The East Asian Welfare Regime

Final Version

The East Asian Welfare Regime:

A Political-Cultural Perspective

Christian Aspalter

(The University of Hong Kong)

1. Introduction

In recent years the study of East Asian welfare state systems succeeded in making the transition from a pioneering to a maturing field of study. Not only have local researchers increased the level of research activity, with regard to width and depth of study topics, but also international studies achieved great progress, most of all the comparative country studies.

This brief study has two objectives. One to bring a bit closer the wonderful world of welfare state theories to our current mind, underlining its structural composition, similarities and differences of theories, to give an overall view of the situation. It is important for research studies and researchers alike to angle themselves in the different dimensions of theoretical thought, to connect to further similar studies, as well as to discover new, not yet familiar studies, and to bring them all again closer to one’s own findings.

The many theoretical streams that have been developed show that today we are in a lucky position of not having merely a mainstream of thought with some minor approaches to welfare being neglected on its side. But rather, we may enjoy the plurality of theories, which as a whole gained momentum in the mid-1990s, with an exceptional growth in e.g. gender-based theories. Comparative social welfare theories, too, have had the chance to grow and prosper. Hence, it may be time, in the first part of this study, to shortly recapture the overall state of affairs, in major parts of the theoretical field, paying special attention to developments with regard to comparative theories.

The second part of this study sets out to connect the overall theoretical picture with new developments of the welfare state in East Asian countries – the second objective of this study. After briefly describing the overall development of welfare state systems in East Asia taking the cases of Taiwan, Korea, and Hong Kong, the paper will draw several conclusions noting that both politics and macro-cultural determinants are vital in determining the historical path of welfare state systems in the long run. Rather than concentrating exclusively on the direct causal relationship between political and institutional determinants and welfare state development, the author identifies in this study cultural determinants as the key, macro-level factor determining these very socio-political and institutional determinants.

2. The World of Welfare State Theories

In comparative social policy, welfare state systems in East Asia take on a particular interesting role, as they may serve as a testing ground for many theories, be they (a) descriptive, or representational, (b) explanatory, or analytical, or (c) normative theories (Table 1). Both descriptive and explanatory theories are used for classifications of welfare state systems, whereas the latter clearly exhibit, by their very nature, more explanatory capacity, hence being more salient to the study of welfare state comparison.

Each explanatory theory may be grouped into either (i) actor-based (conflict) theories, or (ii) structural (functional) theories (Table 2). Actor-based theories rest on the firm prediction that different actors will achieve different results in social welfare policy, and hence, that it is the actors, their very nature, their power, their programs, and connections that matter. These actors usually include the State, corporatist institutions, political parties, ruling elites, governing administrators, labor unions, social movements, interest groups and organizations, social advocates and activists, but also international organizations, such as the IMF and the World Bank.

As to structural theories, they in general predict a convergence of social welfare policies based on common structural determinants such as e.g. the degree of economic development, urbanization, modernization, the advance of capitalism, and even evolutionary theories, such as that of T.H. Marshall (1950, 1964) or that of Collier and Messick (1975).

Table 1: Brief Overview of Social Policy Theories:

With special emphasis on comparative theories

Descriptive Theories / Explanatory Theories / Normative Theories
· historical analyses
· describing particular welfare states systems, or families of welfare state systems
· identifying welfare state clusters
· comparing welfare state systems and social policies
· setting up classifications of welfare state systems and social policies / · explaining determinants of the welfare state in general and social policies in particular
· explaining past and current developments
· explaining comparative differences and similarities, deviations in social welfare policy
· projecting past trends and developments into the future / · evaluating and criticizing welfare state systems and social policies
· identifying problems, shortcomings, and needs
· identifying particular failures and successes in social policy
· proposing new social policies, or new directions/ key solutions in social welfare policy
Examples:
Titmuss (1958, 1974)
Kersbergen & Becker (1988)
Esping-Andersen (1987a, 1990, 1998)
Castles & Mitchell (1991)
Leibfried (1992)
Deacon (1992)
C. Jones (1985, 1990)
Ostner & Lewis (1995)
Palier & Bonoli (1995)
Ferrera (1996, 1998)
Taylor-Gooby (1996, 1998)
Kaufmann (1997)
Sainsbury (1999)
O’Connor et al. (1999)
Holliday (2000)
Gough (2000)
K.L. Tang (2000)
Ferrera & Rhodes (2000)
Olsson Hort (2000)
Ramesh (2000, 2003)
Huber & Stephens (1999, 2001)
Aspalter (2004)
Abrahamson (2003)
Ferrera & Hemerijk (2003)
Clasen & Oorschot (2003)
Mesa-Lago (2003)
Haggard & Kaufmann (2004)
Holliday & Wilding (2004)
Gough et al. (2004)
Lewis & Surender (2004) / Examples:
Wilensky & Lebeaux (1965, [1958])
Kerr et al. (1960)
M. Olson (1965, 1982)
Collier & Messick (1975)
Hewitt (1977)
Castles (1982, 1985)
Korpi (1983)
Shalev (1983a,b)
Esping-Andersen (1985, 1987b)
Pascall (1986)
Skocpol (1987, 1992)
Weir, Orloff, Skocpol (1988)
Baldwin (1990)
Budge & Keman (1990)
Immergut (1992, 1998)
C. Jones (1993)
George & Wilding (1994)
Kersbergen (1994, 1995)
P. Pierson (1995)
Y. Ku (1997)
Gauthier (1996)
Midgley & Hughes (1997)
Woldendorp et al. (1998)
Mishra (1981, 1984, 1999)
H. Kwon (1998, 1999)
Lavallette & Mooney (1999)
O’Brian (2000)
Swank (2001, 2002)
Aspalter (2001a,b, 2002a,b)
Saint-Martin (2002)
Rieger & Leibfried (2003)
Ahn & Olsson Hort (2003)
Kim & Ahn (2003)
Allan & Scruggs (2004) / Examples:
Gilbert & Gilbert (1989)
Sherraden & Gilbert (1991)
Orloff (1993)
Sainsbury (1994)
Van Parijs (1994, 1998)
George & Miller (1994)
Midgley (1995, 2001, 2003)
Gilbert (1995)
Taylor-Gooby & George (1996)
O’Connor (1996)
Beverly & Sherraden (1997)
Midgley & Sherraden (1997)
Korpi & Palme (1998)
Giddens (1998, 2001)
Fitzpatrick (1999)
Hantrais (2000)
Shapiro & Wolff (2001)
Morrow-Howellet al. (2001)
Skocpol & Leone (2001)
Esping-Andersen (2002)
Walker (2002)
Lister (2002, 2003, 2004a,b)
Beck et al. (2003)
Body-Gendrot & Gittell (2003)

Table 2: A Focus on Explanatory Theories:

The Basic Distinction between Actor-based and Structural Theories

Actor-based (conflict) theories / Structural (functional) theories
Examples:
M. Olson (1965, 1982)
Downs (1968)
Piven & Cloward (1971)
Rimlinger (1971)
George (1973)
Janowitz (1978)
Stephens (1979)
Castles (1982, 1985)
Korpi (1983)
Ferrera (1984, 1993)
Esping-Andersen (1985, 1990)
Baldwin (1990)
Budge & Keman (1990)
Immergut (1992, 1998)
Skocpol (1992)
Kerbergen (1994, 1995)
P. Pierson (1995)
Wolderndorp et al. (1998)
Lavallette & Mooney (1999)
O’Brian (2000)
Taylor-Gooby (2001)
Aspalter (2001a,b, 2002a,b)
Kim & Ahn (2003)
Ahn & Olsson Hort (2003)
Allen & Scruggs (2004) / Examples:
Heiman (1980, [1929])
T.H. Marshall (1950, 1964)
Polanyi (1957)
Wilensky & Lebeaux (1965, [1958])
Kerr et al. (1960)
Miliband (1969, 1991)
O’Connor (1973)
Wilensky (1975)
Collier & Messick (1975)
Ginsburgh (1979)
Gough (1979)
Mishra (1981, 1984, 1999)
Offe (1972, 1984)
Dahrendorf (1985)
Habermas (1989)
C. Jones (1990, 1993)
Rieger & Leibfried (2003)

In comparative social policy, there are several approaches and perspectives that may be distinguished from each other. The range of theories is wide, integrating economic, political, cultural, and gender-based theories of classification.

Why is it so important to identify and classify welfare regimes? For one, it facilitates the business of theorizing (explaining) welfare developments, be they in the past, in the present, or the near future. It proofs be a vital ground for testing general welfare state theories. Besides the identification of underlying factors and determinants, international comparative studies serve as a tool to also understand domestic developments and issues from a different, more objective – and hence scientific – angle.

In the face of the numerous possible determinants and impact factors that have been identified in the past, the business of welfare state comparison is vital to sort out the more important from the a bit less important factors, to sort out short-term from long-term determinants, to establish a hierarchy/a structure of causal relationships, and to identify the permanent interplay of different causes and underlying or side factors.

In Table 3, four possible approaches in the tradition of “explanatory” comparative welfare theory have been depicted. Among them are three more familiar ones, focusing on the cultural argument, the political economy argument, and the socio-political/institutional argument.

Table 3: Explanatory theories in Comparative Social Policy:

A focus on cultural, political and economic approaches

Structural theories / Actor-based theories
Theories that focus on
economic and political determinants
representatives:
Wilensky & Lebeaux (1965, [1958]), Wilensky (1975), Wilensky & Turner (1987), Deyo (1989, 1992),
Mishra (1990), Gough (2000), Holliday (2000), Ebbinghaus & Manow (2001)
Haggard & Kaufmann (2004) / Theories with a focus on
socio-political & institutional determinants
representatives:
Esping-Andersen (1987a, 1990, 1998), Kersbergen & Becker (1988), Mishra (1990), Immergut (1992, 1998),
Kersbergen (1994, 1995), Palier & Bonoli (1995),
Huber & Stephens (2001), Aspalter (2001a,b, 2002a,b)
Theories with a focus on
cultural determinants
representatives:
Catherine Jones (1990, 1993, 1999),
Rieger & Leibfried, (2003) / Theories that focus on both political
and cultural determinants
first theories by:
Max Weber (1991, 1994),[1] Almond & Verba (1963),
Verba et al. (1987), Ellis et al. (1990),
Rueschemeyer et al. (1998)*

Notes: * These theorists did not conduct comparative social policy – yet, their theoretical approach and comparative analyses may provide vital impetus for current research in comparative social welfare policy.

The fourth group represents an amalgam of both the socio-political/institutional and the cultural argument. This group integrates these two streams to the same extent, hence putting forward a new independent, and yet again more sophisticated, theoretical argument that may explain more case studies in greater depth, more historic and current developments, and more deviations – in particular with regard to welfare regimes.

The usefulness of this new argument has been, in brief, confirmed (cf below) in the case of:

(a)the similarity of France in comparison to its immediate Continental European neighbors,

(b)the similarity of Canada in comparison to other Anglo-Saxon countries in the Commonwealth that have a strong Labour Party, and

(c)the differences between the conservative-led welfare regimes of East Asia and that of the United States.

3. Country Studies

3.1. Sketching Welfare Development in Taiwan

The starting point for and the logic behind the construction of the Taiwanese social security system again sets the case of Taiwan, to some extent, apart from its Northeast Asian neighbors. In Taiwan, the slow process of implementing labor insurance set off in 1950 was prompted by the defeat of the Kuomintang on the Mainland by the Communists, and the launching of a labor insurance program as early as in 1948 in, at that time, Communist-controlled Manchuria and, then, in all of Mainland China (Chow and Aspalter, 2003).

Legitimacy problems and the continuous attempt to pacify labor unions stood at the center of the government’s motivation to introduce new welfare programs, and to extend coverage of the existing labor insurance. There were no Communists – or left-wing parties – in Taiwan during the authoritarian rule of the Kuomintang, from 1945 to 1987. However, there were significant oppositional forces from the very beginning, as independent candidates were allowed to join local government elections as early as 1951.

Most locals regarded the Kuomintang regime to be alien to Taiwanese soil, as almost all government officials and high-ranking military officers, at that time, were born in Mainland China. The rise of powerful political forces in the mid-1970s that later culminated in the formation of the Democratic Progressive Party pushed the Kuomintang regime, to speed up social reform and further extend the coverage of social security systems.

In doing so, the KMT had to incorporate workers and farmers in what was, in fact, a comfortable welfare state system, which however until the mid-1980s only catered to certain privileged groups that were needed to support the Kuomintang regime – above all government employees, military personnel, and private school teachers and employees (Aspalter, 2002b; Ku, 1997; H. Chan, 1985).

Beginning with the year 1980, the government started to address social welfare problems more seriously, at it enacted a series of new welfare laws and programs, starting with the introduction of a new social assistance scheme of that year.

With the lift of Martial Law and the onset of democracy, the conservative Kuomintang regime needed, for the first time, to compete for votes on national, provincial, county and city level. It is largely for this reason that in 1987 Premier Yu Kuo-Hua announced the plan to introduce a national health insurance system by the year 2000. Due to heightened political pressure – with the rise of powerful social welfare movements and opposition parties – a national health insurance was enacted much earlier, in 1994, and went into operation in March of the following year. The Farmers Health Insurance Law was set up in 1989, and in 1990 and 1991 special health insurance schemes were established to cater to low-income families and the handicapped (Chan and Yang, 2001).

In the present day, the Taiwanese welfare state is in effect, to a great extent, universal – with regard to National Health Insurance (introduced in 1995), and universal old-age allowances for all citizens aged 65 and above. In recent years, the government repeatedly promised and, then again, delayed the introduction of a national pension scheme. Decision makers tend, for the time being, to favor a balance between a funded and a non-funded scheme in setting up the design for a national pension scheme, the timing of its introduction and the institutional design are still uncertain.

3.2. Sketching Welfare Development in Korea

The development of the welfare state in South Korea only took off in the early 1960s, and was continued to be rather incremental for another two and a half decades. The first social security schemes that have been implemented were the Civil Service Pension of 1960 and the Military Personnel Pension Scheme of 1962, followed by the introduction of the Industrial Accident Compensation Insurance in 1964, and the beginning of the Livelihood Assistance Scheme and experimental health insurance schemes in 1965. The timing of this new wave of social security programs was not accidental.

A military coup d’état put an abrupt end to the first democratic government that lasted less than a year, from August 1960 to May 1961. For two and a half years, the country was ruled by a military junta, only to be replaced by another authoritarian regime, under the President Park Chung-Hee. The lack of legitimacy and support for the new governing elite represented the key motive behind the formation and extension of social security and welfare programs in the long period of authoritarian rule from 1961 to 1987 (H. Kwon, 1998; Aspalter, 2001a).

Only with the onset of formal democracy, welfare state development shifted gear and a series of vital extensions of the social security system took place. The logic of the formation of Korea’s welfare state system may resemble a great deal that of its neighbors Japan and Taiwan, yet when looking closer, apparent differences become visible – one point in concern is company welfare provision.

The industrial landscape of both Japan and Korea is dominated by large corporations – in Taiwan small companies are dominant – while industrial relations are largely communitarian (based on harmony and integration) in Japan, they are relatively patriarchal and authoritarian in Korea (cf S. Chan, 2002), which is reflected in the great level of industrial strikes and the outbursts of violence in industrial disputes in Korea.

Korean Labor unions are strong, but their activities do not yet have a decisive effect on employment security, wages, working hours, and welfare provision of ordinary workers and employees. Therefore the institutional set-up of the Korean welfare state differs significantly from that of Japan, with regard to the importance of company welfare in particular, and public welfare provision in general. Public and private sectors in Korea spend 10 and 1 percent of GDP respectively on social welfare (cf Holliday, 2000).

Korea’s welfare state system has been universalized to some extent in the last one and a half decades, but is far from being a universal welfare state that grants social rights based on citizenships. Public assistance continues to be means-tested and highly stigmatized.

The pensions system is not unified yet, since there are still four different schemes existing: (1) for government employees, (2) military personnel, (3) private school teachers and employees, and (4) the rest of the population. In addition, up to one third of the urban workforce is not covered or evade the coverage of the system.

Although universal coverage was introduced for the National Health Insurance, it still does not provide adequate protection against income loss from illness. As of today, the health service system, in essence, constitutes a “market-oriented, private-sector dominated, fee-for-service payment system” (Kim and Lee, 2004; S. Kwon, 2003; Yang, 2002: 64).

3.3. Sketching Welfare Development in Hong Kong

Hong Kong certainly stands out a bit from the other two East Asian welfare state systems examined above. From 1945 to 1997, Hong Kong was under British Colonial rule – hence, some features of the welfare state system we find in Hong Kong resemble quite a bit that of its former mother country, the United Kingdom. An obvious point in concern is the emphasis on – rather redistributive and, hence, expenditure heavy – means-tested, and quite generous, social assistance schemes, which still form a core column of the Hong Kong welfare state system.

In addition, health care is funded to a large extent out of government revenue, providing each citizen with a comfortable safety net. Health care in Hong Kong is very affordable, as fees for services provided are kept very low. In terms of safety provided, the health care system in Hong Kong matches to a large extent the National Health Service of the United Kingdom.

A key factor for development of a welfare state in Hong Kong was waves of massive migration from Mainland China into Hong Kong after World War II, and this by the millions. The desperate situation of new arrivals led to the engagement of foreign charities and NGOs in Hong Kong, which led to the development of a strong local NGO sector by the end of the 1960s. Another important factor was the fear of the government, in the late 1960s and early 1970s, that the Cultural Revolution could sweep into Hong Kong, and that Communist forces would gain considerable strength in the territory. As a result, in 1971, the government of Hong Kong started to act and, subsequently, launched a series of new social welfare policies, putting social welfare provision high up on its agenda (Chow, 1980).