Department of Sociology, Doshisha University, Kyoto
25th January 2008

The Development of Social Welfare Policy inTaiwan:
Welfare Debates between
the Left and the RightGordon Hou-sheng Chan

Hou-Sheng Chan (詹火生), Ph.D. (Wales)
PRESENT POSITION：
Professor, Department of Sociology, Taiwan University.
Professor, Department of Social Policy and Social Work,Chi Nan University.
Director, Social Security Division, National Policy Foundation.

EXPERIENCES：
Professor & Chairman, Department and Graduate Institute ofSociology, National Taiwan University.
Professor & Director, Graduate Institute of Social Welfare,
National Chung Cheng University.
Vice Chairman, Council of Labour Affairs, Executive Yuan.
Minister of State, Executive Yuan.
Chairman, Council of Labour Affairs, Executive Yuan.

Introduction
Since the development and expansion of welfare state from the
1960s onward, arguments between western countries aroundsuch issues have led to debates of welfare ideology. And now
the welfare ideology has fully developed.

There exists an imbalance between economic development
and social welfare in Taiwan. The society has changed fast
and the need of Taiwanese people for welfare has become
diverse and complicated.

In the 21st century, Taiwan faces many challenges in terms ofsocial policy planning. For instance, how the government canactively meet people’s needs and expectation; and how it is able
to implement policy through reasonable and sustainable plans.

Introduction
In fact, differences between the two main political parties,
the Kuomintang (KMT) and the Democratic Progress Party(DDP), has brought about distinctive development in welfare
policy during recent years,
especially after
the DDP being
in power since
2000.

In following

paper, we shall look
into welfare
expenditure and related
legislations and examine the influence of welfare ideology
on social policy in Taiwan. And we shall point out that there
exists some challenges for the future, including the comingof longevity society and the growing gap between the poorand the rich.

Social Welfare and Ideology
Socialism

Capitalism(left)(right)which concerns:

which cares about:Group interest

Individual interest

CentralLaissez faireControlMarket mechanism

PlanHighest◎ Socialism◎ Welfare State◎ Fabian socialist

DegreeOfStateInterveneLowest◎ Social security State◎ Reluctant collectivist◎ Positive State ◎ Liberalism◎ Interest Liberalism◎ New Managerialism◎ Anti-collectivist◎ Laissez-faire◎ Capitalism

HighestDegree of de-commodification

Spectrum of Social Welfare Ideology

LowestWelfare State Regimes
Gosta Esping-Andersen (1990) in his book “Three Worlds ofWelfare Capitalism”, categorizes the welfare state into threemajor modes: the liberal welfare regime, the social democratic
welfare regime and the historical corporatist-statist legacy.
Esping-Andersen employs two criteria, de-commodification anduniversalism, to develop his theoretical structure.

I. De-commodification

II. Universalism

means to remove
the dependence ofpeople on market
by political force.

indicates the scope ofservice provisions,being universal orselective.

Welfare State Regimes
1. The liberal welfare regime
includes America, Canada and Australia.
Stresses on personal rights in market andopposes state intervention. Thus, its
welfare system focuses on social
assistance and social insurance that arebased on means test.
In this system, the level of decommodification is low and theuniversal service is little.

Welfare State Regimes
2. The social democratic welfare regime
refers mainly to the Nordic countries.
Draws attention to universalism, de-commodification,and de-familialization. Its welfare system provides
plenty of social service and work opportunities.
Also, it serves family needs and allows
women to stay in work rather than tolook after their family.
Thus, the level of de-commodification
is high and services are generally universal.
Most importantly, the government actively involves insocial welfare.

Welfare State Regimes
3. The historical corporatist-statist legacy
contains countries of the European Continent,such as Austria, France, German and Italy.
Accentuates the responsibility of both the sate and the family
in offering welfare service.
On the one hand, it hopes to substitutemarket force with official provision.
On the other hand, it asks the family toshare the burden of welfare service.
And the state offers only supplemental
assistance and service. Therefore, the level ofde-commodification is high, the universal service is little, andthe welfare system relies on family function.

Table1 The Nature of Welfare State
LiberalSocial DemocraticConservative

FamilyMarginal

Marginal

NuclearMarketNuclearMarginal

Marginal

NationMarginal

Nuclear

Supplemental

De-commodification

LowHighHigh

Universal ServiceLittle

ManyLittle

The Welfare Ideology of the KMT and DDPDistinguish
Spectrum

DPP
center-to-left

KMT
center-to-right

NationActive protective

Social insurance andassistanceChild care

Government fullresponsibility

Family take primary
responsibility

Economical security for
old age

General protection-revenue

Social insurance modelintervenes with market
mechanism operation

Spectrummiddle to the socialist

middle to the market
capitalism

De-commodification

HighLittle

LowLittle

Less active than the social
democratic regime

Much higher than the liberal
welfare regime

Universal Service
State Intervention

Welfare Budget and Legislation in Taiwan
Since the 1990s, more than half of the working population enters
the service sector. Taiwan then becomes the postindustrial country. The social welfare legislation
is more comprehensive and the welfare budget
grows even more rapidly.

With political democratization, Taiwan changed
the ruling party for the first time in 2000. Thiscertainly brought in some stimulation concerning
welfare legislation and spending, because the new ruling party has
different ideology in the social policy. And this takes Taiwan into
different phase particularly in social welfare.
Development of welfare laws, increasingly comprehensive (since1950)

Substantial growth in welfare budget (since 1980)

Table2.1 Social Welfare Legislation in Taiwan
Enacted(y)Titles of Rules and Regulations

1950

Regulations governing Labor Insurance in Taiwan Province
Servicemen’s Insurance Plan

1951

Occupational Labor Insurance Plan for Taiwan Province

1953

Fishermen’s Insurance Plan
Insurance Program for Army, Navy and Air Force Personnel

1958

Government Employees Law
Labor Insurance Act (1968~2002revised)

1964

Insurance Plan for Retired Employees(Insurance extensions terminated in July, 1985)

1970

Servicemen Insurance Provisions

1973

Children’s Welfare Law (1993~2003revised)1975

Comprehensive Safety Insurance for Students in Taiwan ProvinceTable2.2 Social Welfare Legislation in Taiwan
Enacted(y)Titles of Rules and Regulations

1980

Insurance Provisions for Teachers and Employees of Private Schools
Senior Citizen Welfare Law (1997~2002revised)
Regulations Governing the Protection of Physically and Mentally
Disabled Persons (1990~2007revised)Social Relief Law

1984

Labor Standards Law (1996~2002revised)

1985

Health Insurance for Retired Government Employees(1988~1990revised)
Health Insurance for Spouses of Retired Government Employees
Health Insurance for Spouses of Retired Private School Teachers,Employees and Their Spouses

1987

Youth Welfare Law (2000~2003revised)

1989

Farmers’ Health Insurance
Statute of Farmers’ Health Insurance
Temporary Provisions for the Health Insurance for Local
Representatives, Heads of Villages, Li and Lin , at All Levels ofthe Taiwan Provincial Government

Table2.3 Social Welfare Legislation in Taiwan
Enacted(y)Titles of Rules and Regulations

1990

Temporary Provisions for Family Health Insurance

1991

Health Insurance for the Disabled and Handicapped

1992Employment Service Act (1997~2002revised)

1994

National Health Insurance Law (1995~2005revised)

1995

Statute on Compensation for Victims in the “2-28” Incident
Anti-Juvenile Prostitution Law

1997

Sexual Assault Prevention Act
Social Workers Law
Credit Union Law

1998

Domestic Violence Prevention Act

2000

Provisions for Assistance to Women and Households in Difficulties

2001

Voluntary Service Law

2002

Gender Equality in Employment Law

2003

Children and Youth Welfare Law

2007

National Pension Act

Welfare Budget and Legislation in Taiwan
With regard to social welfare legislation,
the KMT paid more attention to the establishment ofthe system,
particularly insocial insurance
schemes, such as
the national healthinsurance andthe labor insurance.

Based onEsping-Andersen’s
point of view, the KMT’s welfare ideology is similar
to the liberal welfare regime. It is center to right in thespectrum of ideology, and gives more attention todeveloping national economy.

Table3 Taiwan’s Social Expenditure (1980~2006)
Items
Year

social welfare
expenditure(NT$million)

1980

34,125

1985

Total

community
development andenvironmental
sustainability

retirement
payments to progovernment
employers

Amount (NT$)

increasingrate(%)--

272,38135.0

68,060--405,720

14.7

1990

150,782--

804,558

19.5

1995

143,737

19,834

108,600

1,085,077

8.9

2000

293,349

22,309

121,967

1,559,700

-30.1

2005

304,200

20,758133,804

1,571,685

0.3

2006

309,881

20,046

134,772

1,663,807

5.9

Resource: Directory-General of Budget,
Accounting and Statistics, Executive Yuan, R.O.C.

Welfare Budget and Legislation in Taiwan
As shown in Table 4, during 2000 and 2007,
implemented by the DDP government and influenced by
the center-left welfare ideology, the welfare budget andproportion of such budget incentral government’s total budget are higher
than the budget when the KMT was in power.

And most of the social welfare budget ismainly for the old population, especiallyold age allowance for the elderly which accounts foralmost 90% of social welfare budget. This is very
different from the past when the KMT was ruling.

Table4 Social Welfare Proportion of Central Government budget
20

15

10

50 1994

1996

1998

2000

2002

2004

2006

2008

Ra tio of c e ntr al gove r nment budge tYear

1994

1995

1996

1997

1998

1999

2000

2001

20022003

2004

2005

2006

2007

2008

Socialwelfare

9.1

13.7

13.7

13.2

12.9

12.8

16.4

18.6

16.7

18.3

17.7

17.7

18.5

18.6

17.5

%

Resource: Directory-General of Budget,
Accounting and Statistics, Executive Yuan, R.O.C.

Table5 Social Welfare Expenditure in GDP ratio from major nation
Year

TaiwanUSAJapanGermanFranceUK

Korea

Singapore

China

1994

4.4

11.6

14.1

26.0

…

23.2

…

1.4

0.2

1995

5.2

11.8

14.7

25.9

28.9

22.9

3.2

2.0

0.2

1996

5.8

11.6

14.7

27.7

28.8

22.3

3.4

3.4

0.2

1997

5.7

11.4

15.1

28.229.3

21.7

3.6

1.4

0.2

1998

5.2

11.2

15.9

28.0

28.8

20.9

4.4

1.6

0.2

1999

4.9

10.9

16.6

27.8

28.6

20.9

4.8

1.5

0.2

2000

5.3

10.8

17.0

27.7

28.0

21.0

4.7

1.6

0.2

2001

5.8

11.2

18.0

27.7

27.9

23.6

5.7

4.0

0.3

2002

4.9

11.9

18.4

28.4

28.6

22.4

5.5

1.8

0.3

2003

5.0

12.2

18.4

28.8

29.3

23.0

…

1.9

0.4

2004

4.9

11.9

…

…

…

23.5

…

1.5

0.4

2005

5.1

11.9

…

…

…

…

…

…

…

2006

5.2

…

…

…

…

…

…

…

…

2007(f)

5.0
Resource: Social Affairs Department,
Ministry of Interior.

New Challenge of Social Policy in Taiwan
Different welfare ideology results in diverse development insocial welfare in Taiwan. Whether the centre-left or centre-rightideology, we can not ignore social changes and the impact thatthese changes brought about in the 21st century. Both the KMTand DDP face new challenges to its
welfare ideology when handling these problems.

For example, to deal with the problem of the newpoor or nearly poor, the KMT will not be able torely on old social relief system; and it will have toprovide more welfare services and prepare more
welfare budget in the future.

As to the growing number of old population, the DPP has
excessively granted allowance, which results in a heavy financial
burden to the state. This, of course, will be a rigorous test.

New Challenge of Social Policy in Taiwan
1. Widening gap between the rich and the poor
According to recent household income survey by the
Executive Yuan, it is discovered that the gap between
individual and household income are enlarging andthe net asset of family is declining.
In 2001 survey, average annual household income dropped to 8,900 NT dollars
which was 9,100 NT dollars in 2000. The householdincome of the lowest 20% fell off most, around 10.7% while
the highest 20% rose 2.1%. The difference between two
groups was 6.39 times. And it was the first time that the gap
between the poor and the rich reached 6 times. From 2002
onward, the gap has slightly decreased, from 6.1 times to
6.07 times in 2003. A investigation in 2006 indicated that the gap dropped to 6.01
times.
However, it is still considered a big gap, compared with the 4 or 5 times
during the KMT in power.

New Challenge of Social Policy in Taiwan
2. Growing number of poor people
It has been seven years since the DPP is in administration.
The population living in poverty is the highest in a decade.
And the ratio of low-income household to all household isthe highest since the 1980s.
In 2000 statistics, 66,467 households and 156,134 people werelow income. In 2001, the number of low-income household
and population were 67,191 and 162,699. In 2004, reached
82,783 and 204,216. By the end of 2006, the low-income
household is 89,902 and population is 218,151 people.
The ratio of low-income household to all household in 2000,
it was 0.99%, and reached 1.02% in 2002. By the end of 2005, the ratio was ashigh as 1.16%.
The growth is fast, compared to the KMT administration period.

New Challenge of Social Policy in Taiwan
3. Increase in the Elderly Populationyear

Total pop.

Pop. aged 65+% of total pop.

Dependent ratio% of support ratio

1993

20,995,416

1,490,801

7.10

10.48

47.60

1994

21,177,874

1,562,356

7.38

10.82

46.60

1995

21,357,431

1,631,054

7.64

11.13

45.78

1996

21,525,433

1,691,608

7.86

11.39

44.94

1997

21,742,815

1,752,056

8.06

11.62

44.22

1998

21,928,591

1,810,231

8.26

11.83

43.30

1999

22,092,387

1,865,472

8.44

12.04

42.60

2000

22,276,672

1,921,308

8.62

12.27

42.32

2001

22,405,568

1,973,357

8.81

12.51

42.07

2002

22,520,776

2,031,300

9.02

12.78

41.72

2003

22,604,550

2,087,734

9.24

13.02

40.97

2004

22,689,122

2,150,475

9.48

13.31

40.48

200522,770,383

2,216,804

9.74

13.60

39.74

Source : Household Registration Affairs, MOI.

Conclusion: Where is Taiwan Going?
The current welfare policy is largely given attention to hand out
allowance, such as the low-income elderly allowance, the old age
allowance, the child allowance for under three years of age, farmer
welfare benefits etc. It is argued that such policy has become a greatburden for the government,
especially when the revenue is no longer as much as
it should be. Although the government tries to bear
the main responsibility for social welfare, it stillneeds ample financial resources as backup.

Under the recent slowdown in economic growth, thegovernment revenue shortage, coupled with changing
opinion of the public and challenge of Taiwan’s election
culture, social welfare in the future should be carefully planned.

Conclusion: Where is Taiwan Going?
With slow development of economic in the past decade,social problems will be even more serious. In the future, thesociety may not be able to resist social impact, including thewidening gap between the rich and the poor,a high unemployment rate, soaring number of theaged population, health care spending expanded,
and less enforcement or even non enforcement inlaw and order etc.

The harshest test for political parties in Taiwan shall be, under
the goal of social justice and fairness, to solve social problems,
to maintain social stability, to promote social integration, as
well as to improve industries and market through positive
economic and employment policy.

Conclusion: Where is Taiwan Going?
The welfare reforms under the new Labour government
in Britain in the past decade provide a helpful lesson forTaiwan. Reforms,
such as extending
the retirement age,encouraging single
mothers andunemployed to go
working in order
to avoid welfare
dependency, andso on, are perhaps for
future consideration in Taiwan.

However, for political parties in Taiwan to get rid of
Burden of the old welfare ideology is the most importanttask.

Conclusion: Where is Taiwan Going?
Where will be the social welfare policy of Taiwan going?
Close to the liberal welfare regime or to the social
democratic welfare regime? Or moving toward a newkind of welfarestate?
It is obvious thatpoliticaldemocratization
has a positive impact
on thedevelopment of social
welfare in Taiwan.

And the competition for power between political parties
has increased pressures on the government to improve its
welfare services. Can Taiwan be said to move toward a newkind of welfare state? This question remains more examination.