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Development economist

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1 Development economist
An Asian Welfare State Model? East and South Asian trajectories and approaches Gabriele Köhler Development economist Conference on Re-Thinking Asia II “Building New Welfare States: What Asia and Europe can learn from each other” Protestant Academy Tutzing 28-29 October 2013 Re-Thinking Asia II “Building New Welfare States: What Asia and Europe can learn from each other” Protestant Academy Tutzing, Bavaria/Germany, October 2013 Re-Thinking Asia is an annual Forum, organized by the German Friedrich-Ebert-Stiftung (FES), which intends to stimulate a visionary debate on Asian politics in the 21st century and their impact on global policies affecting Europe. The Forum brings together a selected group of leading politicians, distinguished academics and experienced practitioners from Germany, Europe and Asia and creates space for courageous and visionary ways of thinking about future Asian-European cooperation. Re-Thinking Asia draws from the observation that Western perspectives on the emergence of Asia have for too long been dominated by old fashioned worldviews. On this reading the emergence of Asia is often portrayed as a threatening scenario for Europe asking for defensive policies in return or upholding Europe as a model for Asians to follow. The opportunities for Europeans and Asians to work together as partners are frequently overlooked in this interpretation. Against this background, the concept of Re-Thinking Asia aims to establish a progressive counter-narrative.

2 I.) Premises of the discussion
Growing social inequalities in Asia and Europe Despite commonly accepted fundamental values and ideals Need for a progressive counter-narrative to Tackle social inequalities Make social justice available to all Reduce income inequality and unequal opportunities What role do comprehensive social security systems play Hence: revisit the welfare state Source: FES invitation

3 II.) Preliminaries socio-economic trends

4 Vulnerability, poverty, informality
Source ILO World Social Security Report 2010 p 31

5 Source: http://www. nationmaster
Data for each country from latest available year 1993 (!) – 2004. This is a dated and static picture of the state of income inequality measured by the Gini coefficient. The closer to 0, the more equal income distribution, the closer to 100, the more unequal the situation; generally, a Gini coefficient higher than 30 is considered socially unjust. This graph shows the large differences in income inequality, and that many of the so called emerging economies, considered to be so successful in terms of economic growth, are among the countries with the highest inequalities. A dynamic picture showing changes over time would reveal the increasing income inequality of the past decade, but is not possible given the lack of time series and recent data.

6 Asia-Pacific: people deprived
Source ESCAP Source: Asia-Pacific Regional MDG report 2011/12 (ESCAP/ADB/UNDP)

7 III. Welfare state trajectories
Sources: Mkandawire 2005; and other literature

8 Welfare state definitions
Two -three – four – five pillars Education Health access Social security and social assistance Active labour market policies Family policy - welfare services

9 Pillar III: Social security Pillar II: Health A welfare state model
Social Insurance, including health insurance Social assi-stance Labour market policies Forms of micro credit, micro insurance, area-based schemes Child protection services/transfers Pillar III: Social security Source author, based on ADB 2001. Different policy domains belong to social protection, and there are different ways of organising them. One broad based approach is to include social insurance and assistance, and also active labour market policies; microcredit and insurance; and even child-related policies. Specific reference: Isabel Ortiz , editor. Social protection in Asia and the Pacific. Manila: ADB Also see Pillar I: Education Pillar II: Health

10 Welfare state politics
Nation building Demographic factors Economic progress Productivity enhancement Economic compensation – anti-poverty Enhancing the domestic market Political co-optation of subordinated classes by elites Guilt or security concerns of the elites Political stability Political pressure from trade union movements or “grassroots” Socio-cultural values and changing welfare provision arrangements Norms Peer competition Copycatting ….  Social policy as a process driven by power relations Sources: Mkandawire 2005; and other literature

11 The North: welfare state history
Germany Bismarckian reform: 1870s US New Deal: 1930s Japan interventionist welfare state: post WWII UK: Keynes and Beveridge 1950s Northern, Central Europe, Southern Europe welfare states: since 1950s Sources: Japan: Pierson: 2005: 228

12 The South: welfare state history
Latin America in s Uruguay, Argentina, Chile, Brazil, Costa Rica Sri Lanka 1930s South Asia – Constitutions of 1940s/1950s Sources: Pierson 2005; Wehrr et al 2012

13 The South: recent developments
Source: Nora Lustig in High level panel report on the post 2015 development agenda. United Nations May Page 33. Estimate based on sample size of 144 countries. Most countries now have some form of social protection. See Barrientos et al.

14 IV. Four types of welfare states?

15 “Developmental welfare state I”
Japan, Republic of Korea 1st phase, Taiwan PoC, Hong Kong SAR, Singapore, Malaysia Social policy subordinate to economic development Low government spending Means tested, frequently conditional

16 “Developmental welfare state II”
Korea: New social contract after 1997 – democracy and response to Asian financial crisis National Basic Livelihood Security Act 1999: right to social assistance universalised guaranteed social minimum

17 Indonesia: recent social assistance programmes
Name BLT Unconditional Cash Transfer ( ) Raskin Rice for the Poor Jamkesmas Health Protection BSM Scholarship for the Poor PKH Conditional Cash Transfer Transfer Type Cash Subsidized Rice Health service fees waived Cash & Conditions Target group (HHs) Poor & near poor HHs Students from poor HHs Very poor HHs Number of beneficiaries 18.7 Mn HHs 17.5 Mn HHs 18.2 Mn HHs 8 Mn Students 1.5 Mn HHs Benefit level IDR 100,000 per month 15 kg rice per month Unlimited IDR 480,000 per year IDR 1,287,000 per year Key executing agency Ministry of Social Affairs (MoSA) Bureau of Logistics (BULOG) Ministry of Health (MoH) MoNE & MoRA MoSA Source: Nazara, Suahasil. Poverty alleviation in Indonesia: Progress and challenges. Social Protection Conference, Myanmar, June 2012.

18 Philippines: conditional cash transfer
Selection Procedures of Target Households To raise the average food expenditure of poor households To increase school enrollment and attendance To improve preventive health care for pregnant women and young children To reduce child labor To encourage parents to invest in their children’s (and their own) human capital: health and nutrition, education, and participation in community activities Geographical Targeting Household Assessment (Enumeration) Source: Solloso, Ernestina Z.. Philippines conditional cash transfer program. Social protection conference: call to action. Myanmar, June 25-26th, 2012. Selection of Poor Beneficiaries using Proxy Means Test Eligibility Check

19 “Developmental welfare state II”
China: Disconnect between urban and rural coverage Selective social contract: Minimum Subsistence Guarantee for urban populations in 1999 – response to market reforms extended to rural populations in 2008 does not cover migrants Rural cooperative medical insurance scheme universalised Ringen and Ngok 2013

20 “Developmental welfare regime III”
South Asia: Bangladesh, India, Maldives, Nepal, Pakistan, Sri Lanka Norms-based Strong social inclusion angle Mixture of means-tested and universal Rights-based Justiciable (notionally) Koehler and Chopra 2014

21 Social protection panorama
South Asia Food-related measures Social Assistance Public works Affirmative action Human rights National Rural Employment Guarantee (IND) Employment Generation Programme for the Poorest (BGD) Karnali Programme; Employment Guarantee Act (NPL) Employment generation for rural unskilled workers (PAK) Cooked school meals (IND) Subsidized PDS (IND, NPL, BGD) Subsidized grain prices Universal old age pension (NPL) Benazir Income Support Program (PAK) Child benefit (NPL) Unorganized sector health insurance (IND) Secondary school stipend for girls (BGD) Education for all (NPL) Child grants for girls (IND) Rural development and community based interventions (IND) Right to food/National Food Security Act (IND) Mid-day meal (IND) Right to education (all) Right to health services (all) Right to work (IND) Right to information (IND, BGD, NPL) Source: updated from Bonnerjee and Köhler The challenge of food and nutrition insecurity and policy innovations from the South. Rethinking Development in an Age of Scarcity and Uncertainty. EADI/DSA Conference. https://www.conftool.com/gc2011/index.php?page=browseSessions&form_room=28&presentations=show&print=yes

22 “Developmental welfare state IV”
Dismantling: Europe 2005 onwards Partial deterioration of entitlements Means testing reintroduced Conditionalities Examples: Hartz IV in Germany Child benefit in UK

23 V. Welfare expenditures

24 Total Social Protection Expenditure, as % of GDP
Social protection expenditures comprise social security, social assistance, and labour market policies. Data from Source: The Social Protection Index: Assessing Results for Asia and the Pacific. Asia Development Bank. 2013, Philippines. Downloadable at:

25 Source: Asian Development Bank 2013 http://spi. adb. org/spidmz/index
Definition social protection index: “The SPI is a relatively simple indicator that divides total expenditures on social protection by the total number of intended beneficiaries of all social protection programs. For assessment purposes, this ratio of expenditures to beneficiaries is compared with poverty-line expenditures. For example, if the SPI were in country X, this index number would mean that total social protection expenditures (per intended beneficiary) represent 10% of poverty-line expenditures. The higher this index number, the better a country’s performance.” “The example of an SPI of can also help explain how the SPI assesses the relative importance of the major programs of social insurance, social assistance, and labor market programs. For instance, the SPI for social insurance could be 0.065, the SPI for social assistance 0.025, and the SPI for labor market programs These three program-level SPIs necessarily add up to the overall SPI (e.g., = 0.100). This example is similar to the actual results across Asia and the Pacific. Social insurance is indeed the dominant form of social protection.” Source: ADB The Social Protection Index. Assessing Results for Asia and the Pacific . P. xii

26 V. Propositions

27 Proposition I Each country has a trajectory of a developmental welfare state, but its characteristics differ as a function of power politics Some are purely instrumental for nation building, growth, social appeasement Others are progressive, as outcome of pressure from formal sector trade unions, informal sector or rural cooperatives, women's movements, social or faith-based CSOs

28 Proposition II Common perception: welfare states were invented in Europe In fact, types of welfare states existed in the South before the North Latin America had welfare state elements in the 1910s Sri Lanka “Zeitgeist” for welfare states: see post-war Europe, independent South Asia

29 Proposition III Convergence in Asia:
1st new wave: East Asia post 1998 economic crisis with new social policies 2nd new wave: rights-based or notionally universal welfare states South Asia, South Korea, Southeast Asia and China, since early 2000s

30 Proposition IV Divergence South-North:
While “Asia” is moving towards nascent universalist developmental welfare states (at modest level of coverage and benefit levels) Europe is moving towards a top-down welfare state (with remaining high coverage, but decreasing real entitlements, more conditionalities, and widespread public resentment)

31 Selected references Asian Development Bank, The Social Protection Index. Assessing Results for Asia and the Pacific. ADB Manila. Köhler, Gabriele and Deepta Chopra, eds., Development and Welfare Policy in South Asia. London Mkandawire, Thandhika, ed., Social policy in a development context. UNRISD. Geneva, London Pierson, Chris Late industrializers and the development of the welfare state, in Mkandawire, op. cit. Porsche-Ludwig, Markus Sozialpolitik in Asien. Ein Handbuch der Staaten Asiens von A-Z. LitVerlag Berlin: W Hopf Ringen, Stein and Kinglun Ngok, What Kind of Welfare State is Emerging in China? UNRISD working paper Ringen, Stein, Huck-ju Kwon et al, The Korean State and Social policy. Oxford: OUP UNRISD, Combating Poverty and Inequality. Structural Change, Social Policy and Politics. Geneva Wehr, I., Leubolt, B. and Schaffar, W ‘Welfare regimes in the Global South: A short introduction’, Austrian Journal of Development Studies, Welfare Regimes in the Global South, 28(1), pp. 6-13 .

32 Contact information Gabriele Köhler Website: Development and Welfare Policy in South Asia Edited by Gabriele Koehler and Deepta Chopra Routledge, February 2014


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