Welfare State System Development in Taiwan: The Causal Determinants of the Past and the Future

Written by Christian Aspalter.

Taiwan today has a relatively comprehensive welfare state system due to the work of Lee Teng-Hui and millions of Taiwanese. These citizens pushed the very same man to open and safeguard the process of democratisation back in the late 1980s, and to set up the first major system of the Taiwanese welfare state, the universal National Health Insurance, back in 1996. Lee listened to what people wanted, and that means all of the Taiwanese people, not just the elite, the ancient regime of the Kuomintang (KMT) or the business tycoons. Other leaders behaved quite differently.

Ma Ying-Jiou, on the other hand, at first attacked means-tested social assistance programs for the elder Taiwanese as a means of income support in the light of the long absence of the National Pension System (until 2008). Nevertheless, in 2007, he jumped on the bandwagon and became a champion of the very same and promised to double previous proposals from the Democratic Progressive Party (DPP) for old-age allowances. This made his crushing victory in the 2008 presidential elections.

Chen Shui-Bian yet again, while voted into office on a pro-welfare ticket, was quick to abandon a pro-welfare stance in favour of a pro-business stance. This was in light of the new wave of Third Way neoliberalism, which was still circling the globe at that time: a phenomenon starting from Australia in 1994, moving into the US by 1996, the UK in 1998, and Germany in 2003 to 2005, etc.

Tsai Ing-Wen, while having almost lost her broad-based support in the middle of her first term (with massive losses for the DPP in the mid-term elections), reshaped rather than expanded, in an overall perspective, the welfare state system. Her significant achievements in the area of social policy are, first, cutting generous pensions and 18-per cent interest savings accounts for public servants and military personnel. Defunding the KMT’s support base, so to speak. Second, she managed to extend public services for the increasingly aged, and soon super-aged, society of Taiwan, especially in terms of publicly funded long-term care services.

These four presidents highly directed and shaped welfare state development in Taiwan over the past three decades. These three last decades are marked by the slow development of a national income maintenance system for elderly Taiwanese citizens. At first, the DPP spearheaded this goal in social policymaking, and the movement behind it, starting as early as in the 1993 local elections. In July 2007, at last, the National Pension Insurance plan was passed by the parliament and launched the following year. At the same time, all other non-contributory schemes old-age allowances were united under the then newly formed National Pension System. Still, it was a watered-down version of previous proposals. The legislature passed the long-term care system that offers publicly financed long-term care services as it is today in 2015, and subsequently heavily extended in 2017.

These significant steps in the development of the Taiwanese welfare state system were the results of the rise of social movements, in particular social welfare movements, but also social movements in general, and the rise of political competition between candidates of one and the same party and in between different parties (especially the DPP and the KMT), in the numerous fiercely competitive elections that Taiwan held ever since the year 1993.

The next three decades are yet in the wind. Still, many fundamental trends and developments shaping these forthcoming three decades are already long in the making. Moreover, they are set in stone for the very most part—just like democratisation was set down from 1987 to 1992 roughly and caused major welfare state expansion, and its particular pathways, in the last three decades.

Looking into the other direction, into the future, systemic changes—rather than metric changes (changing parameters here and there inside any particular system)—of the Taiwanese welfare state system are already well on their way. They will be brought upon by most-powerful old and new causal forces of welfare state development. Of course, democratisation—and with it, its highly competitive political environment—in the case of Taiwan is here to stay. Moreover, as a consequence of that, we will see the masses and hence the political parties supporting new ideas and new paths in social policymaking, such as universal basic income. This means the government will pay every citizen a basic income, regardless of their work status, income or wealth, which is not to be mixed up with the concept of basic minimum income.

Looking further to the north to South Korea, the issue of universal basic income is the hottest political topic there right now. With it, traditional unsustainable social insurance-based and poverty-increasing asset- and means-tested-based social security systems will become, per definition, obsolete and redundant at best. Ever-rising massive overall income polarity among insiders and outsiders of modern-day Taiwanese society (i.e. in terms of differences in overall income and/or wealth) is the second major driving force for systemic change of the welfare state system in the decades yet to come. Social unrests in France and the United States in recent years are largely the product of income polarity and the resulting hopelessness of the masses—the majority of the population, including large shares of the middle class—and realisation thereof.

A super-aged society and the employment-killing (and hence social insurance-killing) effects of artificial intelligence and super-digitalisation are driving forces of all-changing income polarity itself. The adverse social and economic effects of climate change, which will come a bit later, one or two decades later down the road further into the 21st century, will be pouring more oil into the fire. Climate change will hit Taiwan mostly in the form of stronger level-4 and more level-5 Taifuns. When it comes to the worldwide Covid-19 pandemic, Taiwan can be deemed lucky to avoid an additional shock wave of impoverishment of the masses, this year and the next. But actually, it was (and is) the outcome of the great work by its health care administrators and professionals, and the government as a whole. Nonetheless, the greatest tests, tasks and challenges, are yet to come—most of which may seem or in actual fact turn out to be insurmountable.

Christian Aspalter is Professor of Social Policy, Dept. of Social Work and Social Administration, BNU-HKBU United International College. His forthcoming publications include “Ideal Types in Comparative Social Policy (Routledge)”, “Financing Welfare State Systems in Asia (Routledge)”, “Developmental Social Policy and Active Aging with High Quality of Life”, in: F. Rojo-Pérez and G. Fernández-Mayoralas (eds.), Handbook of Active Aging and Quality of Life: From Concepts to Applications .

This article is part of a special issue on poverty.

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