A Comparative Analysis of Welfare Regimes in the South:

The social origins of social assistance outside of the established democracies

Jeremy Seekings(University of Cape Town)

Presentation at Social Policy Forum, Boğazici University, Istanbul, 3 November 2004

1. Introduction: Public Policy and Distribution in ‘North’ and

‘South’

The ‘Crisis’ in Public Welfare Provision: North and South

In the ‘North’ in the late twentieth century:• ‘Almost all advanced industrial democracies cut entitlements in

some programs’• but it was/is politically difficult to roll back substantially the

public provision of welfare

In the ‘South’, at the same time:• Partial or full privatisation of contributory welfare systems

(especially in Latin America and post-Communist Eastern Europe and central Asia)

• but elsewhere: extensions of welfare provision to the poor, especially through non-contributory social assistance schemes (including Brazil and Mexico; South Africa, Namibia, and Botswana; India and Nepal; Hong Kong, Taiwan and Korea)

Esping-Andersen’s Three Worlds of Welfare Capitalism (in North)

Liberal Social democratic Conservative

Role of:

Family Marginal Marginal central

Market Central Marginal marginal

State Marginal Central subsidiary

Welfare state:

dominant mode of solidarity Individual Universal kinship;corporatism;

etatism

dominant locus of solidarity Market State family

degree of decommodification Minimal Maximum high (for breadwinner)

degree of defamilialisation medium high low

Extent of redistribution Low High medium

Relevant criticisms of the Esping-Andersen ‘three worlds’ typology?

• It mis-categorises non-modal cases, including most late industrialising countries

• It addresses inadequately gender differences and household/family dynamics

• It underestimates the importance of labour-market policies influencing wages and therefore mis-categorises countries that achieved distributional goals through such policies

• It neglects broader developmental policies, i.e. policies shaping the economic ‘growth path’ (and hence distribution)

• It inadequately addresses the equity-enhancing imperative of ‘commodification’ (through increased employment) prior to ‘decommodification’

Key elements of a ‘distributional regime’

Growth strategy(incl. policies on sectors, skills,

openness)

External context(esp. global demand

for exports)

Distributional outcome

Redistribution through the budget: Welfare,

tax and social policies

Employment- and wage-setting

institutions/policies

Growth path

Distributional vs welfare regimes:

overall effects on equityIn South Africa:• The welfare regime is very redistributive:

– generous social assistance (plus pro-poor educational and health spending),

– financed out of an efficient, progressive tax system

• But the overall distributional regime is neutral, because:– Wage-setting and growth path policies produce a

skill-intensive growth path and very high unemployment, increasing inequality and poverty

• Today, I focus on welfare regimes, with incomplete and uneven attention to other aspects of distributional regimes

• I focus on the question: what are the ‘social origins’ of social assistance?

• I try to answer this question through – Proposing an alternative typology of the

‘Southern’ worlds of welfare capitalism, and

– Examining how and why these different worlds were established in specific historical settings

2. Developing a Typology of Welfare Regimes in the South

Pu

blic

ex

pen

dit

ure

/ G

DP

GDP per capita

OECD

AfricaSouth Asia

etc

East AsiaPu

bli

c ex

pen

dit

ure

/GD

P

Latin America

GDP per capita

Family/kin

State

Market

Latin America

East Asia (and World Bank model)

Based on Esping-

Andersen

Role of kin

Both state and market were/are new and weak across much of the South.

Therefore the family/kin was/is:• the provider of default • the major provider, even now for old age:

– only 30% of the world’s elderly are covered by formal arrangements

– only 40% of the world’s working population participate in any formal arrangements for their future old age

• the provider, under the constitution or law, in much of South/East Asia and Africa

Alternatives to kin …

• Rights / claims linked to commodification, i.e. to employment– Whether through the state (social insurance)– Or through ‘market’ (private, but generally state-

regulated, contributory risk-pooling and saving)

• Rights independent of commodification, i.e. ‘decommodification’– Social assistance, i.e. moves towards a basic

income

• Charity

Family/kin

State

Market

Latin America

East Asia (and World Bank model)

Based on Esping-

Andersen

Family/kin

State

Market

Formal employment

Esping-Andersen

reinterpreted

Welfare regimes in the South1. Agrarian: private provision of welfare dependent on access

to land and/or kin (and appropriate state support)• Measured through % of population receiving a subsistence income

from agricultural production

2. Inegalitarian corporatism: risk-pooling and/or savings dependent on employment

• (2a) a more market-oriented version (private, contributory schemes)

• (2b) a more statist version (formal social insurance)• Measured through % of population covered by social insurance or

private contributory schemes, or through benefits or contributions as % of GDP

3. Redistributive: tax-financed provision of welfare independent of employment

• Measured through social assistance payments as % of GDP

Agrarian

Redistrib-utive

Inegalitarian

corporatism

Welfare regimes

in the South

Agrarian

Redistrib-utive

Inegalitarian

corporatism

Welfare regimes

in the South

Br

Ken

Kor

Tur

SA

Bang

Typology of southern welfare regimes

Agrarian Inegalitarian corporatist (or

employment-based)

Redistributive

Role of:

Family Central Marginal Marginal

Employment Marginal Central Marginal

State Varied Varied Central

Welfare state:

dominant mode of solidarity

Kinship Individual or corporate (occupational)

universal

dominant locus of solidarity

Family Market or state State

degree of decommodification

Varied Minimum Maximum

degree of defamilialisation low varied Medium to high

Extent of redistribution Varied Low Medium to high

The role of ideas: what norms of welfare provision?

Anglo liberal tradition

(Beverıdge, Marshall)

Corporatist tradition

(ILO)

Rights as citizens (when ‘deservıng’) and/or as workers

Rights as workers

Poverty reduction + risk-pooling + income-smoothing over life-

course

Risk-pooling + income-smoothing over life-course

Universal norms of welfare provision

Employment-based norms of welfare provision

Social assistance + social insurance

Social insurance only

3. Examining the Origins of ‘Redistributive’ Welfare Regimes in the South

Periodisation of the making of welfare regimes in the South

• Early C20th: Struggles for welfare provision by industrial and public sector workers, typically among unionised immigrants primarily, with the objective of state-subsidised risk-pooling: this generally resulted in corporatist social insurance

– outside of these social groups, poverty was the concern of kin– only in exceptional circumstances did the state accept the need for state-

funded social assistance• Mid-C20th: Concern with agrarian crisis (and urban poverty) in context

of wartime ideals led to reform in two directions: – the predominant response was the ‘developmental’ one, either through re-

establishing an agrarian economy or through ISI, therefore poverty addressed by kin or through the extension of corporatıst risk-pooling / income-smoothing among wage-earners

– less often: the extension of social assistance • Late C20th: broadening of inegalitarian corporatism, i.e. broader

coverage• End of C20th: demographic change, massive deagrarianisation and

democratisation increased pressures for welfare reform including social assistance

(Inegalitarian) Corporatism in the South

Standard story: • state-enforced, contributory social insurance for (1) military

(2) civil servants (3) formal workers in key sectors• Fragmented by occupation; unequal benefits; state

subsidies; limited coverage; costs to employers passed onto consumers

• E.g. Brazil, Chile

A deviant case: South Africa• 1928 non-contributory old-age pensions for white/coloured

elderly (and, later, non-contributory grants for disabled people and single mothers)

• Deagrarianisation; semi-open economy; electoral competition for non-unionised poor, urban voters; an inclusive ideology (but more racism/Afrikaner nationalism not socialism)

The Agrarian Moment

1940s: new concern with poverty across much of the colonial South (as well as the North)

Universal norms of welfare provision: 1938 New Zealand Social Security Act, 1941 Atlantic Charter, 1942 Beveridge Report, 1940/1945 (British) Colonial Development and Welfare Acts, constitutions of new postwar states, etc

Response: revive agrarian society through active state interventions (‘development’) eg land reform, marketing infrastructure, transport infrastructure, financial infrastructure, agricultural extension, social welfare (development) officers

e.g. most of Africa, South Asia, East Asia, South-east Asia

Deviant cases: South Africa, Mauritius, some Caribbean

South Africa

• Non-contributory social assistance for white and coloured people from 1920s

• 1944: extended to African and Indian people (but with racially unequal benefıts)

• Why?– Deagrarianisation– Semi-open economy (gold)– Influence of universal norms during war– Paternalism, not electoral competition

Mauritius

• Small, open economy: sugar estates with landless rural proletariat

• 1937 riots => proposals but prevarication• 1948 competitive elections to Legislative Council

(pre-independence parliament)• 1950: non-contributory old-age pensions

• Meade (1961): ‘In the conditions of Mauritius, low wages (to stimulate expanded employment) plus a moderate dose of social-security benefits ór cost-of-living subsidies (to support the standard of living) together make up a very sensible policy’

South Korea and Taiwan

Agrarian regimes until late introduction of (unsubsidised) social insuranceOpen economiesDemocratisation => social assistance

South Korea:• 1988 (to 1992) opposition parties had majority in legislature• 1988 contributory old-age pension system established; also national health

insurance• 1996 opposition parties again in majority• 1998 non-contributory old-age pensions

Taiwan:• 1993 opposition DPP promised a universal old-age pension; ruling KMT

matched the promise• 1993: means-tested old-age pensions (1994: universal health insurance)• Mid-1990s: other, supplementary social assistance for small farmers and in

some towns

Case Deagrar-ianisation

Universal norms

Open economy

Electoral competition

Entrenched corporatism

Uruguay + + ? +

S/Africa ’27 + (+) (+) +

S/Africa ’44 + + (+) -S/Africa 80s/90s

+ + (+) + (early 1990s)

-

Caribbean + + + +

Mauritius + + + +

Hong Kong + + + + (1990s)

Korea / Taiwan

? ? + +

Brazil 1970s + -Brazil 1990s + ? + -Mexico City + ? + -

Future prospects for social assistance

• Reforms: – Rhetorical support for universal/basic income? E.g. Brazil– Actual support for ‘deserving poor’: elderly, disabled,

children, single parents• Pressures:

– competitive electoral politics– demographic change– Socio-economic change (deagrarianisation, weakened

kinship links)– Fiscal costs of public subsidies of existing social insurance

schemes– More open economies

• Obstacles:– Vetoes by beneficiaries of existing inegalitarian corporatist

regime (trade unions, professional associations, pensioner associations) if subsidised

– Fiscal conservatism