Welfare Reform in East Asia

Towards Workfare

Chak Kwan Chan, Kinglun Ngok

• Publisher: Taylor & Francis
• Year: 2012
• Print ISBN: 9780415590266
• eBook ISBN: 9781136680052
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Social Policy
• Index: Politics & International Relations

In many Western countries, social welfare payments are increasingly being made conditional on recipients doing voluntary work or attending job training courses, a system known as "welfare-to-work" or "workfare". Although social welfare in Asia is very different to the West, with much smaller social welfare budgets, a strong self-reliance and a much higher dependency on family networks to provide support, the workfare approach is also being adopted in many Asian countries. This is the first book to provide a comprehensive overview of how welfare reform around work is implemented in leading East Asian.

Based on the experiences of seven East Asian economies - including China, Japan, South Korea, Taiwan, Singapore, Hong Kong and Macau - this book critically analyses current trends; the social, economic and political factors which lead to the implementation of workfare; compares the similarities and differences of workfare in the different polities and assesses their effectiveness.

Part I

Introduction

1 Understanding Workfare in Western and East Asian Welfare States

Chak Kwan Chan

Introduction

Many Western welfare states have adopted workfare as their dominant approach to provide welfare services. This has made social security conditional, with welfare beneficiaries having to fulfil assigned duties in order to receive their benefits. Traditional pro-welfare social democratic parties in Europe and the United States (US), as well as pro-market conservative parties, now support this approach to welfare provision (Lodemel & Trickey 2000a). Welfare reforms based on the ideology of workfare have occurred in all the countries in Western Europe (Handler 2003) and, since the mid-1990s, the European Union (EU) has regarded activation, which refers to activating the incentive to work among unemployed people, as the ‘cornerstone of social policy development’ (Lodemel & Trickey 2000b: 14).

The impact of workfare has not been restricted to Western capitalist states. An increasing number of Asian countries have introduced welfare-to-work measures since the late 1990s. Asia’s socioeconomic conditions are different from those in Europe, however, so it is important to examine why East Asian welfare states have introduced workfare and what the main features of their workfare measures are. The first part of this introductory chapter therefore critically examines the socioeconomic factors contributing to the implementation of workfare in Western capitalist states. It then points out the nature of East Asian welfare states and this book’s key concerns.

What Workfare is

Although many European countries have had workfare programmes since the mid-1990s, much disagreement exists about what the word workfare actually means (Lodemel & Trickey 2000b; Grover & Stewart 2002). It was originally associated with the US welfare policy that required welfare beneficiaries to work in both governmental and non-governmental organizations (Mead 1997). The concept later became broader to include the requirement to be actively job-hunting (Grover & Stewart 2002).

Despite its lacking a single definition, scholars have noted that workfare has several common elements. The first of these is ideological and involves the conviction that citizenship involves both rights and duties rather than that its main concern should be citizens’ rights. This involves attaching obligations to rights and changing the nature of social citizenship from being a status to a matter of contract (Handler 2004). The social contract between the state and the public now emphasizes the responsibility of welfare beneficiaries to perform required duties in order to access rights. This new view of citizenship has justified governments in demanding that welfare beneficiaries do assigned work as a prerequisite for receiving benefits (Lodemel & Trickey 2000b). This new citizenship ideology therefore accords more power to governments to regulate poor people’s behaviour.

Another common element of workfare is that it stresses the need of welfare systems to be active rather than passive in response to welfare beneficiaries’ needs and problems. This has become ‘a universal trend in developed welfare states’ due to its widespread perception as an effective means of addressing social deprivation (Lodemel & Trickey 2000b: 15), and that the provision of training and education that leads to inclusion in the labour market is also the stablest, most certain route to social inclusion (Handler 2004). This view that the extension of states’ control over their citizens’ employment behaviour is beneficial to their social and psychological well-being leads to the conclusion that governments have to improve the employability of disadvantaged groups proactively by requiring them to do community work, attend job-training programmes and pursue further education.

Yet another common element is the conviction that it is proper for states to use coercive means to improve welfare beneficiaries’ employability and to reward those who have done their assigned duties. The US government, for example, passed the Personal Responsibility and Work Opportunity Reconciliation Act in 1999, which strictly enforces work requirements and also restricts the assistance period to a maximum of two consecutive years with a five-year lifetime limit (Handler 2004). This approach also concentrates on limiting the amount of benefits. The United Kingdom (UK) government, for example, is typical in this regard in ensuring that the least well-paid workers receive better incomes than those who are not in paid employment (Grover & Stewart 2002). This means that governments use incentives to make having a job more attractive than receiving a benefit (Lodemel & Trickey 2000a). These key common elements indicate a definition of workfare as a welfare approach that uses coercion and rewards to push welfare beneficiaries into the labour market or to require them to participate in certain activities to strengthen their work ethics or to enhance their employability.

Socioeconomic Challenges and Workfare in the West

The emergence of workfare in the West needs to be examined from the context of the economic and social changes that have challenged the US and Western European welfare systems. Their advanced capitalist economies have experienced serious declines in their manufacturing sectors while having to compete with developing economies in a global financial market for international investment. Furthermore, their societies have become characterized by ageing populations and the disintegration of traditional families, which have put the democratic welfare states under considerable financial strain.

Economic Changes

Fierce global competition has frustrated the development of Western welfare states since the mid-1980s, as Western governments have found that they can no longer just increase corporate and income taxes to finance expensive welfare programmes and, at the same time, achieve the objective of relatively full employment. This is because capital has become more mobile and international corporations can easily transfer their investments and production lines to developing countries that offer them low taxes and cheap labour. An increasing number of countries with advanced economies have begun to try to reduce their tax rates in order to maintain their competitive positions in the global market. For example, when he was the UK’s Chancellor of the Exchequer in 2007, Gordon Brown announced a reduction in corporation and personal income tax rates of 2 per cent, putting the UK’s corporate tax rate well below both the Organisation for Economic Co-operation and Development (OECD) and EU15 average (Tax-News. com 2007).

Globalization has had a dramatic impact on the advanced economies’ labour markets in addition to having put pressure on their tax revenues. Having high labour costs, Western capitalist states experienced a decline in their manufacturing industries as corporations moved many factory operations to Asia and Africa. The number of workers in the manufacturing sectors of ten major developed economies dropped from 69.7 million in 1970 to 63.7 million in 1992 (ILO 2010). The average unemployment rate in fifteen members of the EU was 10 per cent from 1992 to 1997 (Eurofound 2009).

Although the advanced economies have created new jobs, many unemployed workers have had difficulty being hired for them because of poor education and inadequate skills. The European Centre for the Development of Vocational Training (2010) estimated that the share of jobs that require high qualifications in the EU will increase from 29 per cent in 2010 to about 35 per cent in 2020, and that the share of those requiring low qualifications will drop from 20 per cent to 15 per cent. This means that workers with low skill and educational levels are being excluded from the new labour market.

In the early part of the twenty-first century, 20 per cent of the UK’sworking population had inadequate skills and were effectively illiterate. Nickell (2003: 104) concluded that the solution to poverty in the new economy is to reduce ‘the long tail in the skill distribution’. Similarly, the European Centre for the Development of Vocational Training (2010: 4) pointed out that Europe’s occupational structure has been becoming one dominated by jobs requiring high levels of knowledge and skills, adding that ‘Europe needs to make sure its human resources can respond to the economy’s needs. Policy must enable people to raise and broaden their skills’. In order to address the problem of unemployment in their knowledge-based economies, the Western welfare states have obviously had little choice but to take effective measures to improve their unemployed workers’ skills.

The Western welfare states have also had to devise more effective ways of encouraging welfare beneficiaries to accept increasingly unattractive jobs. A rapidly increasing number of jobs have become part-time and low-paid, with unsocial working hours and short-term contracts or casual employment arrangements. Based on the employment data from 1985 to 2000, the OECD (2002) concluded that temporary jobs were a significant part of the employment structure in all its countries, with one in three jobs in Spain, for example, being temporary. Workers in temporary jobs also tend to be paid less than those in full-time employment and also have less access to paid holidays, sick leave, unemployment insurance and training. Many temporary workers have expressed dissatisfaction with their work because of inflexible work schedules and monotonous work tasks (OECD 2002).

Grover and Stewart (2002) argued that workfare helps capitalist economies to address some of the dilemmas involved in the neoliberal capital accumulation process because its deterrent effect forces more people to search for jobs in the labour market, which helps to reduce wage levels. The provision of in-work benefits for subsidized jobs suppresses wages further, allowing for the creation of more jobs. Workfare’s deterrent effects therefore push more unemployed beneficiaries to accept insecure jobs in unattractive labour markets that help to maintain their economies’ wage competitiveness.

Social Changes

Western welfare states have also faced the challenges of ageing populations and an increasing number of single-parent families. Advanced medical technology and comprehensive health care services have rapidly increased the life expectancy of the general public in the developed world. The proportion of people aged 65 and older in twenty-five EU countries increased from 26.1 per cent in 1975 to 29.5 per cent in 2000 (Zaidi 2008), and the EU’s Economic Policy Committee (2001) expected the size of this demographic to rise dramatically from 61 million in 2000 to 103 million in 2050. These ageing populations have created a heavy financial burden. As the International Labour Organization (ILO) (2009, n. p.) reported,

social security expenditure throughout Europe is heavily dominated by spending on pensions and health care. There is evidence that this is also the case in non-EU countries. Other programmes, such as unemployment benefit schemes, family programmes, housing and social assistance, are consequently at risk of being crowded out.

The EU’s Economic Policy Committee (2001) also expected expenditure on the public pensions of those aged 55 and older as a share of gross domestic product (GDP) to increase from 10.4 per cent in 2000 to 13.3 per cent in 2050. Having to pay pensions to this growing demographic is another pressure for Western welfare states to encourage beneficiaries to accept jobs in order to make more contributions to state pension funds. Jozefowicz and Pearce (2000: 19) noted that the social security systems of post-industrial countries with ageing populations have accentuated their need to make ‘the economically inactive population active’, and these countries have therefore attempted to reduce the dependence burden, unemployment and therefore the need to recruit foreign workers.

In addition to this increase in the number of elderly people, the Western welfare states have also had to address the needs of an increasing number of families with no one in paid employment, due mainly to family breakdown and disabilities. The number of UK males receiving incapacity benefit, for example, doubled between the early 1980s and the mid-1990s. Some have argued that generous invalidity benefits had pushed these men into inactivity (Nickell 2003).

The number of divorces in the EU increased by 55 per cent between 1980 and 2005, and in the enlarged EU, the breakdown of approximately 13.5 million marriages affected more than 21 million children between 1990 and 2005 (Bloomberg 2007). In some Western countries, more than a quarter of all households are headed by single parents, and single-parent families often involve child poverty and unemployment, which directly increase the public’s welfare burden. The number of female-headed families in the US receiving Aid to Families with Dependent Children (AFDC), for example, increased from 3,771,000 in 1989 to 4,981,000 in 1993 (US Department of Health and Human Services 2008a). The real growth of the cost of the AFDC programme to the federal government consequently increased over those five years from US$13,733 million to US$16,212 million, or by 18 per cent (US Department of Health and Human Services 2008b). Similarly, prior to the UK’s New Labour government, more than 20 per cent of working-age jobless households were ‘cut off from jobs and careers’ (Department for Education and Employment 1997, cited in Finn 1998: 106).

Jobless households are one of the key factors contributing to child poverty. More than half of the single parents in the UK in 2000 had no paid employment and lived on public assistance, and 53 per cent of the children living under the poverty line lived in jobless households (Nickell 2003). The New Labour government therefore introduced its New Deal programme, which, according to former Chancellor Gordon Brown, was ‘an onslaught against the unacceptable culture of worklessness that grew up in some of our communities in the 1980s and early 1990s’ (cited in Carpenter and Speeden 2007: 143).

In addition to demographic and family changes, the emergence of workfare is related to the discourse on welfare dependence and social exclusion. Such US neoliberal and neoconservative analysts as Charles Murray, Lawrence Mead and Michael Novak accused the US welfare system of increasing family breakdowns and welfare dependence (Grant 2000). Murray (1990: 8), for example, pointed out that ‘long-term welfare dependency is a fact, not a myth, among young women who have children without husbands’. He went on to assert that a social consequence of single parenthood is the emergence of an underclass in which ‘large numbers of young, healthy, low-income males choose not to take jobs’ (Murray 1990: 17). Based on this analysis, Murray (1994: 227) advocated the elimination of benefits for single mothers, asserting that doing so would ‘drastically reduce births to single teenage girls’ and ‘reverse the trendline in the break-up of poor f...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• List of illustrations
• List of abbreviations
• List of contributors
• Preface
• Part I: Introduction
• Part II: Workfare in seven East Asian economies
• Part III: Conclusion
• Index