. In addition, Hong Kong is a society where a full-fledged democracy has not existed over a long period of time and where the middle class does not profit from welfare arrangements; hence, its opposition to the extension of public welfare for the lower stratum of society. Therefore, the welfare state in Hong Kong is residual and weak when compared to its Western counterparts. Hong Kong’s welfare system, however, evolved into an “expanded residual” welfare state due to enormous extensions in social security and social service provision over the past three decades. Bearing the political changes of the 1990s in mind, one may conclude that the future of Hong Kong’s welfare state is one with an increasing, but comparatively modest extension of the existing welfare system.

CHAPTER 7

MAINLAND CHINA THE DEVELOPMENT OF SOCIAL POLICY IN MAINLAND CHINA

The Chinese welfare system is a welfare state in the sense that it represents a system of public provision, either provided by subsidies or regulated by state programs, legislation, or policies (cf. Chan and Tsui, 1997: 177). Following World War II, China saw its social system as a reflection of the superiority of socialism (Wong and Mok, 1995: 15). In October 1950, the Government Administrative Council announced the Labor Insurance Regulations (LIR) that covered benefits for sick and disabled workers, as well as retirement benefits. The predecessor of the 1950 labor insurance scheme was the Manchurian Labor Insurance Program promulgated by the Communist Party of China (CPC) on December 27, 1948. At that time, the northeastern provinces were under the rule of the Communists. The LIR was promulgated nationally in February 1951 and revised later in 1953. The labor insurance scheme—like its predecessor—covered a wide range of risks, such as occupational and nonoccupa-

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tional injury, disability, death, maternity benefits, and birth allowances (Dixon, 1981: 27–43). In the first two years of operation, the labor insurance scheme covered well under 10 percent of the working population. It covered employees in state-operated, joint state-private, co-operative, and private factories and mines with more than 100 workers and staff. From 1953 onwards, the coverage also included workers in capital construction units of factories, mines and transport enterprises, communication services, and stateoperated construction enterprises (Selden and You, 1997: 1658). The financing of the welfare system was left entirely to the companies themselves, whether they were state-owned, co-operatives owned, or privately owned. The 1953 LIR guaranteed a pension of 50 to 70 percent of the wage at retirement to men who worked for more than 25 years at the age of 60 and to women who worked for more than 20 years at the age of 50. Those enterprises that participated in the social security program paid 3 percent of the payroll in the labor insurance fund, which was jointly managed by the enterprise and the labor unions. Seventy percent of the fund was used for pensions, disability allowances, and subsidies to dependants. The rest was given to the All China Federation of Trade Unions (ACFTU) to financially help enterprises that found themselves in difficulties. In 1956 and 1957, administrative degrees extended the coverage of the labor insurance scheme a great deal, from 24 million members in 1956 to 45 million members in 1958 (Dixon, 1981: 37–40). From the 1950s to the 1970s, the overall development of social security schemes had been stagnant. However, there was considerable growth in other social welfare sectors, such as housing, medical care subsidies, and collective welfare of enterprise units that included sanatoriums, rest homes, and orphanages, as well as homes for the old and disabled. Selden and You report that by the late 1970s social welfare had expanded to cover 78 percent of urban wage earners, but this represented only 19 percent of China’s total labor force, which mostly lived

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in the countryside. In 1978, out of 95 million workers who were entitled to pensions, 74.5 million were former state sector workers and 20.5 million collective workers (Dixon, 1981). Following 1978, the year of great reforms under the national goal of modernization and the “reform and open” policy in China, the government began to increase social welfare spending in the fields of retirement pensions, health services and housing. In 1979, the government also introduced the “one child per couple” policy, which had significant effects on the age structures in the great cities where the policy had been implemented much more vigorously (Lee, 1993: 33, 35; Dixon, 1981: 30; Chow, 1999: 25–6). Beginning in the early 1980s, China began to reform its pension system by centralizing the managerial power of retirement schemes from enterprise level to local government level. Fujian was reportedly the first province to introduce the system of “unified management” (tong chou). The purpose of this restructuring was the greater pooling of risks in order to guarantee a long-term balance between contributions and retirement benefits. The implementation of this new retirement pension system has been very extensive and fast since 1984. By the late 1980s, approximately 80 percent of all townships and counties across China implemented pooled pension funds. In several municipalities and provinces, some forms of retirement pensions were introduced on municipality/province level, for example, Beijing, Shanghai, Tientsin, Hebei, Guangdong, Jiangxi, Fujian, Henan, Anhui, Shandong, Shaanxi and Jilin (Lee, 1993: 39–40). Beginning in 1995, the Chinese pension system adopted a two-tier system: a defined benefit system financed by pay-as-you-go taxes and a system that relies on contributions of both employers and employees in state-owned enterprises (Feldstein, 1998: 3, 6). The “Iron Rice Bowl” welfare system in the time before 1978 guaranteed the provision of employment according to employment status. That meant that the state had to finance life-sustaining goods, services, and the resources needed for 115 million industrial workers and employees regardless of their

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work records. Under the new economic policy initiated by Deng Xiaoping in 1978, the government has emphasized the new principle of distribution of benefits according to work and performance, and enterprises were made responsible for their own profits and losses. By 1978, the Chinese welfare state comprised a wide range of programs aimed at enhancing the social security of the people, such as retirement pensions, birth control allowances, sick leave and benefits, health care insurance, collective amenities, cultural facilities, housing benefits, subsidies, social relief, and disaster relief (Yeung, 1986: 8; Lee, 1993: 35). From 1978 to 1994, the annual expenditures on social security benefits rose from Renminbi (RMB) 7.81 billion to RMB 195.61 billion. These expenditures included collective welfare subsidies, medical care expenses, funeral expenses, pensions for the families of the deceased, living allowances to people who are in difficulty, family planning subsidies, heating subsidies in winter, and expenses associated with recreational, cultural, and propaganda activities. The great social reforms since 1978 have transformed the formerly work unit-centered social security system into a societal-centered social security system. Before the 1980s, the Chinese state bore the financial burden of the social security system. Since then, the state, the work units, and the employees share the expenses for social security. The new social security system, furthermore, combines personal accounts with social pooling. Old age insurance and unemployment insurance have become the cornerstones of the new Chinese welfare state. However, the dualism between the countryside and the cities, so far, has continued to disadvantage farmers—especially regarding pensions and medical care—in comparison to city dwellers (CIRD and CASS, 1998: 49–50; Chi and Zhu, 1998: 61; Liu, 1988: 69). THE POLITICAL INSTITUTIONS, SOCIALIST DEMOCRACY AND SOCIAL MOVEMENTS IN MAINLAND CHINA

The founder of the People’s Republic of China, Mao Zedong, was one of the first members of the Communist Party of China

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(CPC), which was established on July 1, 1921. At a time when the Communists and the Nationalists co-operated with each other, Mao organized labor unions for the Kuomintang. After the split with the Nationalists, Mao Zedong established the Red Army in 1927. He was the leader of the Communist forces in the Long March (1934–1935) and, subsequently, became the head of the Communist party. After the victory over the Kuomintang in the Chinese civil war, Mao became the first chairman of the People’s Republic of China. Due to the failure of a national program for initiating industrial growth, the Great Leap Forward (1958), Mao was replaced as head of the state, but kept his position as party chairman. In 1959, his interim successor, Liu Shaoqi, became head of the state. Having been heavily criticized during the Cultural Revolution (1966–1969), Liu was purged from power in 1968. Mao Zedong, once again, returned to power and managed to consolidate his power position as chairman of the CPC and head of the state. In 1976, after the death of Mao Zedong and Zhou Enlai (the long-term prime minister), Hua Guofeng became chairman of the CPC and prime minister. As followers of Deng Xiaoping, the then vice prime minister, reinforced their power-bases in the Political Bureau (Politburo) of the Central Committee of the Communist party, Hua Guofeng was replaced by Hu Yaobang as party chairman. In the early 1980s, Deng Xiaoping became the second most powerful leader of the Communist party in history of the People’s Republic of China. Before, Deng was twice removed from power, in 1967 and 1976, and twice rehabilitated, in 1973 and 1979. Deng Xiaoping consolidated his power base by lifting his supporters to important positions. Zhao Ziyang succeeded Hua Guofeng as prime minister in 1980, and Hu Yaobang replaced Hua as party chairman in 1982.15 Deng continued to emphasize tight party control of the government and politics. Jiang Zemin became secretary general of the Communist party in 1989 and subsequently replaced Deng as head of the powerful government and party military commissions in 1989 and 1990. In March 1993, Jiang Zemin became presi-

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dent of the People’s Republic of China (PRC). In March 1998, a political reformer, Zhu Rongji, became prime minister (Shinn and Worden, 2000; Meisner, 1999; Hsu, 1999). The history of the Communist Party of China saw, from time to time, factional in-fighting and, then again, long periods of stable leadership. In the political arena of China, it happened quite often that leaders were thrown out of power and then rehabilitated again. In 1961, a new power bloc inside the CPC emerged. This new dominant leadership was centered around a group of moderate politicians under the leadership of Liu Shaoqi, Deng Xiaoping, and others. This party faction stood in opposition to party Chairman Mao Zedong, Minister of Defense Lin Biao, and their followers. These two groups were in disagreement about the methods with which their common goal was to be achieved. From 1961 to 1965, the group around Liu and Deng managed to strengthen party organization and party discipline, set up realistic economic planning instruments, and decentralize decision-making. Thus, in the early 1960s, Mao found himself on the political sidelines and in semi-seclusion. Mao interpreted the new politics of moderate circles as a sign of creeping capitalist and anti-socialist tendencies in the country. For this reason, and for the reason to return to the center power, Mao set out with the help of the People’s Liberation Army (PLA) to restore ideological purity, re-infuse the revolutionary fervor into the party and the government bureaucracies, and intensify the Communist class struggle. With the Cultural Revolution, Mao launched a mass assault on the CPC and the state bureaucracies (Harding, 1990). By mid1965, Mao had regained control of the party with support of Lin Biao and Jiang Qing, his fourth wife.16 Subsequently, Liu Shaoqi and Deng Xiaoping and their supporting party leaders were purged and attacked by the new leadership. By mid-1966, this purge turned into the Great Proletarian Cultural Revolution, the first mass action that was directed against the CPC apparatus itself. Mao Zedong believed that the party organization was permeated with capitalist and bourgeois elements and in-

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corporated the help of Lin Biao, the PLA, and the Red Guards (Hsu, 1999; Meisner, 1999; Shinn and Worden, 2000).17 By the time the Chinese and Soviet troops clashed in the border area in March 1969, the CPC began to make an end to factional in-fighting in order to focus on the danger stemming from the Soviet Union. From 1969 until his death, Mao took a more pragmatic stance with regard to revolutionary enthusiasm. Fundamentalist influence in party politics lessened after the death of Lin Biao in 1971, which resulted in the political rehabilitation of those fallen into disgrace during the years of the Cultural Revolution. Factional controversies within the CPC continued to determine party politics until Mao’s death in 1976. The political arena was polarized further right before Mao’s death. In April 1976, masses of people that supported Zhou Enlai and his moderate policy stand demonstrated at the Tiananmen Square to memorialize the death of Zhou, who died in January. Just before his death, in September, Mao ordered the purge of Deng Xiaoping. After Mao’s death, the Gang of Four tried to seize power. However, this attempt failed. After their imprisonment, Hua Guofeng became the new strongman of the CPC. At the 1977 National Party Congress, the balance of power again started to favor the group of reformers centering around Deng Xiaoping. The congress declared the formal end of the Cultural Revolution. In 1978, the student movement gained momentum, supported Deng Xiaoping, and attacked Hua Guofeng and even Mao Zedong. Subsequently, a lot of politicians who had been purged in the 1950s and 1960s were rehabilitated. In December 1978, at the Third Plenum of the Eleventh National Party Congress Central Committee, the four modernization policies of Zhou Enlai replaced the policy of promoting class struggle.18 Political achievements abroad, notably the diplomatic recognition of the People’s Republic of China by the United States, and the first economic improvements strengthened the power base of Deng Xiaoping (Hsu, 1999; Shinn and Worden, 2000). The transfer of power from Deng Xiaoping to Jiang Zemin was free of major controversies

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inside the party. Thus, from the early 1980s onwards, the political control of the CPC, and consequently the state, was in the hands of the reformers who sought to open the country and to promote economic growth and prosperity over class struggle. In 1954, the constitution of the People’s Republic of China had been promulgated by the National People’s Congress, the highest organ of the state (CPRC, Art. 57). Formally, the National People’s Congress exercised the legislative power of the state (CPRC, Art. 58). However, apart from the early period of the People’s Republic of China, the National People’s Congress did not make use of the constitution. Constitutional provisions were as valid as the party line went with it. In the People’s Republic of China, the constitution was only an instrument of party politics (Weggel, 1980: 264, 268). It is for this reason that the provisions of the PRC constitution were mere suggestions rather than binding legislation. The state was rather weak and, in fact, only an executive organ of the CPC. Due to the lack of legislation by the National People’s Congress, the country was ruled by ordinances of the state and the will of the party (Weggel: 1980: 268). When the president of the People’s Republic of China can count on the support of the Politburo and the PLA, the powers of the state are united in one person. The president has the power to appoint the prime minister and the members of the State Council. The president also proclaims martial law and a state of war (CPRC, Art. 80). The State Council, also referred to as the Central People’s Government, is the highest administrative organ of the state. It adopts administrative measures, enacts administrative rules and regulations, and issues decisions and orders (CPRC, Art. 89). The prime minister is responsible for and directs the work of the State Council, which in turn leads the ministries, five committees, the National Auditing Agency and the Bank of China, and local governments. There is a Ministry of Health and a Ministry of Labor and Social Welfare (CNT, 2000).

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Hence, the locus of political power in the People’s Republic of China is neither the National People’s Congress nor the State Council, but the Communist Party of China, and especially the Politburo of the CPC (see Walker, 1955: 27). Whereas, in the beginning, the party was led by the charismatic leadership of party chairman Mao Zedong, that leadership weakened and was replaced by a more institutionalized leadership in the years following 1959 (Domes, 1975: 334–7). Since the early 1980s, the leadership had strengthened and major rivalries stopped dominating party politics and, thus, Chinese politics as a whole. Currently, President Jiang Zemin also holds the post of secretary general of the CPC Central Committee, which is the leading position in the Standing Committee of the Politburo. Other members of the Standing Committee of the Politburo are Li Peng, Zhu Rongji, Li Ruihuan, Hu Jintao, Wei Jianxing, and Li Lanqing. Most members of the Politburo have a professional background in engineering (KAT, 2000). An often forgotten fact with regard to party politics in China is that there are eight other “fraternal” parties beside the CPC in China all of which were established between October 1925 and January 1948 (CNT, 2000). These are the China Zhi Gong Dang (15,000+ members), the Chinese Peasants’ and Workers’ Democratic Party (65,000+ members), the China Democratic League (130,000 members), Jiu San Society (68,000+ members), the China Democratic National Construction Association (69,000+ members), the China Association for Promoting Democracy (65,000+ members), Taiwan Democratic Self-Government League (1,600+ members), and the China Revolutionary Committee of the Kuomintang (53,000+ members). The preamble of the constitution states that a united front under the leadership of the CPC had been formed to support socialism and reunify the motherland. This front is composed of the CPC and the eight democratic parties just mentioned (CPRC). In May 1986, Chinese students first called for the introduction of democracy. Fang Lizhi, the student leader, became a hero to students and intellectuals. Subsequently, students as-

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sumed the leadership of China’s new reform movement. The government tried to downplay the student movement and to brand them as hooligans. In May 1989, at the seventieth anniversary of the “May 4” Democracy Movement, students began to occupy the Tiananmen Square in the center of Beijing. On May 13, workers joined the students in a hunger strike. By the end of May, however, Deng Xiaoping declared martial law and ordered the violent clearance of the Tiananmen Square on June 3, which ended in a massacre (Yee, 2000). The Tiananmen pro-democracy demonstrations of May 1989 were a major test for the survival of the government. Thousands of students died, and thousands more were arrested thereafter. Zhao Ziyang (party secretary general since 1987) who supported the students was removed from power. Li Peng, the new prime minister from 1987 to 1998, played an active role in suppressing the democracy movement. Only a decade later, the appointment of Zhu Rongji, a liberal reformer, as prime minister in March 1998 indicated a consolidation of the power of moderate forces within the CPC (Hsu, 1999; Tien and Chu, 2000). THE POLITICS OF SOCIAL POLICY IN MAINLAND CHINA

As early as in 1948, still in the heyday of civil war, the Communist Party of China began to implement a comprehensive social security system in Manchuria. The long experience in participating in policymaking in China (since 1921) in combination with the pro-welfare Communist ideology (cf. CPRC) enabled the CPC to establish quickly an extensive social security system. The Communists won the support of the farmers by propagating land reform and the support of laborers by focusing on industrial development and social welfare provisions. In the 1950s, the Communists tried to realize Marxist theories and to create a socialist state. Land had been confiscated and industries nationalized. Common farmers and workers were the center of the Communist party’s concern. However, power

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struggles in the CPC led to the outbreak of the Cultural Revolution, which also attacked local, provincial Communist elites and their authority. As a consequence, government, party, and labor union organizations were significantly weakened. In 1969, the administration of the pension system, therefore, had been given into the hands of corporations on an ad hoc basis (Lee, 1993: 39). Hence, the understanding of the development of the Chinese welfare state is tied to the understanding of state institutions and its structures (cf. Chen, 1996: 278). It was in the early 1980s that the state began to relocate the management of the pension system and other social security systems to higher administrative levels. The Chinese welfare state was and still is characterized by a great dualism of realized welfare rights of people living in the cities, who profit from various welfare state programs, and that of those living in the countryside, who cannot rely on state welfare. Seventy to 80 percent of China’s population resides in the countryside. However, the welfare state was especially designed for the workers and employees in the cities who might have represented an acute danger for the Communist regime in times of social discontent. State intervention that was aimed to improve the welfare of city dwellers helped to sustain the legitimacy of the state and the power of enterprise over the work force (Wong and Mok, 1995: 16). The powerful increase in legitimacy, thus, decreased the likelihood of social uprisings and increased the support of the long-term ruling government of the Communist Party of China. THE FUTURE OF SOCIAL POLICY IN MAINLAND CHINA

China developed a rather sophisticated welfare state in the late 1950s when compared to other countries that found themselves in the same developmental phase. Though the late 1960s represented a major setback in welfare state development, the CPC began to extend welfare state provisions in the 1970s in the areas of pensions, health care, and housing. The year 1978

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represents a watershed year in Chinese welfare state development since, then, social security systems have been upgraded from enterprise to local and even provincial government levels. In addition, the economic reforms that required state enterprises to take over the responsibility of their finances from the state also forced state enterprises to lay off millions of workers and employees.19 In July 1986, the government installed an unemployment insurance for state-owned enterprises. Another development that has changed the socio-economic structure in China is the fact that more than 100 million peasants have left their farms and are now working in individual businesses in both the cities and the rural areas (Hu, 1997: 51; Chow, 1995: 27). Between 1978 and 1984, the government prepared for the major changes to the social security system by launching a series of studies, discussions, and dialogues. Major reforms only took place after 1984. Between 1984 and 1994, the state started to reform and unify the pension system, set up an unemployment insurance scheme and experimental schemes for unifying maternity insurance schemes (which formerly also operated on company level), and conducted smaller improvements in other social security domains. Since 1994, the Chinese welfare state has experienced a period of reform in the field of pensions and health care (Hu, 1997: 47–54). The major task for future social policy in China is: (1) to incorporate those who are not covered by social security, that is, farmers and their dependants, as well as workers and entrepreneurs in the booming small and medium-sized enterprises; and (2) to continue unifying social security schemes all across China.

CHAPTER 8

THE FUTURE OF THE WELFARE STATE IN EAST ASIA After taking a close look at the social and political systems of six East Asian countries, we can note the common features and differences of welfare state development in these countries and project their development into the future. Tables 6 and 7 show the impact of political determinants in welfare state development, such as legitimacy, democratic competition, constitutions, and doctrines of political parties. With regard to legitimacy, we see that South Korea had the lowest degree of government legitimacy due to authoritarian regimes and military takeovers. Japan, Singapore, and China enjoyed high degrees of governmental legitimacy, since the public did accept the authority of the ruling government, and alternative governments were out of the question. Taiwan, followed by Hong Kong, South Korea, and Japan, have the highest degree in democratic competition in democratic elections. While in Hong Kong the executive branch is not elected, this study has highlighted the increasing importance of party competition in government coalition formation in Taiwan, South Korea, and Japan.

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Table 6 Comparison of Political/Institutional Factors Behind Welfare State Development in Japan, South Korea, and Taiwan

Constitutional provisions that provide concrete, extensive social policies and that are strongly supported by long-term ruling parties are found in Taiwan, Singapore, and mainland China. Major pro-welfare political doctrines of government parties—including the willingness to use governmental resources—can be found in mainland China and Hong Kong. In mainland China, the Communist Party tries to extend welfare state arrangements, although massive investments into infrastructure and economic development come first. In Hong Kong, there is a majority of pro-welfare parties in parliament; however, the executive branch of government pursues conservative social policies and does not support extensive spending on social welfare. In Singapore, the government party, the People’s Action Party, prefers to regulate social welfare and to avoid

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Table 7 Comparison of Political/Institutional Factors Behind Welfare State Development in Singapore, Hong Kong, and China

financial commitments of the state. In Taiwan, South Korea, and Japan, all major political parties are parties of the political right. However, there exist some political parties that are inclined to support the extension of social insurance and social welfare programs in the light of increased party competition in democratic elections. When taking these insights into consideration, we can sketch the future development of these welfare states. Despite the ongoing globalization of the world economy, the welfare states in the developed economies of East Asia do not pursue a strategy of welfare state retrenchment, but rather work for welfare state extension. In essence, all countries covered by this study conduct conservative social policies, that is, occupationally divided social security schemes; a large reliance on the market in providing social security, a priority given to government officials, sol-

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diers, and teachers in welfare state provision; a dualism between large-scale enterprises and small and medium-scale enterprises (while the former enjoy coverage of social insurance schemes and occupational welfare, the latter have to rely on the market or less well funded insurance schemes); and a gradual extension of social insurance schemes to the entire population while avoiding major financial commitments of the state. In the light of a fast-aging population, the welfare states in East Asia will see the extension of social insurance and social welfare programs in the fields of pensions, health care, and social welfare provision to the elderly. In Japan, South Korea, Taiwan, and China, social insurance schemes with subsidies of the state will continue to be the center of the welfare state. In Hong Kong, the system of noncontributionary social assistance schemes with low benefit levels will stay the main provider of social security. In Singapore, the established provident fund system can be expected to operate well into the decades to come.

NOTES 1. Single Non-Transferrable Vote System: A certain number of candidates are elected in each constituency. Votes cannot be shifted from one candidate to another, thus, the number of candidates competing in each constituency is vital to the election result. For example, if too many candidates (of different parties) compete for conservative voters, this may reduce the chance of becoming elected. Depending on the size of the constituency, it is wise only to nominate one, two, three, or more candidates. The new concerted action of electoral nomination under the umbrella of the LDP enabled the conservative camp to gain again significantly more seats in parliament than their overall share of votes would suggest. In the 1953 and 1955 elections, the conservative camp (especially the Liberal Party) lost its advantage of gaining up to 10 percent more seats than votes, due to a further split of the Liberal Party into the Hatoyama Liberal Party and the Yoshida Liberal Party in 1953. 2. Up to 90 percent of Japanese regard themselves as members of the middle class. 3. The origin of the Burakumin goes back far into history to the arrival of Buddhism in Japan when the killing of cattle and the related manufacture of cattle products have been seen as “unpure.”

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4. It was drafted only within a few days by experts established by the Supreme Commander of Allied Powers. 5. Most of the progressive (i.e., Socialist- or Communist-supported) mayors ran as independents in order to attract more middle-class votes. These mayors, however, united in the National Association of Progressive Mayors, which makes the distinction between mayors backed by oppositional and conservative parties easier. See Kurt Steiner (1980: 320–1), and Nisihira Sigeki (1979: 90–1). 6. 29.2 percent; the ruling DJP received 35.3 percent (Cotton, 1993: 30). 7. The Kaohsiung Incident was planned by the secret police. Conservative forces might have planted some violent people in the crowd that came to join the event of the opposition movement. 8. The two largest cities, Taipei and Kaohsiung, voted one year later in 1998 when the DPP lost the mayorship of Taipei to the KMT, and the KMT lost that of Kaoshiung to the DPP. 9. For example, those who are too old to work, or those who are advanced tuberculosis patients, chronically sick, physically or mentally handicapped, widowed or orphaned, or unemployed and over 55 years of age (cf. Chow, 1981: 362). 10. The necessary qualifications of a presidential candidate include the following: a presidential candidate must be a person of integrity, good character, and reputation in the eyes of the Presidential Election Committee, he or she must not be a member of a political party on nomination day, he or she must have served for a minimum period of three years as minister or chief justice, speaker, attorney-general, etc. (cf. Article 19 (e)—(i) of the Constitution; CSIN, 2000). 11. For five days, the government party held less than half of the Legislative Assembly seats, until S.V. Lingam joined the PAP. However, just five days later, a PAP legislator (Ahmad bin Ibrahim) died. This created a stalemate in the Legislative Assembly. 12. An alliance of the Singapore People’s Alliance (SPA), the Singapore United Malays National Organization (SUMNO), the Singapore Malayan Chinese Association (SMCA), and the Singapore Malayan Indian Congress (SMIC). 13. The 1968 election was the only positive exception when the PAP won 84.4 percent of votes and won 58 seats in the Legislative Assembly of which only 7 were contested by opposition candidates.

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14. Throughout the post-World War II period, the increase of income in the lower strata lagged behind that of the higher income strata. Even in times of higher social expenditure, between 1986 and 1996, the gap between the richest 10 percent of households and the others grew, as the highest decile substantially enlarged its share of overall household income from 35.5 to 41.8 percent. All other deciles had decreasing relative shares as the number of highest income households grew overproportionally. Thus, the rich became richer and the poor stayed poor (cf. Hong Kong Monthly Digest of Statistics, December 1996). 15. Zhao was also purged during the Cultural Revolution and later rehabilitated again. 16. Who was a leader in the Cultural Revolution and the head of the Gang of Four after the death of Mao Zedong and Zhou Enlai in 1976. 17. The Red Guards were made up of millions of students who were mobilized in order to become a shock force and to bombard party headquarters at national, regional, and provincial levels with criticism and to consolidate the power of Mao Zedong. 18. In 1975, Zhou Enlai outlined a program of what has come to be known as the Four Modernizations for the four sectors of agriculture, industry, national defense, and science and technology. 19. In the year 1998 alone, two million workers had been laid off. In 1997, the official unemployment rate was 4 percent, i.e. eight million unemployed workers (cf. Biffl, 1998). 20. In Japan, the constitution was set up by an ad hoc committee of the Supreme Commander of Allied Powers and, thus, does not rely on the ideology of the major political parties. In South Korea, the constitutions have been changed many times, and those in effect were not taken seriously (South Korea misses one chamber of the parliament; and elections were held belatedly). In Taiwan, the constitution is based on the by-then 50 year-old teachings of Dr. Sun Yat-sen, the founder of the Republic of China, and is, therefore, highly respected and every detail has been implemented so far (cf. CJAP, CKOR, and CROC). 21. Specifically the willingness to spend money on social security and social welfare programs.

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22. The new democracy movement of the 1980s attacked the lack of democracy, since members of the Legislative Council could be elected only on a limited basis. 23. In Singapore, the constitution was set up by the PAP and, hence, provides in detail the core policies of the PAP. In Hong Kong, constitutional provisions were not set up by major parties of the Legislative Council. The Communist Party of China set up the constitution of the PRC and, for the most part, follows all the basic principles and policy guidelines given by the constitution (cf. CSIN, CHKG, HKJD, and CPRC).

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INDEX All China Federation of Trade Unions, 76 An-Kang scheme, Taiwan, 41 Anson by-election, 57 Anti-colonial struggle, Hong Kong, 70 Association for the Betterment of Hong Kong, 69 Barisan Sosialis, Singapore, 56 Basic Law, Hong Kong, 67 British Fabian society, 66 Burakumin, Japan, 17 Cairo Declaration, 42 Central Provident Fund, 8, 49–52, 59–62 Chang, Myon, 28 Chen, Shui-bian, 41, 44 Chiang, Ching-kuo, 42, 44

Chiang, Kai-shek, 41–42, 44 Child allowance, Japan, 12 Choi, Kyu-ha, 29 Cholla, 29 Christian democratic parties, 3 Christian movement, South Korea, 30–32 Christian social teachings, 3 Chronic Care Insurance, Japan, 13 Chruritsu Roren, Japan, 17 Chun, Doo-hwan, 28–30, 32, 34 Clean Government Party, Japan, 15–16 Coalition government, Japan, 15–16, 20 Coalition government, Singapore, 54 Coalition government, South Korea, 31

110

Index

Competition, electoral, 20, 31, 34–35, 87–89 Comprehensive Social Security Assistance Scheme, Hong Kong, 63–65 Conservative political parties, 4, 35, 47 Conservative social policy, 4, 52, 89 Conservative welfare state systems, 3–4 Constitution, Japanese, 13, 20, 88 Constitution, of Hong Kong Special Administrative Region, China, 67, 89 Constitution, of People’s Republic of China, 82, 89 Constitution, of Republic of China (Taiwan), 42, 46, 88 Constitution, of Singapore, 27, 89 Constitution, of South Korea, 62, 88 Convention of Beijing, 66 Cultural Revolution, 70–71, 79–81, 85 Democracy, 16, 28, 73 Democratic Alliance for the Betterment of Hong Kong, 69 Democratic Justice Party, South Korea, 30 Democratic Liberal Party, South Korea, 31 Democratic Party, Hong Kong, 68, 70 Democratic Party, Japan, 14

Democratic Party, South Korea, 30–31 Democratic Progressive Party, Taiwan, 43–45, 47 Democratic Republican Party, South Korea, 28–29 Democratic Socialist Party, Japan, 14–15 Deng, Xiaoping, 78–81, 84 Diet, Japan, 13, 16 Domei, Japan, 15 East India Company, 54 Employee Pension Insurance scheme, Japan, 11–12 Esping-Andersen, Gøsta, 2–3 Fang, Lizhi, 83 Farmers’ health insurance, Taiwan, 39 Federation of Malaysia, 55 Federation of Trade Unions, Hong Kong, 70 Gang of Four, 81 Globalization, 3, 89 Gold Plan, Japan, 13 Grand National Party, South Korea, 31 Great Kanto Earthquake, 9, 18 Great Leap Forward, 79 Hamayotsu, Ms., 16 Hannara Dang, South Korea, 31 Health care, China, 78 Ho, Puay Choo, 56 Hong Kong Affairs Society, 68–69

Index Hong Kong Association for the Promotion of Democracy and People’s Livelihood, 68–70 Hong Kong Democratic Foundation, 68 Hong Kong Federation of Trade Unions, 70 Hu, Jintao, 83 Hu, Yaobang, 79 Hua, Guofeng, 79, 81 Industrial Accident Insurance Scheme, South Korea, 23–24 “Iron Rice Bowl” welfare system, 77 Ishak, Yusuf bin, 55 Japan Communist Party, 14–15 Japan New Party, 15 Japan Socialist Party, 14–15 Jiang, Qing, 80 Jiang, Zemin, 79 Joint declaration, Hong Kong, 67 Kaishin Party, Japan, 15 Kaoshiung incident, 43 Kim, Dae-jung, 29–32 Kim, Jae-kyu, 29 Kim, Jong-pil, 30–31 Kim, To-yon, 28 Kim, Young-sam, 30–32 Komeito, Japan, 15 Komeito movement, 15–16 Korean minority, Japan, 17 Kuomintang, Taiwan, 39–47, 56, 70, 79, 83

111

Kwangju incident, South Korea, 29–30, 32 Labor insurance, China, 75–78 Labor insurance, Taiwan, 37–38, 40 Labor movement, Hong Kong, 70 Labor movement, Japan, 17–18 Labor movement, Singapore, 58 Labor movement, South Korea, 31–32 Lee, Kuan Yew, 52–53, 55–59 Lee, Teng-hui, 44 Legitimacy, 17, 33, 35, 72, 85, 87–89 Li, Lanqing, 83 Li, Peng, 83–84 Li, Ruihuan, 83 Liberal Democratic Party, Japan, 13–21 Liberal Party, Hong Kong, 68 Liberal Party, Japan, 11 Liberal Party, South Korea, 30 Lim, Yew Hock, 56 Lin, Biao, 80–81 Liu, Shaoqi, 79–80 Long March, 79 MacArthur, Douglas, 13 MacLehose, Govenor, 71 Malayan Chinese Association, 54 Malayan Communist Party, 56 Malayan Democratic Union, 56 Mao, Zedong, 78–81, 83

112

Index

Martial law, Taiwan, 42, 46 Medicaid scheme, South Korea, 27 Medical care system, Japan, 9–11 Medisave scheme, Singapore, 51–2, 60–61 Medishield scheme, Singapore, 52 Meeting Point, Hong Kong, 68–69 Millenium Democratic Party, South Korea, 31 Minimum Sum scheme, Singapore, 52, 60 Minjoong democracy movement, 32 Muto Sanji, 10 Nathan, S.R., 54 National Assistance Law, Japan, 11 National Congress for New Politics, South Korea, 31 National Employment Insurance, South Korea, 34 National health insurance, Japan, 10 National health insurance, South Korea, 23–25, 33–34 National health insurance, Taiwan, 39–40, 43 National Pension Insurance scheme, Japan, 12 National Pension Insurance scheme, South Korea, 23, 25–26, 33–34

National People’s Congress, 82–83 New Democratic Party, South Korea, 30 New Democratic United Party, South Korea, 31 New Frontier Party, Japan, 15 New Gold Plan, Japan, 13 New Korea Democratic Party, South Korea, 29–30, 32 New Korea Party, 31 New Liberal Club, Japan, 14 New Party, Taiwan, 44 Nonaka, Hiromu, 21 Ong, Teng Cheong, 55 Opposition movement, Taiwan, 43–45 Park, Chung-hee, 28, 30, 34 Park, Jong-cheol, 32 Park, Tae-joon, 31 Party for Peace and Democracy, South Korea, 30 Pension system, China, 75–78, 85–86 Pension system, Japan, 11–12 Pension system, Singapore, 51–52, 60–61 Pension system, South Korea, 23, 25–26, 33–34 People First Party, Taiwan, 44 People’s Action Party, Singapore, 54–59, 88 People’s United Front, Singapore, 56 Public Assistance Scheme, Hong Kong, 64

Index Public housing, Hong Kong, 65, 68 Public housing, Singapore, 50–51 Red Guards, 81 Reform Club, Hong Kong, 68 Regime theory, 2 Rendel Constitution, Singapore, 54 Reunification Democratic Party, South Korea, 30 Rhee, In-je, 31 Rhee, Syngman, 27–28, 31 Rice Riots, Japan, 9, 18 Riots, Hong Kong, 71 Riots, Singapore, 55 Roh, Tae-woo, 30 Rotary Society, 45 Sakigake Party, Japan, 15, 20 Sato, Japanese prime minister, 11 Self-employment assistance, Singapore, 53 Shao-Kang scheme, Taiwan, 41 Shinsambetsu, Japan, 17 Shinseito, Japan, 15 Shinshinto, Japan, 15 Singapore Alliance, 56 Singapore Labor Front, 54, 56 Singapore Labor Party, 56 Singapore Progressive Party, 56 Singapore Socialist Party, 56 Social assistance, Hong Kong, 63–65

113

Social assistance, Japan, 7–8 Social assistance, Singapore, 52–54 Social assistance, South Korea, 26–27 Social assistance, Taiwan, 41 Social Democratic Party, Japan, 15, 20 Social Security Allowance Scheme, Hong Kong, 63–65 Sohyo, Japan, 14–15 Sokagakkai, Japan, 15 Soong, James, 44 Special Needs Allowance, Hong Kong, 64 Student movement, China, 83–84 Student movement, Hong Kong, 71 Student movement, Japan, 16 Student movement, South Korea, 31–32 Sun, Yat-sen, 42, 46 Supreme Commander of Allied Powers, 11 Tanaka, Kakuei, 12 Tang, Fei, 41 Temporary Provisions, Taiwan, 39, 42 Three Principles of People, 46 Tiananmen Square, 84 Tiao Yu Tai Islands, 71 Trade Union Congress, Hong Kong, 70 Treaty of Nanjing, 66

114

Index

Unemployment benefit scheme, Taiwan, 40 Unemployment insurance, China, 78 Unemployment insurance, Japan, 11 United Democrats of Hong Kong, 69 United Liberal Democrats, South Korea, 31 United Malays National Organization, 54 Value Creation Society, Japan, 15 Wei, Jianxing, 83 “Welfare capitalism,” the term, 2 Welfare movements, Taiwan, 45 Welfare organizations, Hong Kong, 65–66, 71–72 Welfare organizations, Singapore, 53–54 “Welfare state,” the term, 1–2

Welfare state extension, 20–21, 35, 73 “Welfare state regime,” the term, 2 Welfare state retrenchment, 89 “Welfare state system,” the term, 1–2 Welfare state systems, classification of, 3 White Paper on Social Welfare, Hong Kong, 66 Women’s movement, Japan, 17 Workers’ accident insurance, Japan, 11 Workers’ pension insurance, Japan, 10–11 You, Ching, 44 Yu, Kuo-hua, 39 Yun, Po-son, 28 Yushin Constitution, South Korea, 28, 31, 34 Zhao, Ziyang, 79, 84 Zhou, Enlai, 79, 81 Zhu, Rongji, 80, 83, 84

About the Author

CHRISTIAN ASPALTER is currently teaching at the Department of Public Policy and Administration of Shantou University in China and at the Department of Social Work and Social Administration of Hong Kong University.