Social Welfare Development in East Asia Also by Kwong-leung Tang COLONIAL STATE AND SOCIAL POLICY MODELS OF WORKPLACE TRAINING (with Jacqueline Cheung) Social Welfare Development in East Asia Kwong-leung Tang Associate Professor College of Arts, Social and Health Sciences University of Northern British Columbia Canada © Kwong-leung Tang 2000 Softcover reprint of the hardcover 1st edition 2000 978-0-333-75460-3 All rights reserved.No reproduction,copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced,copied or transmitted save with written permission or in accordance with the provisions of the Copyright,Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency,90 Tottenham Court Road,London W1P 0LP. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The author has asserted his right to be identified as the author of this work in accordance with the Copyright,Designs and Patents Act 1988. First published 2000 by PALGRAVE Houndmills,Basingstoke,Hampshire RG21 6XS and 175 Fifth Avenue,New York,N.Y.10010 Companies and representatives throughout the world PALGRAVEis the new global academic imprint of St.Martin’s Press LLC Scholarly and Reference Division and Palgrave Publishers Ltd (formerly Macmillan Press Ltd). ISBN 978-1-349-41340-9 ISBN 978-0-333-98549-6 (eBook) DOI 10.1057/9780333985496 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. A catalogue record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Tang,Kwong-Leung Social welfare development in East Asia / Kwong-Leung Tang. p.cm. Includes bibliographical references and index. ISBN 978-1-349-41340-9 1.East Asia—Social policy.2.Public welfare—East Asia.I.Title. HN720.5.A8 T36 2000 361.6'1'095—dc21 00–027538 10 9 8 7 6 5 4 3 2 1 09 08 07 06 05 04 03 02 01 00 Contents List of Tables vi Preface vii 1 The Study of State Welfare in East Asia 1 2 East Asia and Theories of Comparative Social Policy 19 3 The Capital Investment State of Singapore 38 4 Authoritarianism and the Social Insurance State: The Case of Taiwan 64 5 The Authoritarian Developmental State and Social Welfare in Korea 89 6 Toward a Capital Investment State? The Social Welfare Development of Hong Kong 113 7 Social Welfare Provisions in East Asia and Quality of Life 135 8 The Future of State Welfare in East Asia 156 Notes 175 References 183 Index 209 v List of Tables 1.1 Economic indicators for East Asian little tigers 2 1.2 Social indicators for East Asian little tigers 2 1.3 Human Development Index for Asian tigers, 1975–1997 3 3.1 Major extensions of the CPF in Singapore, 1968–1998 45 3.2 Educational spending in the four little tigers, 1980 and 1996 51 3.3 Health spending in the four little tigers, 1990–1997 51 3.4 Population aged 65 and above (as percentage of total population) in the Asian little tigers, 1997 and 2015 62 4.1 Low-income households and population in Taiwan, 1990–1997 74 4.2 Net expenditure on social welfare in Taiwan, 1990–1997 76 5.1 State expenditure on social welfare in Korea, 1979–1995 96 6.1 Social services spending as proportion of GDP in Hong Kong, 1975–1996 120 6.2 Number of people on public assistance in Hong Kong, 1985–1999 125 7.1 Social welfare spending of Asian little tigers, 1995 137 7.2 Social spending in the Asian little tigers 138 7.3 Social welfare provision in the four Asian tigers 141 7.4 Congruence of HDI and GNP ranking, 1997 143 7.5 Gender Empowerment Measure (GEM) for Asian little tigers and selected countries, 1997 144 7.6 Absolute poverty (percentage of households in poverty) in Asian little tigers, 1966–1996 145 7.7 Gini coefficient for household income in East Asian little tigers, 1966–1996 149 7.8 Asian tigers’ income ratio per capita ($US), 1980–1994 150 vi Preface This book was conceived with two purposes in mind. One was to con- tribute to the growing literature on social welfare development of East Asian little tigers (Hong Kong, Singapore, South Korea, and Singapore) by locating their welfare development in the context of developmental states and developmental ideologies. The other was to fill in the gap left by comparative social policy analysis which has long neglected the rich economies in East Asia. While welfare state studies have attained a sophisticated level of development in terms of theory generation and policy analysis, the field has been weakened by a blatant neglect of economically rich East Asian little tigers. Although the literature on EastAsian welfare development is growing rapidly, yet it is still over- represented by single-country studies whose conclusions and findings may not be generalizable to the neighbouring countries. The availabil- ity of research papers and book chapters partially meet the needs of readers interested in Asian welfare development. Nevertheless, the number of texts which attempt to compare and contrast welfare devel- opment in East Asia is meagre. Systematic, cross-national study of East Asian welfare development has long been overdue. The book raises a number of central issues for those interested in comparative social policy. What is the present level of social welfare development in these four countries? What kinds of welfare institution have these countries established? What is the nature of these institu- tions? Given their economic might, why did these East Asian countries refuse to adopt western-style welfare states? What are some of the major determinants which would affect the future course of welfare develop- ment? Will their approach to social welfare be different after the onset of Asian economic crisis? Unlike those welfare state studies which often pose the question ‘what determines welfare state development?’, the point of departure of this book is: why has social welfare development been underdeveloped in East Asia? Acknowledging a host of factors which explain their underdevelopment, this study puts emphasis on the role of the devel- opmental states. In line with the current interest in state-centred ana- lysis, the important role of the state in shaping the economic growth as well as social welfare will be explored and analysed. Such emphasis on state actions and policies does not preclude analysis of societal forces of vii viii Preface labour movement and business stances toward welfare. The concept of developmental states will also be used to explain the gradual but steady emergence of social welfare in these countries. We end our discussion on a sombre note. After five decades of development, the develop- mental states in East Asia are still averse to significant welfare institu- tions such as family allowance, well-articulated active labour market policies, and unemployment insurance. The concepts of social entitle- ment as right and redistributive justice are not embraced by political leaders in these states. We hope the book will prove useful to students studying the role of the state, social welfare development in Asia, and government policy. It will also be useful to academics interested in East Asian welfare develop- ment. We hope anyone who has a strong interest in the interface of developmental states and social welfare will find it of value. I must thank the Madam K. Li Memorial Fund for its funding, which allowed me to make several research trips to Hong Kong, Taiwan, Singa- pore, and Hawaii. Thanks are also due to Florence Cheung and Jacqueline Cheung, who have typed, read, and commented on various chapters. However, given the scope of the book, errors and omissions no doubt remain. My gratitude and respect goes to Sarah Barrett for her meticulous work. Finally, special thanks to Tim Farmiloe and Karen Brazier of Macmillan Press, who offered help and suggestions. The standard disclaimer applies: any remaining errors are the sole responsibility of the author. 1 The Study of State Welfare in East Asia Introduction Before the onset of the Asian economic crisis, the rapid economic growth of East and Southeast Asia has astonished the world. In particular, East Asia is considered as the most dynamic economic region in the world. Much of the growth was attributable to the achievements of Japan and the four tigers (Hong Kong, Singapore, South Korea, and Taiwan). These ‘little tigers’ have experienced very fast economic rate in the last three decades. Parallel to such phenomenal growth has been a big leap in per capita gross domestic product over a 30-year period. Hong Kong’s per capita GDP increased from US $2,422 in 1965 to US $12,060 in 1994, while that for Singapore went up from US $1,685 to US $13,043. The other two tigers experienced very similar success in the same period: Taiwan (US $267 to US $11,629) and South Korea (US $623 to US $5,197). The world’s highest per capita growth rate is found in Singapore (Ermisch & Huff, 1999). Per capita income in Hong Kong and Singapore has exceeded those of the United Kingdom, Australia, and Canada. In the same period, all the tigers attained an impressive record of full employment. Unemployment for the tigers was less than 3 per cent for most of the times. This was substantially below the structural unem- ployment rate in the other major industrialized countries, where it ranged from 5.8 to 10.6 per cent (OECD, 1996). According to the Organization for Economic Cooperation and Development, Asian tigers have formally achieved ‘developed country’ status (Enricht et al., 1997). When many of the developing countries fail to replicate the economic success of the advanced industrial countries, the economic miracle in the East Asian tigers carries an added significance. As a result, there has been massive literature published at their economic achievements, with researchers examining various aspects of their growth (Krueger, 1995). 1 K. Tang, Social Welfare Development in East Asia © Kwong-leung Tang 2000