anthony cheung paper

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Discussion draft only: Not to be cited

The Third EASP International Conference

Centre for East Asian Studies, Bristol University, UK,

12-13 July 2006

GDPism and Risk:

Challenges for Social Development and Governance in East Asia

The East Asian Social Policy Discourse:Policy Shift, Reversal, or Steadiness?1

Professor Anthony B. L. Cheung

Professor, Department of Public and Social Administration

City University of Hong Kong, Hong Kong, China

[email protected]

1. Introduction

Robert Wade (1990)s study of South Korea, Taiwan and Japan resulted in an

understanding of East Asian developmentalism as the governed market. Hong Kongarguably had developed an alternative model of growth in the name of positive non-

interventionism. The identification of an East Asia-specific growth model is also

matched by a similar attempt to construct an East Asian productivist model of

welfare capitalism (Holliday 2000).

This paper explores the substance of the East Asian social policy discourse. The first

question addressed is whether by having undergone rapid economic growth by the

1990s, East Asian developed societies have also trodden a path of modernization

comparable to that in the West where post-War economic and social changes

constituted interlinked aspects of a singular process of transformation leading to

policy convergence in the form of the welfare state. The productivist explanation

casts doubt on such a proposition. The secondquestion is whether since the 1997

Asian financial crisis the pre-existing East Asian developmental model has been

eroded because of the impact of globalization and the rise of neo-liberalism as

prescription for the economic problems.

Economic challenges like globalization and the Asian financial crisis, and political

challenges like regime change with democratization (South Korea and Taiwan) or

without democratization (Hong Kong), and the gradual rise of new politics (Japan

included), together with increasing fiscal/budgetary pressure (notably in Japan,

Taiwan and Hong Kong), have certainly helped to induce public policy rethinking

among East Asian governments. However, it is observed changes so far have not

substantially moved beyond the original policy path grounded in a developmental

1Acknowledgement: The author is most grateful to the Governance in Asia Research Centre (GARC)

of the City University of Hong Kong for providing financial support to enable him to travel to Bristolfor the conference at which this paper is presented. The research support of Lo Oi-yu, senior research

assistant of GARC, is also gratefully acknowledged.

1
mailto:[email protected]:[email protected]


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state with productivist goals. Path dependency is still very much at play, sustained by

institutional continuity. Policy reversals are rare.

Such policy steadiness in East Asian public policy governance can be explained by

the longstanding bureaucrats-dominated nature of public policy making in addition to

the state-led economic development approach to policy interventions. Some publicservices have historically been developed and expanded not for the sake of

independent social policy values, but as instrumentalist complements to the

developmental agenda and related political objectives. Welfare provisions have

mostly been introduced not out of welfare ideology considerations, as some suggested

to be the case in the formation of the welfare state in the West (Pinker 1979; Marshall

and Bottomore 1992), but as a result of a fiscally and economically driven social

development programme, in which case economic slowdown and recession could

arguably cause a readjustment or even reversal shift, but still within the same logic.

New social policy development in some East Asian states like South Korea after

democratization can at best been seen as indicative of the rise of welfare

developmentalism. If developmentalism is still the foundation of the East Asianpublic policy discourse, then its welfarist component needs to be conceptualized more

appropriately as an offshoot of economic development and thus an outcome of fiscal

surplus, rather than any pure ideology of collectivist welfare. Social development is

thus part and parcel of the bigger economic development project. The role of family

and individual efforts remains a key element of the social philosophy underpinning

state-society interaction and the states response to social demands, even though there

are increasing state regulatory and intervention efforts along the way.

2. East Asian Welfare States Nature and Evolution

The developmental state

Before the 1997 Asian financial crisis cast doubt about the prospect of the postwar

developmental state mode (Wong, 2004: 345-56), the conventional wisdom in

understanding the system of governance in East Asia would start with the East Asian

Economic Miracle thesis (World Bank, 1993). According to it, the success of the

East Asian growth economies (Japan, Taiwan, Singapore and South Korea) until the

1990s could be attributed largely to the presence of a strong developmental state

(very often authoritarian and corporatist in nature). Japan was portrayed by Chalmers

Johnson (1982) as a pioneer model of the developmental or plan-rational state. As

Beeson (2003: 26) put it, the very idea of the developmental state was reflective ofconceptions and intellectual traditions about the purpose of public policy and the

concomitant role of government which fundamentally differed from those prevalent in

the Anglo-American nations. Such an idea can be traced to the Meiji Restoration in

the 1860s, when the modern Japanese nation-state was created as a response to the

challenge (and threat) posed by Western capitalist expansion. Wade (1990)s seminal

study of Japan, South Korea and Taiwan analyzed the nature and operations of the

market under East Asian developmentalism and summed them up as the governed

market.

Among the newly developed East Asian economies, Hong Kong under British

colonial rule (until 1997) was arguably an exception as it had all along been held asthe last bastion of the free market (Friedman 1981: 54) practicing an official

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philosophy of positive non-interventionism. Whether or not Hong Kong was a

reverse proof of a successful free-market non-interventionist economy depends on

how intervention (or non-intervention) was interpreted. Hong Kongs colonial

government in reality had displayed some unusual instruments for influencing

industrial activities, so that the economy worked very differently from the textbook

picture of a free market economy or from those economies of the Anglo-Americankind (Wade 1990: 331-33). Though not of a Western welfare state type, the

government was active in regulative controls and had extensive involvement in social

and community services, relying on land revenue instead of heavy taxation as the

principal means of supporting these services. To that extent Hong Kong was

recognized by some as having developed a unique model of growth (Schiffer 1983).

According to Wong (2004: 349-52), the East Asian developmental states had the

following core features:

1. Their economies had benefited from the advantages of economic

backwardness, and hence the advantages of catch-up development, byimporting knowledge, technology, and economic know-how from abroad

instead of starting from scratch.

2. They used public policy instruments to allocate productive resources rather

than relying solely on the market, sometimes playing a big leadership role in

prospecting potentially lucrative industrial sectors.

3. They were social welfare laggards because their economic policy, including

industrial policy, was primarily geared toward maximizing national

productivity, i.e. rapid economic growth, with distributive consequences being

considered secondary.

4. They were highly capable in economic policymaking, implementation, and

policy monitoring and enforcement.

5. The developmental state model was anchored in a relatively autonomous, and

historical hard state in the case of South Korea and Taiwan, functioning

independently of popular social forces with close linkages with industry.

Seen in this light, the East Asian development state model attests to Evans (1989,

1995) notion of embedded autonomy that gives the state the capacity to combine

two apparently contradictory aspects namely Weberian bureaucratic insulation

and intense immersion in the surrounding social structure (Evans 1989: 561).

Similarly, Weiss (1998) argued in favour of the transformative capacity of the state

insulated from undue special interests but firmly embedded in society, andmaintaining effective linkages with industry and other societal/economic actors to

ensure the happening of things through what she theorized as governed

interdependence.

Expansion of the residualist welfare regime

As late industrializers, Japan and subsequently other East Asian developed economies

had historically exhibited a residual form of social welfare based more on family and

corporate welfare than on state protection (Pierson 2004: 11). Their welfare state2

2

The term welfare state is used here as a general term not necessarily denoting any particular formof welfare state such as that in some European countries. As the later discussion explains, there are

different forms of welfare state.

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was set up and expanded over the last few decades by conservative governments

with clear antiwelfare ideologies (Aspalter 2002a: 2). Public social expenditures in

East Asia were considered very low on a world scale according to Gough (2004: 171),

though he included some Southeast Asian countries within the East Asia sector. The

figures were slightly higher in developed East Asian states, but still be low by

Western European and North American standards see Table 1 below.

Table 1: Total government expenditure and major social policy expenditures,

as percentages of GDP, in late 1990s

East Asian

developed

economies

Total government

expenditure

1997-98

Education

1995-97

Health

1997-98

Social security

1990-97

Japan

Singapore

Hong Kong

Taiwan

South Korea

29.4

16.8

14.5

22.7

17.4

3.7

1.8

2.6

5.0

3.7

5.3

1.2

1.7

3.5

2.2

6.7

0.8 (2.2a)

1.2

2.2

3.0

Selected

Western

countries

Government

expenditure

1999

Education

1998

Health

1998

Social security

transfers

1998

Australia 31.9b 4.34 5.9 8.4

Sweden 55.1 6.59 7.0 19.3

United

States

32.7c 4.82 6.1 12.6c

United

Kingdom

37.8 4.65 5.6 13.6

Germany 44.8 4.35 7.9 19.0

Notes:a including social-related withdrawals from the Central Provident Fund. b 1998 figurec 1997 figureSource:Figures on the five East Asian developed economies are from Gough (2004: Table 5.2); figures on the five selectedOECD developed economies are from: OECD (2001a: 36-37, unnumbered table) (for general government

expenditure), OECD (2001b: 80, Table B2.1a) (for public expenditure on education institutions), OECD (2001a: 8-9, unnumbered table) (for public expenditure on healthcare), and OECD (2002: 67, Table 6.3) (for social security

transfers)

However, rapid economic growth in the booming decades had resulted in a faster

expansion in real resources devoted to the social sector than in most countries (Gough

2004). Rather than an ideological offshoot, the welfare state in Japan, South Korea,Hong Kong, Taiwan and Singapore was explained as largely caused by social

protests, political pressures, competition in democratic elections, and particular

demographic changes (ibid). In all of these late industrialized economies, economic

transformation did not necessarily result in an expanded state welfare regime, and

changes in welfare expenditures had been modest compared with Western countries.

According to Pierson (2004: 11), Japan subordinated social policy to the logic of

nation (re-)building through economic development, with a high economic growth

strategy built around full (male) employment. Relying on a network of communal and

family social support, Japanese governments were able to keep to a minimum the

states responsibility for personal social services. Peng (2002) argued that such awelfare regime was sustained by the anti-welfare stance of the dominant parties (in

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particular the Liberal Democratic Party), though demographic and social changes in

recent years had seen the gradual rise of new pro-welfare women-friendly social

policies. Until democratization in the 1990s, South Korea and Taiwan shared the

features of a system where an authoritarian state, acting closely with business interests

and in a weak-unions context, fashioned a strategy for national economic

development. Though social welfare was not a priority, it was improved throughenlarging the economic pie and by way of maximizing employment and upgrading the

skills base of the economy. In South Korea, the development of the welfare state had

an underlying logic of politics (Kwon 2002). The government was forced by the 1997

economic crisis to reform social security schemes and employment programmes, as a

way to enhance its political legitimacy and broaden electoral appeal.

In Taiwan, Ku (2002) argued that demographic changes had reduced the role and

capacity of the family as the most important provider of welfare, and the rise of public

pressure, social movements and ultimately party competition within a growingly

democratic political environment following the demise of Kuomintang (KMT,

Nationalist Party) authoritarianism had driven the state into the establishment of socialinsurance and health insurance schemes. Under the logic of positive non-

interventionism, colonial Hong Kong had a typical system of residual welfare, though

education and healthcare had evolved to become almost universal. Chan (2002)

explained how political factors like pressure groups and social movements,

politicians agitations, and the governments need for legitimacy had help expand

welfare provision. Singapore, despite the soft paternalistic nature of its state, had

largely depended on the contributory Central Provident Fund to provide for various

accounts and schemes of retirement protection, healthcare and even home purchase

(Aspalter 2002c).

Convergence towards or deviation from Western welfare state model

As East Asian welfare states came to maturity in the 1990s upon reaching a developed

economy stage, an obvious question is whether they would have eventually converged

to the typical welfare state model of the West if not for disruption by the 1997 Asian

financial crisis. The answer depends on whether there exists some kind of established

welfare state modernization path spurred by economic growth.

The OECD experience, however, does not attest to such an inevitability. One would

have presumed that there is greater policy interdependence and convergence among

Western countries which share in civilization, have greater interaction in economiclife, enjoy similar democratic forms of political governance, and are more or less in

the same stage of modernity. A common perception was that most OECD countries

converged in the post-War years towards big government fuelled by rapid economic

development. From the 1970s onwards, economic and fiscal difficulties had triggered

a New Right political economy emphasizing rolling back the frontiers of the welfare

state, deregulation and privatization of public services. Then development of a

globalized economy had prompted another kind of policy convergence tending

towards international policy benchmarking and the use of similar policy tools in face

of perceived common challenges from such globalization.

However, post-Second World War public policy development in European countriesin OECD had not been evolving along uniform patterns. As Castles (1998) recent

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comparative study of OECD post-War transformation discovered, cross-national

patterns of social and economic policy outcomes were in a constant state of flux as

they were shaped by a wide range of economic, social, cultural, political and policy

factors, which all altered over time. He tested the modernization theory that saw post-

War economic and social changes as interlinked aspects of a singular process of

societal transformation leading ultimately to policy convergence amongst nations, andin the end found that the story revealed was of a modernity fractured by major

political, demographic and cultural fault lines, cross-cutting each other in different

ways in different nations and, potentially, making for considerable policy diversity

(1998: 301, italic ours). The fact was modernity could be characterized by quite

different age and occupational structures across nations, so much so that the story

became that of a modernity with many mansions (p. 305). Castles suggested there

were thresholds of modernity in the sense that all these nations had moved into certain

government programmes (such as universal health coverage and social security which

were typical of the welfare state), but once such thresholds were reached, nations

might differ in their policy options and outcomes even if they were of comparable

economic development. Economic and social development thus acted more as aconstrainingfactor rather than a determining factor in public policy choices.

Mirroring Esping-Andersons (1990) typology of three worlds of welfare capitalism

(namely Liberal, Conservative, and Social Democratic), he identified four families of

nations among OECD countries, whose policy development differences could be

defined in terms of common cultural, historical and geographical features, namely:

English-speaking; Scandinavian; continental Western European; and Southern

European (Castles 1998: 8-9). Japan was deemed to be outside such categorization

and belong to a new family of newly industrialized nations with East Asian cultural

(or Confucianist) features. East Asian social policy scholars have certainly sought to

delineate an East Asian experience distinctive, differing decisively from the Euro-

American models current in social policy discourse (Kwon, 1998: 27). Cultural

explanation aside, the argument for a unique East Asian social policy route rests

mostly on an economic thesis of productivism.

Productivist welfare capitalism

Drawing upon Japanese and Korean experience, Kwon (1997) found the

Conservative welfare regime as classified by Esping-Andersons three worlds

typology unable to capture the distinctive characteristics of the East Asian welfare

regime type. Holliday (2000) came up with the notion of a fourth world withproductivist features. This productivist world comprises three distinct subsets namely facilitative (Hong Kong), developmental-universalist (Japan, South

Korea, Taiwan), and developmental-particularist (Singapore). Table 2 below,

reproduced from Holliday (2000: table 2), gives the key features of the three subsets.

Table 2: TheProductivistWorld of Welfare Capitalism

Social Policy Social Rights Stratification

Effects

State-market-

family

Relationship

Facilitative Subordinate to

economic

policy

Minimal Limited Market

prioritized

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Developmental-

universalist

Subordinate to

economic

policy

Limited;

extensions

linked to

productive

activity

Reinforcement

of the position

of productive

elements

State underpins

market and

families with

some universal

programmes

Developmental-particularist Subordinate toeconomic

policy

Minimal; forcedto individual

provision linked

to productive

activity

Reinforcementof the position

of productive

elements

State directssocial welfare

activities of

families

Source: Holliday (2000: 710, Table 2)

Despite internal variations, the essence of this productivist world is that its social

policy is placed subordinate to economic policy. Holliday argued that productivist

welfare capitalism could not be fully explained by a unique East Asian social base of

political superstructure (such as the typical Confucian welfare state argument

[Jones, 1993] and developmental state argument [Ramesh, 1995; Kwon, 1997], but

had to be seen as a result of bureaucratic politics that drive social policy development.

The point is that those technocrats and elite policy makers who staffed key East Asian

economic agencies were central to the pursuance of particular social and economic

policy (Holliday 2000: 717). We shall return to this point in the later discussion.

Citing Japans unique politics of welfare, Miyamoto (2003) disputed treating it in the

same way as other East Asian states and argued that neither the welfare state regime

theory a la Esping-Anderson nor the East Asian model could fully capture the

features of the Japanese welfare state.

3. Impact of Economic Crisis and Globalization

Irrespective of whether and how the different East Asian developed economies

experiences can be neatly captured by a uniform conceptual framework surrounding a

strong or interventionist state, a key question since the 1997 Asian financial crisis has

been whether such a previous paradigm of East Asian state model and social policy

regime has been eroded because of the impact of globalization, economic crisis, and

political changes (such as democratization such as in South Korea and Taiwan).

Two trajectories

If it is accepted that welfare provisions in East Asian countries had been embarked

upon not out of welfare ideology considerations, but as a result of a fiscally-drivensocial programme funded by economic growth, then it is conceivable that economic

slowdown and recession can easily triggered a reversal shift. In Hong Kong, Eliza Lee

(2005) observed that financial austerity had prompted the state to adopt social policy

reforms through re-commodification and cost containment, resulting in the

retrenchment of the residual welfare state. The fact that Hong Kong society had never

before engaged in real ideological debates on social policies or the role and functions

of the state, also means that mainstream public sentiments could easily be won over to

a fiscally-driven paradigm of public service. However, it is too early to say that such

re-commodification process would be driven home too far partly because bureaucratic

conservatism and caution would see that any such reversal in service provision is less

dramatic than it would be if induced by mainly ideological or political objectives, and

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partly because there is still a developmentalist function to be served by the welfare

system.

Critics of globalization considered globalization not simply as a market-driven

economic phenomenon, but also very much a political and ideological phenomenon,

underpinned by the transnational ideology of neoliberalism which seeks to establishits ascendancy world-wide (Mishra 1999: 7). Robison and Hewison (2005) reviewed

the impact of neo-liberalism on East Asian and Southeast Asian states following the

1997 Asian economic crisis. While it seemed true that the economic crisis had

accelerated the restructuring of state and economic power, and offered an opportunity

for neo-liberal policies to be strengthened such as more market reforms promoted by

international financial institutions as an alternative to the Asian capitalism - such

crisis had not succeeded in achieving a grand convergence. In reality, neo-liberalist-

motivated processes had been highly contested, leading to contradictory, ambiguousand sometimes surprising outcomes (Robison and Hewison 2005: 191). Neo-liberal

agendas were also found to have been subverted or hijacked by political regimes in

some circumstances for their own policy and institutional goals.

An alternative view, in contrast, sees the Asian crisis as actually helping to spur

welfare expansion rather than retrenchment. The argument is this: The East Asian

welfare regimes had relied on optimistic assumptions of decade-long high economic

growth rates, and a high and lifelong male labour market participation (Croissant

2004: 520). The crisis was compounded by increasing urbanization that resulted in

demographic changes and weakened the familialistic foundations of the welfare

regimes, democratization which brought about rising welfare demands, and

globalization that eroded enterprise-based welfare. The previous welfare regimes

had proved to be unsustainable in the post-crisis environment. Since no actors other

than the state will be able to fill the gaps in the welfare system, an increasing role for

the state is likely (ibid), to the extent that the debate about reform of the welfare

system is already increasingly shaped by European models (ibid). Examining the

politics of welfare in Japan, Miyamoto (2003: 21) similarly argued that post-

industrialization and globalization did not automatically result in welfare

retrenchment. Where it was true that there were strong tendencies towards financial

austerity, the concern about increased social instability amidst economic uncertainties

had given rise to pressure for welfare expansion. The ageing society had also built up

the need for lessening the family burden and increasing welfare protection for the

elderly who now constituted a growing portion of the electorate.

Gough (2004), too, saw the possibility of the transformation of East Asian

productivist welfare regimes into productivist welfarestate regimes (p. 201) with an

increasing statist orientation. He observed the East Asian welfare regime as an

outcome of rapid social development coupled with a residual welfare system highly

vulnerable to external shocks (Gough 2001: 177-81). In his view, the aftershock of the

Asian economic crisis would leave East Asian welfare states with two possible

trajectories (Gould 2004: 199-200). One is towards privatization coupled with

persistent informalization, such as marketization and privatization (as, for example,

Eliza Lee [2005] alluded to above), but this route would face the resistance to de-

statize from an essentially developmentalist regime. The other trajectory is towards a

more universalist social investment state with more government provision and

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redistribution. The potential for this direction lies in three reasons (Gough 2004: 200-

01):

1. Globalization and increased competition demand moving into higher-tech and

higher-productivity production, requiring more public investment in social

policy, infrastructure and planning;2. The very weakness of existing social stratification effects among welfare

recipients and of path-dependency effects in the regime as a whole may permit

a statist turn; and

3. The impact of rising democracy in East Asia, notably in Taiwan and South

Korea.

Decline of productivism?

Taking the line of a post-crisis transformation of East Asian welfare systems, there is

the suggestion that even if they were previously productivist, such productivism may

have by now outlived its time. For example, Peng (2004) questioned if the logic ofeconomy first, redistribution later which underlined the productivist thesis could

still be sustained in light of the increasing challenge from three contending factors in

recent years, name: political and regime changes; the expansion, rather than

retrenchment, of social welfare programmes in response to recent economic crises,

which are not necessarily productivistin nature; and new welfare emphasis groundedin family and demographic considerations rather than economic ones. Based on the

experience of Japan and South Korea, she argued that the East Asian welfare state

configuration was no longer as economically determined, but also mediated by the

social structural and domestic political factors. In both countries, the politics of the

welfare state changed as political regimes and political conditions changed (ibid:

408). During the 1990s, the end of the Liberal Democratic Party (LDP)s dominant

one-party rule in Japan had caused political realignments, creating openings for policy

innovations and allowing new civil society groups to enter the policymaking arena;

while the 1997 economic crisis and the onset of democracy facilitated the process of

political realignment in South Korea which saw the Kim Dae-jung government

embarking on both economic liberalization and welfare expansion (ibid: 415-16). The

new social policy was thus no longer exclusively confined to protecting and

privileging the traditional productive sectors, and financial reform necessitated by

economic crisis had actually caused the demise of company welfare, thereby

triggering growing political demands for state welfare interventions.

What Peng and Gough have alluded to are of course important developments in the

East Asian social policy discourse. However, it remains debatable if East Asian

welfare states like Japan and South Korea have already moved beyond the stage of

productivism and developmentalism (Peng 2004: 416) or, as Peng himself has also

allowed for, such changes are no more than only a reorientation of the productivist

logic under different social and structural conditions (ibid). Irrespective of the future

shifts, if developmentalism is still the foundation of policy governance, which we

argue has continued to be the dominant paradigm, then its welfarist component would

remain as an offshoot of economic development and thus fiscal accumulation, rather

than the outcome of a political ideology of collectivist welfare. After all, the role of

family and individual efforts are still the key elements of the East Asian socialphilosophy that underpins state-society interaction and the response of the state to

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social demands. The post-crisis emphasis on education and economic and industrial

policy reforms are all geared towards revitalizing state-led developmentalism in the

new environment of knowledge economy and opened-up markets. Policymaking in

East Asia has already been dominated by a developmentalist bureaucracy keen on

state-building. The social policy and social development agenda is determined neither

by economics nor politics alone, but by bureaucracy-mediated goals of the politicaleconomy that embraces both economic (productivist) and political (social stability,

distributive and redistributive) imperatives.

4. Recent Social Policy Reforms

Policy Shifts rather than Policy Reversals

We now take a look at major social policy reforms, together with economic and fiscal

policy developments, in the five East Asian states (Japan, South Korea, Taiwan,

Singapore and Hong Kong) over the last decade, in order to detect their recent

trajectories and any significant shifts, especially in the aftermath of the 1997 regional

financial crisis. Table 3 highlights those salient policy changes and developments.

[Table 3 about here]

Education reforms

It can be observed that across the policy sectors, all East Asian countries seem to

have been most active in steering the education sector forward, through wide-scale

school education reform (spanning curriculum reform, school management, and

improvement in teacher quality), the expansion and liberalization of the tertiarysector, and the promotion of lifelong education, in order to create a larger and better

educated workforce to cope with the challenge of the new knowledge-based economy

in the aftermath of globalization and the information technology (IT) revolution. Both

general education reform and higher education reform are prominent on all the

national policy agendas. In higher education, corporatization of state universities and

encouraging private investment seem a common direction. Though private

involvement is enlarged in the provision of education, this has not diluted the

proactive role of the state in education which is closely aligned with its objectives in

achieving economic restructuring and adjustment, and building a more adaptive and

knowledge-based workforce.Although as Gough (2004: 171) observed, while East

Asian governments have consistently emphasised the central role of education ineconomic development, this is not matched by a higher-than-average expenditure

for middle-income countries.

Healthcare reforms

In healthcare, Singapore has continued with its policy path dated from the 1980s to

expect citizens to save more to cater to housing and medical needs through the Central

Provident Fund (CPF) vehicle, and made compulsory health insurance and savings a

growing feature of its healthcare system. Hong Kong still operates a predominantly

government-funded public healthcare system, but is actively reviewing health finance

arrangements, with an aim to introduce some form of health insurance and/or savings,and increasing user charges. Even in Taiwan, where a comprehensive national health

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insurance system was implemented in 1995, there have been gradual increases in

insurance premiums in order to cope with rising medical costs. Planning for a second-

generation national health insurance system was started in 2002, though progress has

been hampered by increasing political uncertainties facing the prospect of the

Democratic Progressive Party (DPP) government. Similarly, South Korea and Japan

are also facing problems of better funding insurance schemes in order to cope withrising demands and facilitate more equitable pooling of risk. The former consolidated

various health insurance agencies into one single organization. Historically Japans

healthcare system was highly regulated by government and combines a mainly private

provision of services with mandatory health insurance, with medical fees approved by

government (Imai, 2002). Employees of large companies were covered by company-

based insurance society, while those of SMEs were covered by one big subsidized

central government insurance scheme and most others by schemes run by

municipalities (some 3,250 of them). Now, medical system reform is targeted at

raising contribution rates by citizens, and incorporating long-term care insurance. A

separate old-age nursing care insurance was introduced in April 2000 (ibid). Recently

public-private partnership in the form of private finance was introduced to themanagement of public hospitals. In summary, all five jurisdictions have striven to

maintain the universal coverage of their medical system, mostly through an extended

insurance scheme, but with increasing concern about raising enough premiums and

means-tested user fees to meet rising medical costs and patient demands. Private

sector involvement in the provision of health care is also encouraged.

Housing reforms

In housing, Singapore is the only country still pursuing active and extensive state-

subsidized housing provision in line with its national development agenda since

independence. In 2003, the government replaced the Small Families Improvement

Scheme by a new HOPE (Home Ownership Plus Education) programme to help

these families build up their self-reliance and break out of the poverty trap. The use of

CPF to buy an extended range of public housing types is encouraged. In Hong Kong,

the post-1997 housing reform agenda with an ambitious annual new build target of

85,000 units - to bring down an overheated property market was brought to a drastic

halt because of the Asian financial crisis. The government also made an important

retreat by terminating its home ownership scheme (introduced in the late 1970s) and

sale of public rental housing to sitting tenants (introduced in 1997) in 2002, in order to

save the private property market, even though its commitment to public renting

housing remains intact. In Taiwan, South Korea and Japan, private sector housinghas all along been dominating housing provision. The situation has not changed after

the Asian crisis - for example, even now public renting housing represents only 3% of

all housing units in South Korea (Lee, K. B. 2005). In cope with the post-crisis

economic situation, though, their governments have provided various support

measures to lower-income households mainly in the form of housing loans and some

limited public renting housing. South Korea has also introduced measures on real

estate stabilization, while Japan has abolished the Government Housing Loan

Corporation in order not to be seen as competing with the private sector in the

housing finance market. While no significant policy reversal is observed in the five

states in relation to their pre-existing housing policy regimes, the recent trend has

been to stabilize the housing market and to encourage more private sector provision.

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Welfare and labour protection reforms

In the area of welfare and labour protection, Hong Kong has been trying to contain

the growth of social security expenditure (through the review of CSSA eligibility and

allowance rates), though the level of welfare expenditure (including unemployment

benefits and old age allowance) has still increased because of the economic downturn.In 2005 government was forced by political and public pressures to set up a Poverty

Commission. Despite its non-interventionist policy orientation, the administration of

newly installed Chief Executive Donald Tsang is prepared to support a community-

wide debate on the issues of minimum wage and standard working hours, which trade

unions have been pushing for a long time but which business and employer interests

have all along resisted. In Singapore no new social security programme involving

significant additional public expenditure has been established since the 1960s

(Ramesh 2003: 83) and government has started wage reform and CPF reform. As

relief measures in the aftermath of the Asian crisis, Singapore has introduced various

shorter term initiatives such as the Eldercare Fund, Children Development Co-

Savings Scheme (known as Baby Bonus) and CPF top-up in 2000, the EconomicDownturn Relief Scheme in 2001, and the New Singapore Shares in 2001 and

Economic Restructuring Shares from 2003 onwards. The objective is to achieve a

New Social Compact to cope with the challenge of a New Economy. A Workforce

Development Agency was set up to enhance employability, and new measures were

introduced in 2006 to support low-wage workers. Both city states are giving greater

emphasis on voluntary and third-sector involvement in welfare and community

service provision.

In Japan, welfare laws have been revised, social security system revamped, and

pension reforms and long-term care insurance reforms initiated because of

unemployment and the ageing population. Regime change and democratization of the

political system in South Korea and Taiwan during the late 1990s coincided with

the advent of the Asian financial crisis and the rising challenge of globalization. As a

result, both have engaged more actively in providing unemployment benefits and

some form of minimum living allowance/social assistance schemes, as well as

measures for labour protection, for political as well as social policy purposes. South

Korea adopted a Protection First system for the elderly and unprivileged, and

expanded the Social Safety Plan to increase financial support to low-income families.

In Taiwan, the Employment Insurance Programme was enhanced in 2003 and an

Employment Protection Law enacted in 2004.

Overall, both the trends of welfare review and reform with a viewing to containing

expenditure growth, as well as the attempts to provide relief and minimum living

support allowance schemes, are taking place concurrently, underlining the impact of

fiscal and economic pressures, and the states objectives to keep society sufficiently

harmonious for the purpose of economic growth.

Economic and fiscal policy reforms

The 1997 regional economic crisis has also resulted in stepped-up measures in

economic and fiscal policy reforms. Fiscal reform, deregulation, and economic

revitalization are among key items of government policy agenda in all five EastAsian states. All have engaged actively in financial services sector regulatory reform,

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coupled with the establishment of proper supervisory/regulatory institution (such as a

Financial Supervisory Commission/Agency) to promote better corporate governance,

a stronger fair competition regime, tax review or reform to secure a more steady and

broader taxation base, and new initiatives to nurture entrepreneurship and innovation,

especially IT development. All five have also strengthened their fair trade and pro-

competition regimes. Singapore enacted a Competition Law in 2004 while HongKong is in the process of doing so.

In Japan, an Industrial Revitalization Corporation was set up in 2003 to provide

assistance to small and medium enterprises (SMEs). South Korea places the thrust of

economic policy similarly on nurturing SMEs and their IT capabilities as the next-

generation growth engines. Taiwan extends credit support to traditional industries

and SMEs and establishes R&D centres and free trade zones. Singapore has set up a

Research, Innovation and Enterprise Council in 2005 and also provides strong support

to the internationalisation of its government-linked companies (GLCs), and even

small government Hong Kong had established an SME Financial Assistance

Scheme in 2001. Innovation technology is given special importance in all jurisdictionsto respond to the challenge of the new knowledge economy and to open up a new

frontier for the next round of economic expansion as they can no longer rely on the

traditional export-oriented manufacturing and service industries for growth and

prosperity. Such developmentalist strategy ties in closely with the direction of

education reforms as highlighted above.

Policy shifts rather than policy reversals

In short, economic challenges like globalization and the Asian financial crisis, and

political challenges like regime change with democratization (South Korea and

Taiwan) or without democratization (Hong Kong), and the gradual rise of new politics

(Japan included), together with increasing fiscal/budgetary pressure (notably in Japan,

Taiwan and Hong Kong), have together helped to induced public policy rethinking in

the various East Asian governments. All have to rise to the demands for policy shifts

(and some for even policy reversals). No doubt, new initiatives and modifications

have been launched (such as towards contributory support of public healthcare,

withdrawal from state-subsidized home ownership in Hong Kong, and a wider

acceptance of minimum living standard and income).

Policy shifts, certainly there are, but evidence as enumerated above does not point to

policy reversalsper se, such as in drastically privatizing state responsibilities. Atbest, the government had only resorted more to regulating corporate and privateresources on welfare, and in imposing legislative frameworks for welfare schemes.

The mode of policy delivery governance has, however, seen some notable changes,

such as moving increasingly from state provision to shared responsibility (compulsory

insurance/savings schemes, public-private partnership, and more voluntary/third-

sector involvement) and contracted-out provision and private sector production, but

such shifts in public management systems has not fundamentally eroded the old

regime of East Asian governance, nor diluted (not to say negated) the state

domination, except with reference to Hong Kong, which has all along been a muddled

type of deviant among the East Asian states. Path dependency is still very much in

play, sustained by institutional continuity. Policy changes have not movedsignificantly beyond the original policy path which is still essentially productivist and

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conforms to the East Asian model of state developmentalism. State policymakers and

managers remain to espouse strong developmentalist thinking (despite the advent of

new democratic regimes in Taiwan and South Korea). Even Hong Kongs post-

colonial regime has become more proactive in economic and industrial policy because

of business pressure and political motives (Cheung 2000).

The picture is not complete without tracking the fiscal performance of the East Asian

states. Over the past decade, public expenditure as a percentage of GDP over the past

decade in the five developed East Asian states had not recorded any pattern of

substantial contraction (Table 4 below), though fiscal stress created by the fluctuating

economic performance after the Asian financial crisis had accounted for some

adjustments. Even Japan had managed to maintain a relatively stable level since the

mid-1990s despite the bursting of the economic bubble in the beginning of the 1990s.

It is interesting to note that in the case of South Korea, Taiwan and Hong Kong,

public expenditure had actually taken up a higher proportion of GDP since the Asian

crisis which hit them more severely than Singapore. The fiscal picture in a sense

corroborates the path of public policy developments highlighted above.

Table 4: Public expenditure as percentage of GDP, 1996-2005

Public

expenditure as

percentage of

GDP

Japan South

Korea

Taiwan Singapore Hong Kong

1996 36.5* 14.0 14.8 n.a. 17.7

1997 35.3 14.1 15.6 18.4 17.5

1998 42.7* 16.4 12.7 18.0 17.5

1999 n.a. 16.6 13.8 18.1 20.82000 36.4* 15.1 15.9 c 17.5 21.6

2001 38.0* 15.9 17.1 18.1 21.1

2002 38.1* 15.9 15.3 17.1 20.9

2003 n.a. 16.3 16.0 16.8 22.2

2004 36.9* 15.2a 15.2 15.6 20.7a

2005 n.a. 16.6a 16.0 14.8b n.a.Notes:

n.a. = figures not available.

All figures are for financial years except for most years in Japan, marked with*.aestimates;bpreliminary figure;

cfrom July 1999 to December 2000.

Sources:

Japan Ministry of Finance (various issues); Ministry of Finance (various years); South Korea Ministry ofPlanning and Budget (2006); Taiwan Directorate-General of Budget (various years); Singapore Ministry ofTrade and Industry (various years) [figures calculated by author based on official GDP (current market prices),

government operating expenditure, and government development expenditure figures]; Hong Kong - InformationServices Department (various years).

5. Explanations of East Asian Policy Steadiness

Path of East Asian public policy governance

The developmentalist nature of East Asian states has to be understood not just as an

economic management strategy, but historically path-dependent, which hascontributed towards policy steadiness. Public policy governance is grounded in a

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strong tradition of centralized, politics-administration fusion. Both Singapore and

Hong Kong are typical administrative states where either the bureaucracy runs the

state (as clearly in colonial Hong Kong) or the ruling party and the bureaucracy are

one (Singapore). Taiwan until the late 1990s was under the KMT one-party rule

where bureaucrats were at the same time KMT functionaries. Things might be for a

change after the DPP came to power in 2000, but there seems a tendency for DPP tofollow the footsteps of KMT in politicizing the bureaucracy and public corporations

to create another interlocking model of governance. In Japan, the bureaucracy has

been a strong staying force in government decision-making, which despite a long

history of administrative reforms, makes the reform experience mostly a slow and

somewhat hesitant process, because of the previously successful inter-locking array of

institutions which were resistant to rapid change (Beeson 2003). Reforms were more

often than not a compromise with the agency bureaucrats, known as pre-emptive

bureaucrats (Ito 1995: 251). The same scepticism existed in South Korea where

bureaucrats generally saw reform activities as a source of instability and uncertainty

(Hahm and Kim 1999: 491).

The East Asian bureaucracy is considered as a modernizing and developmental force,

in line with the nature of the state. Public management reforms have been pursued

mostly to secure new or reinvented structures and systems of operations that can

improve the capacity of the state (and of the bureaucracy), so as to better lead nation-

building and economic development efforts. Thus administrative reforms have tended

to adopt a pro-bureaucracy or at least bureaucracy-friendly orientation, and are

usually bureaucrats-driven. In the aftermath of the Asian financial crisis, as global

competition intensifies resulting in more economic pressures, reform agendas might

have embraced more overt managerial, fiscal and economic objectives that seek to

make the bureaucracy less bloated and more efficient, and to contain fiscal pressure,

but this is far from trying to erode public bureaucratic power. Despite the apparent

similarity of the East Asian governance and public sector reforms to the OECD-

pioneered new public management reforms, the political and institutional setting for

such reforms is quite distinct from a typical Western context (Cheung 2005). Some

key features can be identified as in Table 5 below.

Table 5: Features of governance reform setting of East Asian governments

Administrative

traditions and legacies

Strong, centralized bureaucratic tradition;

politics-administration fusion (Singapore and Hong Kong are

typical administrative states)

Nature of political

economy

Developmental state governed market model (with the

exception of Hong Kong which displays a semi-interventionist

model)

State role and capacity Historically strong capacity; highly interventionist (less so in

Hong Kong)

Salience of

administrative reform

Bureaucratic modernization and self-improvement; state

capacity enhancement

Forces for change Mainly bureaucrats-driven, until most recently when politics

and societal demands push for greater pace of reform. (In

Singapore, there is a joint politics-bureaucracy agenda)

Outcome so far Bureaucratic domination of reform agenda, with slow

progress. (Successful public service bargain in Singapore,hence minimum bureaucratic resistance)

Source: Cheung (2005: Table 2)

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Bureaucrats-dominated policymaking

A key reason for policy steadiness in East Asian public policy governance

including social policymaking - is thus the bureaucrats-dominated nature of public

policy making, in addition to the state-led economic development approach to policyinterventions, which see things in economic/developmental perspectives rather than

strict welfare vs. market dichotomies. Bureaucrats who have been the driving force in

public policy formulations are not used to drastic changes that upset thestatus quo toomuch. Their preferred mode of operation is policy modifications and readjustments

along the original policy path, or what Hogwood and Peters (1983) described as

policy succession. Bureaucrats, or politicians thinking like them or in alignment

with them, tend to see the world as more static and policies as vehicles to help achieve

stable development. Once settled in state-led developmentalism, or in Hong Kongs

case a kind of growth-oriented positive non-interventionism, they are unlikely to

change course substantially even amidst economic crisis because of the complexities

and, at times, the inertia imposed by inter-locking interests between state, society andindustry.

Besides, the recalcitrance of bureaucrats who are inherent stakeholders of existing

policies and the modus operandi, as well as the opposition or even open revolt by

other stakeholders who felt affected by drastic policy changes, such as teachers, health

care workers, social workers, and civil servants at large, would serve to prevent too

much deviation from pre-existing policy governance. The fierce opposition of civil

servants to pay reductions and contracting out in Hong Kong, and that of Taiwanese

teachers to education reform, are cases in point. In Japan, as well as South Korea and

Taiwan both of which were previously colonized by Japan and have inherited a public

administration system whereby legislative approval of detailed policy programmes

and administration organizational plans is mandatory, executive-legislative gridlock

grounded in factional politics is yet another cause of slow policymaking. This has

resulted in a high degree of policy continuity and slow incremental policy change.

Despite the 2004 electoral system reform in Japan which some assumed to have

weakened traditional factions within the ruling LDP, factional politics have not

subsided. As Krauss and Pekkanen (2004:1) pointed out, [u]nexpected, kenkai [i.e.factions] have grown stronger because they perform new functions. LDPs Policy

Research Council remains a major avenue of career advancement and specialization

for Diet members and an important if now challenged structure for policymaking. Its

structure and norms are still a means for specialized zoku giin (Policy Tribes Dietmembers) to function as gatekeepers over the policy and legislative agenda ofindividual members and the bureaucracy in LDPs and governments legislative

process (ibid: 23).

Accumulation and legitimation in East Asian capitalism

The emergence of the welfare state as part of Western capitalism can be explained in

various ways like functionalist theories and conflict theories of both the Marxist and

non-Marxist orientations (Aspalter 2002b). Market and capitalism, like any

institutions, are politically and culturally embedded in society. As Gray (1999: 191-2)

argued, it is a mistake to assume that capitalism everywhere will come to resemblethe highly individualist culture of England, Scotland and parts of Germany and The

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Netherlands. It has not done so in France or Italy. Polanyi (1944) had similarly

pointed out much earlier that market institutions did not emerge spontaneously, but

rather often depended heavily on state actions. Indeed the creation of national markets

in the West had historically coincided with the constitution and expansion of state

institutions (United Nations Development Programme 1999). In the same vein, the

welfare state is a construct of state actions within a historically and nationally specificcultural, political and social context.

There are thus different forms of welfare states, embodying different forms of social

policy development, inasmuch as there are different forms of capitalism. As market

capitalism is not an abstracted final stage of economic evolution (Robison 2003:

168), so the Western welfare state model is not the ultimate destiny of a welfare state

development trajectory that all welfare states - European, American and Asian, etc. -

had to converge to. Even globalization does not necessarily end up in convergence,

either towards a universalist welfare regime or a neo-liberal economic regime

sceptical of welfare. As an old Chinese philosophical saying puts it: a white horse is

not a horse, so the impact of globalization may bring about divergence as much asconvergence. Indigenous values and projects count more than simply emulating some

external models even as the process of policy learning and diffusion takes place.

Whether globalization can predetermine the specific context and agenda of policy-

making at the national level is therefore problematic. Even if policy ideas may get

transferred globally, policymaking and politics are always local.

Social policy regimes are the outcome of institutional pathways which in themselves

are constructs of social processes and of historical evolution. In the Western

experience, if one were to employ the Marxist functionalist interpretation, capitalism

came to a point where it suffered from the crisis of accumulation (i.e. continued

growth and capital accumulation) and the crisis of legitimacy (of the capitalist mode

of production). The role of the state in serving the ultimate interest of the logic of

capitalism is to promote both economic growth (accumulation) and the stability of

the social and political order (legitimation) through extensive social policy

provisions and the construction of a welfare state that helps to reduce class

confrontations and political challenges to the capitalist system (OConnor 1973;

Gough 1979; Offe 1984). Among East Asian states, developmentalism (subsumingboth economic and politicalproductivism) can similarly be understood as an array of

state actions and interventions in promoting and bolstering a unique form of market

capitalism (which some describe as state-led for economies like South Korea and

Singapore, and others depict as predatory or clientelist for countries likeIndonesia and Thailand).

In the aftershock of the Asian financial crisis, facing increasing pressure from

globalization as well as the domestic politics of democratization, the developmental

welfare state of both South Korea and Taiwan had clearly become more inclusive.

According to Kwon (2005: 495), the socially inclusive welfare regime helped these

two states to come out of the economic crisis without suffering too many adverse

social effects, such as a sharp rise of poverty or serious worsening of income

inequality. Granted, social policy helps to mitigate the impact of economic setback

and uncertainty, and enables the society to regain cohesion and the collective capacity

to pursue economic development, with still strong productivist connotations. In anycase, the need for sustained growth (or accumulation in the Marxist sense) and

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political legitimacy (legitimation) would make it imperative for an increased state

role for East Asian states in social policy development despite a cultural and social

context that had traditionally assigned welfare functions to the family, the clan and the

corporate sector (as in Japan). The essence of the East Asian welfare state to facilitate

the growth of East Asian capitalism would, like how Marxists and neo-Marxists had

explained the relationship between Western capitalism and its welfare state, support asocial policy discourse that cannot be decoupled from the larger developmentalist

paradigm.

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Japan

Office of the Cabinet Public Relations, Cabinet Secretariat (Japan), Speeches and Statements

by Prime Minister Junichiro Koizumi,http://www.kantei.go.jp/foreign/koizumispeech/index_e.html

Office of the Cabinet Public Relations, Cabinet Secretariat (Japan), Archives of PreviousCabinets (Since 1996), http://www.kantei.go.jp/foreign/archives_e.html

South Korea

Cheong Wa Dae Office of the President, Republic of Korea, Cheongwadae Archives List -

Speeches, http://english.president.go.kr/warp/app/en_speeches/list?group_id=en_archive&meta_id=en_speeches

Taiwan

Research, Development and Evaluation Commission, Executive Yuan, Tuidong Gongying

Shiye Minyinghua [],http://www.rdec.gov.tw/public/Attachment/521217123871.doc

State-owned Enterprise Commission, Ministry of Economic Affairs, Executive Yuan,

http://www.moeacnc.gov.tw

The Executive Yuan of the Republic of China (Taiwan), Shizheng Jihua [] (variousyears since 2001),http://www.ey.gov.tw/web92/n_policies_list.asp.htm

Singapore

Government of Singapore,Prime Ministers National Day Rally Speech (various years since2000), http://www.gov.sg/pressreleases.htm

Ministry of Finance, Budget Archives (various years since 1996),http://www.mof.gov.sg/budget_archives/index.html

Ministry of Finance, Budget Speech 2005,http://www.mof.gov.sg/budget_2005/index.html

Hong Kong

Government of the Hong Kong Special Administrative Region, Peoples Republic of China,

Policy Address by the Chief Executive (various years since 1997),http://www.policyaddress.gov.hk/

22
http://www.kantei.go.jp/foreign/koizumispeech/index_e.htmlhttp://www.kantei.go.jp/foreign/archives_e.htmlhttp://english.president.go.kr/warp/app/en_speeches/list?group_id=en_archive&meta_id=en_speecheshttp://english.president.go.kr/warp/app/en_speeches/list?group_id=en_archive&meta_id=en_speecheshttp://www.rdec.gov.tw/public/Attachment/521217123871.dochttp://www.moeacnc.gov.tw/http://www.ey.gov.tw/web92/n_policies_list.asp.htmhttp://www.ey.gov.tw/web92/n_policies_list.asp.htmhttp://www.gov.sg/pressreleases.htmhttp://www.mof.gov.sg/budget_archives/index.htmlhttp://www.mof.gov.sg/budget_2005/index.htmlhttp://www.mof.gov.sg/budget_2005/index.htmlhttp://www.policyaddress.gov.hk/http://www.kantei.go.jp/foreign/koizumispeech/index_e.htmlhttp://www.kantei.go.jp/foreign/archives_e.htmlhttp://english.president.go.kr/warp/app/en_speeches/list?group_id=en_archive&meta_id=en_speecheshttp://english.president.go.kr/warp/app/en_speeches/list?group_id=en_archive&meta_id=en_speecheshttp://www.rdec.gov.tw/public/Attachment/521217123871.dochttp://www.moeacnc.gov.tw/http://www.ey.gov.tw/web92/n_policies_list.asp.htmhttp://www.gov.sg/pressreleases.htmhttp://www.mof.gov.sg/budget_archives/index.htmlhttp://www.mof.gov.sg/budget_2005/index.htmlhttp://www.policyaddress.gov.hk/


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Table 3: Salient public policy changes in Japan and East Asian NICs since 1990s

Japan South Korea Taiwan Singapore Hong Kong

Education Amendment ofSchool Education

Law to promote

flexibility and

diversity in schooleducation system

Education Reform

Plan for the 21st

Century launched in

2001 (National

Commission onEducation Reform)

National universitiesto be converted to be

National University

Corporations

CompulsoryEducation Reform

(2004) more

flexibilities in current

9-year compulsoryeducation, new

licensing and renewal

system for teachers,

and involvement ofparents and local

authorities in school

management

Higher EducationReform to merge 10

national universities

into 5

Brain Korea (BK)21 a 7-year project

to develop world-

class research-centreduniversities (2005)

Comprehensivereform of education

system started in 1996

(curriculum reform,

expansion of highereducation, quality

assurance,

encouraging non-governmentinvestment, autonomy

of universities, and

corporatization of

public universities)

Amendment to

University Law in2005 to enable public

universities to select

their own presidents

Provision ofkindergarten

education vouchers

Emphasis ondeveloping workforce

for knowledge

economy and

promotion of R&D

Curriculum reform

Establishment of

Lifelong LearningEndowment Fund(2000)

Upgrading

universities and

creating higheducation hub in the

region (build a 5th

polytechnic and 3

new junior colleges)

More autonomy to

public universities

and corporatization of

National Universityof Singapore and

Nanyang

Technological

University

Education reform amajor agenda of new

Tung administration

(1997) (holistic

education, curriculumreform, academic

structure reform,

teacher qualityupgrading, ITeducation, and

promotion of lifelong

education

Increasing highereducation rate through

associate degree

education

Encouraging privateschools and Direct

Subsidy Schools

(DSS).

School-basedManagement

Establishment ofQuality Education

Fund

Health Revision of HealthInsurance Law

(1997) - 80% of

medical costs to be

paid to the insured;

National HealthInsurance extended

to universal coverage

in 1989

Consolidation of

Introduction ofnational health

insurance scheme

aimed at universal

coverage in 1995

Introduction ofMedisave

(compulsory savings

scheme) and

Medisheld (insurance

Review of HealthcareFinance in 1999 -

Harvard Study

advocated compulsory

health insurance-cum-

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introduction of

prescription drugs

Increase of patientscost-sharing in 2000

Implementation ofthe Long Term Care

Insurance in 2000,

and subsequent

reform in 2005

Medical System

Reform in 2002 to

increase contributionrate of citizensinsured by Society-

managed Health

Insurance from 20%

to 30%, to be on apar with the same

rate underGovernment-

managed Health

Insurance; repeal of

the patient charge onprescription drugs

Introduction ofpublic-private

partnership in public

hospitals: first public

hospital managed byprivate sector opened

in 2005 under

framework of Private

Finance Initiative

various health

insurance agencies

into one singleorganization to

facilitate more

equitable risk

pooling in 2000

Planning for second-

generation national

health insurancesystem began in

2002, in order to

cope with funding

deficits

scheme) in order to

make individual

citizens bear a largepart of health

expenditure

Reform of Medishield

in 2004 to raiseclaims for deductibles

and prevent medical

insurance industry

from being too

selective, thus leavingMedisheld to protect

the disadvantaged

Extending meanstesting to general

hospitals

savings schemes;

government counter-

plan for compulsoryhealth savings,

supplemented by

increase in fees and

charges (e.g. inAccident &

Emergency services)

Recent (2005)

proposal

Healthcare Reform Future Healthcare

Delivery Model

Consultation - toallow more public-

private interface in

provision of

healthcare and tointroduce family

doctor scheme

Hospital Authority

introduced standarddrug formulatory to

help reduce

prescription

expenditure

Housing Amendment of Public

Housing Law in June

1996 to tighten

eligibility for public

Temporary measures

for improvement of

low income housing

(1989-1999) to

Encouraging private

sector to build

housing units for

labourers (some 20

Stepping up state

housing through

provision of new

categories such as

Housing reform as

major agenda of new

Tung administration

(1997): Short-lived

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housing

The 7th Housing

Construction Five-year Plan (1996): to

promote building of

good quality housing,

with target of 7.3million units by 2000,

of which 3.5 million

funded through pubic

finance

Housing and UrbanDevelopmentCorporation

reorganized into the

Urban Development

Corporation in 1999

Amendment of

Building Code andCity Planning Law in

1997: High Rise

Housing Promotion

Zones designated incentre of large cities;

Fixed term Rental

Rights System

introduced in 1999

Ending of directhousing financing bythe Government

Housing Loan

Corporation (GHLC)

in 2004, following theabolition of the

corporation which

ceased to issue new

loans in 2001

facilitate low income

housing

redevelopmentprojects

Price ceiling of new

residential housing

units introduced in1997

Privatization of Korea

Housing Bank in

1998

Establishment ofKorea Housing

Finance Credit

Guarantee Fund in1998

Korea HousingFinance Co-operative

established in 1999:

government

participation inhousing consumer

protection measures

New Real Estate

Reform Policy

stabilizing housing

for ordinary peopleand curbing real

estate speculation

More budgetary

allocations toNational Housing

Fund

Increasing public

rental housing supply

Vitalizing long-term

loan systems for

designated categories

of workers, ranging

from miners to mediaworkers) since early

1990s, with terms

similar to those for

public housing

Focus of central

government civil

servants housing

shifted from direct

provision to offeringof subsidized loans

(1995)

Six-Year Housing

Plan 1996-2001: with

majority of publichousing units to be

purchased from the

market, and

government providingsubsidised loans

Executive Yuanproposed to set up a

single organisation in

1999 to tackle

housing problems,instead of having the

responsibility

fragmented across

various branches ofgovernment

Executive Yuan

acknowledged

problem of housingoversupply and

inadequate land

luxurious apartments

for higher-income

citizens, andupgrading of existing

public housing estates

Introduction of

Special HousingAssistance

Programme, to bring

together various home

ownership schemes

for lower incomehouseholds

A new CPF Housing

Grant Scheme forlower income families

who buy HDB

(Housing

Development Board)flats

post-1997 pledge of

85,000 new build

target to preventmarket overheating

Reducing waiting

time for public renting

housing, improvingmanagement &

maintenance, and rent

relief scheme

Establishment of

Urban RenewalAuthority

Termination of public

provision of

ownership housing

through HomeOwnership Scheme

(HOS) and Tenant

Purchase Scheme

(TPS) in 2002 due toproperty market

collapse

Review of Domestic

Rent Policy for Public

Housing in 2006

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small-sized rental

houses for needy

citizens, and formiddle-class citizens

to enjoy stable life in

rental housing

system in 1999

Home Finance Loan

scheme to benefit120,000 households

(2004)

Welfare and

labour

protection

Revision of eight

welfare laws in 1990,

including WelfareLaw for the Elderly

Child Allowance for

the first childintroduced in 1991

Advisory Council on

Social Security

recommended

rebuilding socialsecurity system

(1995)

Enactment of Long-

term Care InsuranceLaw) in 1997, taking

effect in 2000

Pension Reform -

raising the startingage for payment of

employees pension

in 1994; amendment

to Public PensionLaw in 1998 to set

maximum pension

premium, increase

pensionable age, stopwage-indexation, and

introduce old-age

pension for active

workers in late 60s,

Implementation ofEmployment

Insurance Programme

by integrating

unemployment

benefit scheme withjob-training in 1995

Establishment of

tripartite Employees-Employers-

Government

Commission in 1998

Labour Standard Lawexpanded, and

Labour-Management-

Government

Committeeestablished

Introduction ofminimum living

standard guarantee

scheme in 2000 Protection-first

system (2005) for

elderly and other

disenfranchised

citizens

Review of National

Pension Programmewith new fiscal

measures

Passage of Social

Assistance Law in

1997

Introduction of

Employment

InsuranceProgrammein 1999

Reform of labour

pension system in

2001

Attempts to amendthe three labour

laws (Trade Union

Law, Collective

Bargaining Law, andIndustrial Disputes

Settlement Law)

(currently still

pending in thelegislature because of

partisan

disagreement)

TemporaryProvisions for

Elderly Welfare

Subsidy (2002)

Reform to retirementpension system, and

provision of

unemployment

benefits in 2002

Wage Reform and

CPF (Central

Provident Fund)Reform

Promote voluntary

help through charityorganizations

Setting up of

Eldercare Fund,

Children

Development Co-Savings Scheme (or

Baby Bonus), and

granting of CPF Top-

up to all citizens in2000

Economic Downturn

Relief Scheme (2001)

Emphasis on New

Social Compact to

cope with the NewEconomy

Issue of New

Singapore Shares to

less well-off citizensin 2001, with

guaranteed dividend

payment and

redeemable for cash.

Issue of Economic

Restructuring Shares

Introduction of new

Man

anthony cheung paper

Documents