What is social welfare?

The earliest social welfare may well have been the English Poor Laws instituted in the 14th century. The main goal of social welfare is to build a social safety net so that everyone in a society can enjoy certain basic guarantees. But what is meant by "basic guarantees"? There is no consensus on this term; each country defines it differently depending upon that country's history, culture, and politics. For example, Taiwan is currently facing the aging of its society, so there is an urgent need for social services for the elderly. Also, now that Taiwan is an industrialized society and nuclear households with working mothers are becoming the norm, new child care and education policies are being deliberated.

Taiwan's Big Five

Social welfare in Taiwan can be divided into five categories: social insurance, welfare services, social relief, employment assistance, and public health.

The three "big-ticket" items in social insurance are health care, unemployment insurance, and old age pensions. In Taiwan, the three pillars of the social insurance system are national health insurance, unemployment insurance, and "citizens annuities."

The first was implemented in 1994. However, to cope with the growing problem of unemployment among middle-aged and elderly people, the Executive Yuan began trial implementation of partial unemployment insurance on January 1 of this year. At present more than four million workers are covered.

The so-called citizens' annuity (payments to persons over 65) is the most controversial item. The government recently announced that this program will go into effect at the end of the year 2000. Many people are worried that it will become a bottomless pit draining the treasury. However, given that the proportion of Taiwan's population over 65 is still not yet very high and that the economy remains robust, the earlier the program begins the better, for this will reduce the burden for the future. This is also an opportunity to restructure the separate insurance programs that exist for civil servants, farmers, and workers, and moreover offers hope of improving the current situation of various counties and cities having different policies on subsidies to the elderly.

The prerequisite of any successful social insurance program is that it have a reliable funding mechanism. However, in Taiwan the government must currently appropriate funds from the general budget to make up for shortfalls in social insurance schemes. Clearly the success of these schemes will depend on the possibility of insulating them from political manipulation and creating a rational payment structure.

After social insurance, the second largest welfare item in Taiwan is "social services." Those served include children, youth, women, the elderly, and the handicapped. A variety of activities-nursing homes for the elderly, refuges for teenage girls in need of help, assistance to low income households, and so on-fall under this heading.

It is hard to draw a clear line between social services and social relief. Currently, the main forms of social relief in Taiwan include help for low-income households, disaster relief, and help to victims in emergencies. The categories of social relief, employment assistance, and public health account, in total, for less than 12% of Taiwan's overall social welfare expenditures.

How good is Taiwan's welfare system?

The recently passed budgets covering the second half of fiscal 1999 and all of fiscal 2000 (i.e. a total of 18 months) provide for total appropriations of more than NT$36.9 billion for social welfare. This accounts for 16.4% of the budget, more than for culture and education (16.1%), defense (15.8%), and economic development (15.7%). In fact, for the first time ever, social welfare is the single largest spending item in the national budget. And if one adds in civil service retirement benefits, which were formerly considered social insurance but now come under their own heading, social welfare outlays take up a full quarter of the national budget!

By OECD standards, Taiwan is only middling in terms of social welfare expenditures. In 1998, Taiwan's welfare budget (including health care and civil service retirement benefits) was 5.8% of GNP. This figure is well below the 12% of GNP that the US spent on social welfare in 1995 and the 22.5% the UK spent in 1993. Taiwan trails even more if one considers the non-governmental, non-profit private social welfare resources available in those countries. But Taiwan is well ahead of nearby countries like Singapore (which spent only 2% of its GNP on social welfare in 1995) and Korea (2.6%).

"Will today's welfare be tomorrow's monster?" Serious consideration must be given to preventing today's easy promises of handouts from becoming a drain on the treasury, a drag on the economy, and a burden on future generations. （photo by Hsueh Chi-kuang）