Paper delivered at
Department of Sociology,
Doshisha University, Kyoto
25 January 2008

The Development of Social Welfare Policy in Taiwan:
Welfare Debates between the Left and the Right
Hou-sheng Chan
Professor, Department of Social Work
National Taiwan University

Introduction
Since the development and expansion of welfare state from the 1960s onward,
arguments between western countries around such issues have led to debates of
welfare ideology. And now the welfare ideology has fully developed. In this paper, we
attempt to examine the development of social welfare policy in Taiwan on the base of
the welfare ideology.
If we examine social policy in Taiwan from the past several decades, one would findthat there exists an imbalance between economic development and social welfare. The
government has been emphasizing the former, and, in some cases, putting off the latter.
However, the society has changed fast and the need of Taiwanese people for welfare
has become diverse and complicated. In the twenty-first century, Taiwan faces many
challenges in terms of social policy planning. For instance, how the government can
actively meet people’s needs and expectation; and how it is able to implement policy
through reasonable and sustainable plans.
In fact, differences between the main two political parties, the Kuomintang (KMT)
and the Democratic Progress Party (DDP), has brought about distinctive developmentin 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 thecoming of longevity society and the growing gap between the poor and the rich.

Social welfare and ideology
1Social welfare involves the collective consensus of a society. In the past when
Taiwanese government was drawing up welfare policy, related studies and referenceswere taken into consideration; and sometimes on spot investigation was also takenplace. However, these could only understand welfare measures on the surface. To
learn welfare institutions of the western societies and its ideology needs to fully
understand the history, economic and politics of this societies. Due to limitation oftime and space, we will not discuss this issue any further. Nevertheless, the welfare
ideology of the western world is shown in Chart One.

group interest○○ personal interest(left) Socialism
central control, plan

Chart One←→←→

capitalism (right)
liberal, market

the spectrum of welfare ideology

In this spectrum, we can see two extreme ideologies that affect welfare provision by
the sate. And base on this, different welfare systems are established. On the left, it isSocialism which concerns group interest; and, therefore, social policy tends to becontrolled and planned which the government has plenty space to interfere in. On theright, it is capitalism which cares about individual interest and emphasizes on laissez
faire. That is the less interference by the state the better; and welfare provision should
follow principles and rules of the market mechanism. Here, the spectrum is to help
better understanding of welfare systems around the globe. In reality, it is difficult tostumble on an extreme left or right social welfare institution.

Welfare state regimes
While talking about welfare ideology, it is important to mention the welfare state
regime theory. In his book, Three Worlds of Welfare Capitalism, Gosta
2

Esping-Andersen (1990) categorizes the welfare state into three major modes: theliberal welfare regime, the social democratic welfare regime and the historical
corporatist-statist legacy. Esping-Andersen employs two criteria, de-commodification
and universalism, to develop his theoretical structure. The first group includes
America, Canada and Australia. The second group refers mainly to the Nordic
countries. And the third contains countries of the European Continent, such as Austria,
France, German and Italy.
To recognize differences between three regimes, we shall explicate further by using
two criteria. First of all, de-commodification means to remove the dependence ofpeople on market by political force. Second, universalism indicates the scope ofservice provisions, being universal or selective.
The liberal welfare regime stresses on personal rights in market and opposes stateintervention. Thus, its welfare system focuses on social assistance and social
insurance that are based on means test. In this system, the level ofde-commodification is low and the universal service is little.
The social democratic welfare regime draws attention to universalism,
de-commodification, and de-familialization. Its welfare system provides plenty ofsocial service and work opportunities. Also, it serves family needs and allows women
to stay in work rather than to look after their family. Thus, the level ofde-commodification is high and services are generally universal. Most importantly,
the government actively involves in social welfare.
Finally, the historical corporatist-statist legacy accentuates the responsibility of boththe sate and the family in offering welfare service. On the one hand, it hopes tosubstitute market force with official provision. On the other hand, it asks the family toshare the burden of welfare service. And the state offers only supplemental assistanceand service. Therefore, the level of de-commodification is high, the universal service
is little, and the welfare system relies on family function.
The following table summarizes the nature of welfare state regimes.

Table 1 the nature of welfare state
LiberalSocial democratic

3

Conservative

family

marginal

marginal

nuclearmarketnuclearmarginal

marginal

nationmarginal

nuclear

supplemental

de-commodification

low

high

high

universal service

littlemanylittleThe welfare ideology of the KMT and DDP
Welfare ideology has an effect on the direction of social policy. However, using
de-commodification and universalism as the standard to examine the welfare ideologyof the KMT and DDP would be problematical. And it is not easy to place the twopolitical parties into the three regimes that Esping-Andersen has advocated. Welfare
ideology of the KMT has been that the level of de-commodification is low and theuniversal service is little. Still, the scale of state intervention is much higher than theliberal welfare regime. And it is likely to depend on the family function of providing
welfare service. On the other hand, the DDP’s welfare ideology has been that the levelof de-commodification is high and the universal service is little; and the stateinterference is less active than the social democratic regime. Apparently, social policyin Taiwan, whether developed by the KMT or DDP, is dissimilar from that of thetypical western welfare state.
In fact, we can realize more distinction between the KMT and DDP, if we simply
distinguish them with the spectrum of welfare ideology (see Chart One above). The
DPP’s ideology of social policy has always supported that the state social welfare play
an active protective function; that is, it is more center-to-left. Nonetheless, welfare
ideology of the KMT is inclined to adopt social insurance and social assistance asintervention measures; and it advocates joint responsibility of individuals, family andnation in caring the sick, the disable and children as well as old people’s economical
security. It is close to center-right at the welfare ideology spectrum. Furthermore, the
DPP supports the child allowances for all and believes that the government shouldtake up full responsibility in child care. The KMT are apt to assume that the family
4should take primary responsibility for child care.
In term of the financial security for old age, the two political parties have opposite
ideas in policy. The DPP sustains for general protection for the elderly, which ismaintained by revenue. Therefore the government takes full responsibility ineconomical security of old people. In this sense, the DPP is middle to the socialist on
the spectrum. As to the KMT, it prefers the social insurance model with spirit ofmutual cooperation from the community. The state moderately intervenes with theoperation of the market mechanism; and individual and their families share
responsibility in looking after safety and finance of the elderly. This makes the KMT
middle to the market capitalism on the spectrum.

Welfare budget and legislation in Taiwan
Since the 1990s, more than half of the working population enters the service sector.
Taiwan then becomes the post-industrial country. The social welfare legislation ismore comprehensive and the welfare budget grows even more rapidly. With politicaldemocratization, 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 (since 1950)

Table2
Enacted
year
1950
1950
1951
1953
1953
1958
1958
1964
1970

Social welfare legislation in Taiwan

Titles of Rules and Regulations

Revised year

Regulations governing Labor Insurance in Taiwan
Province
Servicemen’s Insurance Plan
Occupational Labor Insurance Plan for Taiwan
Province
Fishermen’s Insurance Plan
Insurance Program for Army, Navy and Air Force
1956
Personnel
Government Employees Law
Labor Insurance Act
1968,1973,1979,1988
1995,2000,2001,2002
Insurance Plan for Retired Employees(Insurance extensions terminated in July, 1985)
Servicemen Insurance Provisions
5

1973
1975
1980
1980
1980
1980
1984
1985
1985
1985
1987
1989
1989
1989

1990
1991
1992
1994
1995
1995
1997
1997
1997
1998
2000
2001
2002
2003
2007

Children’s Welfare Law
1993,1999,2000,2003
Comprehensive Safety Insurance for Students in
Taiwan Province
Insurance Provisions for Teachers and Employeesof Private Schools
Senior Citizen Welfare Law
1997,2000,2002
Regulations Governing the Protection of
1990,1995,1997,2001,
Physically and Mentally Disabled Persons
2003,2004,2007
Social Relief Law
Labor Standards Law
1996,1998,2000,2002
Health Insurance for Retired Government
1988, 1990
Employees
Health Insurance for Spouses of Retired
Government Employees
Health Insurance for Spouses of Retired Private
School Teachers, Employees and Their Spouses
Youth Welfare Law
2000,2003
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 of the Taiwan Provincial
Government (Applicable also to Taipei and
Kaohsiung Cities)
Temporary Provisions for Family Health
Insurance
Health Insurance for the Disabled andHandicapped
Employment Service Act
1997,2000,2002
National Health Insurance Law
1995,2000,2001,2002,
2005
Statute on Compensation for Victims in the“2-28” Incident
Anti-Juvenile Prostitution Law
Sexual Assault Prevention Act
Social Workers Law
Credit Union Law
Domestic Violence Prevention Act
Provisions for Assistance to Women andHouseholds in Difficulties
Voluntary Service Law
Gender Equality in Employment Law
Children and Youth Welfare Law
National Pension Act

Substantial growth in welfare budget (since 1980)

Table 3

Taiwan’s social welfare expenditure from 1980 to 2006
6

Items

Total

Social Welfare

Community

Retirement

AmountIncreasing

Expenditure

Development andPayments to(NT$)

Rate(％)(NT$ million)

Environmental

Pro-government

Sustainability

Employers

Year

1980

34,125--272,381

35.0

1981

45,590--310,445

14.0

1982

50,032--

319,517

2.9

1983

55,182--

316,192

-1.0

1984

58,999--353,871

11.9

1985

68,060--405,720

14.7

1986

72,338--418,962

3.3

1987

88,760--470,255

12.2

1988

100,160--

549,200

16.8

1989

130,420--

673,201

22.6

1990

150,782--

804,558

19.5

1991

103,134-

84,867945,225

17.5

1992

116,374-

88,52310311319.1

1993

91,046

29,20593,3561024255

-0.7

1994

134,182

24,82095,948996,698

-2.7

1995

143,737

19,834

108,600

10850778.9

1996

150,021

15,246

139,52111517626.1

1997

150,152

15,758139,832

1187011

3.1

1998

157,588

19,260129,272

12819968.0

1999

411,023

39,627

195,395

2230145

74.0

2000

293,349

22,309

121,967

1559700

-30.1

2001

250,146

23,433

120,6211551943

-0.5

2002

272,483

28,680121,643

1618129.6

4.3

2003

279,819

24,781

123,1171564799

-3.3

2004

285,691

25,217130,51115669680.1

2005

304,200

20,758133,804

15716850.3

2006309,881

20,046

134,772

1663807

5.9

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

Table 4Social welfare budget and its proportion of central
government budge
7

Year

Welfare budget (thousand NT
dollars)

Ratio of central government
budget (%)

1994

97,153,484

9.1

1995

141,296,399

13.7

1996

155,322,240

13.7

1997

157,903,228

13.2

1998

157,703,109

12.9

1999

160,371,049

12.8

2000

366,964,766

16.4

2001

298,432,047

18.6

2002

266,934,749

16.7

2003

287,624,470

18.3

2004

285,603,145

17.7

2005

289,131,554

17.7

2006

296,567,413

18.5

2007

309,880,813

18.6

2008

297,498,730

17.5

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

Table 5Year

Social welfare expenditure in GDP ratio from major nation
Taiwan USA Japan German France

UK

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

28.2

29.3

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

8

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
Source: Social Affairs Department, Ministry of Interior.

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 and proportionof such budget in central government’s total budget are higher than the budget when
the KMT was in power. And most of the social welfare budget is mainly for the oldpopulation, especially old age allowance for the elderly which accounts for almost
90% of social welfare budget. This is very different from the past when the KMT was
ruling. With regard to social welfare legislation, the KMT paid more attention to theestablishment of the system, particularly in social insurance schemes, such as thenational health insurance and the labor insurance. Based on Esping-Andersen’s pointof view, the KMT’s welfare ideology is similar to the liberal welfare regime. It iscenter to right in the spectrum of ideology, and gives more attention to developing
national economy.

New challenge of social policy in Taiwan
Different welfare ideology results in diverse development in social welfare in Taiwan.
Whether the centre-left or centre-right ideology, we can not ignore social changes andthe impact that these changes brought about in the 21st century. Observing somesocial phenomenon in recent years, we can easily find out issues that shall be tackled
in policy making in the future. For instance, the increase in unemployment causes a
chain effect to the community as a whole. The gap between the rich and the poor isexpanding. As well as the population is aging very fast. We shall discuss these matterslater. Both the KMT and DDP face new challenges to its welfare ideology whenhandling these problems. For example, to deal with the problem of the new poor ornearly poor, the KMT will not be able to rely on old social relief system; and it will
have to provide more welfare services and prepare more welfare budget in the future.
9

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.
Widening gap between the rich and the poor
According to recent household income survey by the Executive Yuan, it is discoveredthat the gap between individual and household income are enlarging and the net assetof family is declining. In 2001 survey, average annual household income dropped to8,900 NT dollars which was 9,100 NT dollars in 2000. The household income of thelowest 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 hasslightly 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.
Growing number of poor people
It has been seven years since the DPP is in administration. And population living inpoverty is increasing. The latest statistics of the Social Affairs Division of the Interior
Ministry illustrates that the number of low-income household and persons is swelling.
In 2000, 66,467 households and 156,134 people were low income. In 2001, thenumber of low-income household and population were 67,191 and 162,699. In 2004,
the low-income household exceeded 80,000 and reached 82,783; and the low-income
individual went beyond 200,000 and arrived at 204,216. By the end of 2006, thelow-income household is 89,902 and the low-income population is 218,151 people.
This is the highest in a decade.
In addition, the ratio of low-income household to all household has been increasing.
In 2000, it was 0.99%, and reached 1.02% in 2002. By the end of 2005, the ratio of
low-income household was as high as 1.16%. The growth is fast, compared to the
KMT administration period. Also, the ratio of low-income population to general
population has increased from 0.7% in 2000, 0.83% in 2003, 0.9% in 2004, to 0.95%
by the end of 2006. This is the highest in the population since the 1980s.
Increase in the elderly population

10

According to statistics by the Population Division of the Interior Ministry, the elderly
population in Taiwan in September 1993 reached 1.48 million, accounting for 7.1% of
the total population. And it exceeded the criteria of ‘aging society’, 7%, set up by theWorld Health Organization of the United Nations. From then, the aging population
continues to grow. By the end of 2002, the number of old people has exceeded 2
million. The latest statistics shows that by the end of May in 2007, the elderly
population is as high as 2.304 million, accounting for 10.06% of total population. Thismeans that for every ten people in Taiwan there is an old person. Taiwan will become
an aged society when the proportion reaches 14%. In June 2006, the Manpower
Planning Office of the Council for Economic Planning published its latest estimationof population from 2006 to 2051. It forecasts, in 2011, the elderly population willreach 10.72% of total population. In 2026, the proportion of old population will beat
20%. In 2040, it will reach 30%. In 2051, it is expected to be as high as 36.98%. And
based on this estimation, in 2017, the aged population will go above the young
population (under 15 years of age, the rate of 12.72%). By 2051, the elderly
population is 4.7 times of the young population.
Moreover, from 1951 to 1971, the dependant rate of the old was around 5%,
equivalent to every 20 working-age people supporting an elderly. At the end of May
2007, the ratio has risen to every 7.2 working-age people supporting one elderly.
According to the estimation mentioned above, in 2026 it will need every 3.3
working-age people to provide an old person, because the post-war baby boomers
enter old age. In 2051, it is expected every 1.5 working population to provide one
elderly person. With fast growing aging population, the need for economic security
and health care will bring enormous burden to the working population.

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 forunder three years of age, farmer welfare benefits etc It is argued that such policy has
become a great burden 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 still needs ample financial resources as backup. Under the recent
slowdown in economic growth, the government revenue shortage, coupled withchanging opinion of the public and challenge of Taiwan’s election culture, social
welfare in the future should be carefully planned.
11With slow development of economic in the past decade, social problems will be evenmore serious. In the future, the society may not be able to resist social impact,
including the widening gap between the rich and the poor, a high unemployment rate,soaring number of the aged population, health care spending expanded, and lessenforcement or even non enforcement in law and order etc. The harshest test forpolitical parties in Taiwan shall be, under the goal of social justice and fairness, tosolve social problems, to maintain social stability, to promote social integration, as
well as to improve industries and market through positive economic and employment
policy.
The welfare reforms under the new Labour government in Britain in the past decade
provide a helpful lesson for Taiwan. Reforms, such as extending the retirement age,encouraging single mothers and unemployed to go working in order to avoid welfare
dependency, and so on, are perhaps for future consideration in Taiwan. However, forpolitical parties in Taiwan to get rid of burden of the old welfare ideology is the mostimportant task.
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 new kind of
welfare state? It is obvious that political democratization 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 new kind of welfare state? This
question remains more examination.

References

Chan, Hou-sheng, & Ku, Yuen-wen (eds) (2001), New Thinking in Social Welfare
Policies, Taipei: Health, Environment, and Welfare Foundation.
Chan, Hou-sheng, and Yang, Ying (2001) “The development of social welfare in
Taiwan”, in Aspalter, Christian (ed.) (2001) Understanding Modern Taiwan:
Essays in economics, politics and social policy, Aldershot: Ashgate Publishing
Ltd. pp. 149-168.
Hsiao, Hsin-huang (2001) “Taiwan’s social welfare movements since 1980s”, in
Aspalter, Christian (ed.) (2001) Understanding Modern Taiwan: Essays in12economics, politics and social policy, Aldershot: Ashgate Publishing Ltd.
pp. 169-204.
Esping-Andersen, Gosta (1990), Three Worlds of Welfare Capitalism, Cambridge,
UK: Polity Press.

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