The political dilemma of the social investment transformation in Taiwan: lessons for newly industrialized welfare states

ABSTRACT

Social investment has emerged as a new policy paradigm in the world. The social investment transformation has triggered the ‘resource-transfer’ game in advanced welfare states. This study illustrates that this argument is problematic when we focus on the SI transformation in East Asian welfare states. By examining the Taiwanese welfare state, we found that the compressed modernity resulted in resource competition. After democratization, political actors exploited a window of opportunity to introduce income-protection to attract political support and votes. As a result, the old-age-oriented welfare state was consolidated, weakening the state’s financial capacity in expanding active social policies.

KEYWORDS:

• Taiwan
• newly industrialized welfare state
• social investment transformation
• resource transfer and resource competition

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1. After 2000, the Taiwanese government produced a social expenditure data according to OECD social expenditure data and its definitions. Therefore, before 2000, we use the government financial statistic data to recalculate the level of social expenditure and its compositions. Although different composition, it still can tell the resource competition between old social policies (social insurance and retirement payment) and active social policies (welfare services).

2. Source: https://pension.president.gov.tw/nc_9646_26076. And, more evidence could be found: https://www.bot.com.tw/GESSI/Statics/pages/statics_page3.aspx.

3. The ‘3-3-3 policy’ included 3 welfare benefits for 3 main subgroups: (1) providing those aged 65 and older with a non-contributory allowance of NT$3,000; (2) free medical treatment for children under three; and (3) housing loans at an interest rate of 3% for first-time home owners.

4. The ‘5-5-5 policy’ included increasing childcare workers by 50%, reducing women’s care work by 50%, increasing the female employment rate by 50%, reducing the drop-out rate by 50%, and reducing violent crime against women by 50%.

5. The KMT government firstly introduced the unemployment benefit (as a part of Labour Insurance) in 1999. It was changed into Employment Insurance in 2003.

6. According to the Employment Service Act, the ESF is collected from employers who hire foreign workers. The main aim of the ESF is to stabilize the labour market, but it was not used to introduce ALMPs until 2003.

7. Tsai (2011) concludes that the mobilization of the Employment Insurance fund to finance the paid parental-leave scheme was mainly because the state’s financial capacity was very limited after he interviewed many policymakers. Moreover, the Council of Labour Affairs also admitted the main reason of why used the Employment Insurance fund to finance the paid parental-leave scheme was fiscal pressure (The Legislative Yuan, 2008).

8. Source: OECD Social Expenditure dataset (https://stats.oecd.org/).

Additional information

Funding

This work was supported by the Ministry of Science and Technology, Taiwan [108-2410-H-031 −069 -MY2].

Notes on contributors

Chung-Yang Yeh

Chung-Yang Yeh is an Associate Professor in Department of Sociology, Soochow University, Taipei, Taiwan. His main research interests include ‘comparative East Asian welfare states’, ‘welfare attitudes’ and ‘pension policy’ . He published some Journal articles and books chapters focusing on pension policies, social investment policies and in-work poverty in East Asia.

Jen-Der Lue

Jen-Der Lue is a Professor in Department of Social Welfare, National Chung-Cheng University, Taiwan. He served as Director-General for Social Affairs at Taichung City -Government during 2014-2018 and pushed the idea of social investment reforms. His research interests include democratization, globalization and welfare state in East Asia.