Welfare services are significant elements in a society, which welfare should provide, to what extent the welfare can be provided and how to provide may vary among different society. There are some models help us to understand the factors affecting the welfare system such as the Residual Welfare Model and the East Asian Welfare Model. We will examine whether Hong Kong a typical example of these two models by analyzing the social welfare policies.
Social welfare refers to the well-being or betterment for individuals through direct benefits, services or disposable income (Wong, 2010). According to Ronald B. Dear, Social policies are those principles, procedures, and courses of action established in statute, administrative code, and agency regulation that affect people’s social well-being. Social Welfare Policies are some sort of these social policies. “‘They may be thought of as those policies that affect the distribution of resources’ Richan (1988). In the following analysis, we will 5 main kinds of welfare policies which are housing, education health care, social care and social security to illustrate whether Hong Kong a typical example of both the East Asian Welfare Model and Residual Welfare Model or not.
There are various characteristics of the Residual Welfare Model, the individual characteristics, economic characteristics and the characteristics of government and state.
For the individual characteristics, people are recognized to be self-independent, self-interested and self-responsible.
For the economic characteristics, ‘laissez fair’ economy and the ‘invisible hand’ are upheld since people believes that market can solve the social problems and to maintain the well- being of the society.
The government and state are the major providers of social welfare and control to what extent the welfare can be provided. Under RWM, the government and state should not over burden itself with social welfare/ services and interfere with individual right and interests. Therefore, only the basic welfare should be provided i.e. law and order, defense, transport and communication infra- structure. Welfare seems as residual, temporary and substitutes of the normal structure of supply which means the family and the market economy. Only when the normal structure of supply breaks down, social welfare and services should be provided. In order to avoid the reliance on the welfare system, some of the welfare/ services may come with the stigma of ‘dole’ or ‘charity’ element. The poor is the major group of people to receipt welfare and they always recognized as the incompetent second class members of society. To ensure the welfare can be provided to the people in need, welfare will always have selectivity. The most common method is by means test.
According the Mishra, the main features show that a minimal government or state is preferred. The government just wants to provide welfare for the paupers and poor which is just minority group of the society.
The services provided are just serving the basic need for them and range of statutory services is limited. Combining all these elements, welfare is just a safety net, confined to those who are unable to manage otherwise.
1. State responsibility in meeting needs (ideology of state intervention)
2. Need-based distribution as a value (ideology of distribution)
3. Range of statutory services
4. Population covered by statutory services
5. Level of benefits
6. Proportion of national income spent on state service
7. Use of means test
8. Nature of clients
Paupers/ the poor
9. Status of clients
10.Orientation of the service
11. Role of non-statutory agencies in welfare
Fig.1, The main features of Residual Welfare Model, (Mishra, 1984)
Whether Hong Kong a typical example of Residual Welfare Model?
We used the 5 main kinds of social welfare policies in Hong Kong to illustrate Hong Kong is adopting the RWM or not.
Hong Kong provided different schemes for people to pay for their education fee. One of the education subsidy schemes is Pre-primary Education Voucher Scheme. Government will subsidize the parents to meet towards school fees for pre-primary education of their children in the form of Pre-primary Education Vouchers.
In addition, Hong Kong government announced 12 years of free education in Policy Address 2009-2010. It provides 12 years compulsory free education to children.
For the Tertiary students, Tertiary Student Finance Scheme was released. Government provided larger amount of subsidies to tertiary students. The total amount of grant paid by government is $621.93 million in 2009-10.
Fig.2, Publicly-funded Programmes Summary of Statistics
The Continuing Education Fund (CEF) subsidizes adults who willing to pursue continuing education and training courses. Adequate applicants will be refunded 80% of their fees, a maximum sum of HK$10,000. Apparently, government pays effort on the education policies and the population covered is really broad.
For the Clinics part, 70 % of primary consultations take place in private sector while others take place in government funded clinics.
Moreover, there are 41 public hospitals in Hong Kong. However, there are only 12 private hospitals. And the Hong Kong’s 12 private hospitals provide a total of 2794 beds. It less than 10% into the number of hospital beds in Hong Kong.
Furthermore, in Healthcare Reform (2009-2010 Policy Address), government decided to increase the healthcare expenditure from 15% of the Government’s recurrent expenditure to 17% by 2012. The strategy of healthcare reform reflects the government’s direction of healthcare in the follow few years will still highly intervene in the healthcare services.
All of these healthcare policies show that government has a quite high level of intervention and these services are open to all the Hong Kong residents without any selectivity. As a result, the health care does not match to the principles of residual welfare model.
Government also had launched lot of policies about housing. There are about 710 000 public rental housing in the Housing Authority’s portfolio, housing about two million people.
Tenants Purchase Scheme (TPS) was introduced in 1997 to enable at least 250 000 families living in public rental housing to buy their flats at an affordable price which is lower than the market price.
Besides, Home ownership schemes (HOS) is another ownership scheme. It is designed to assist residents to buy their own flats and HOS flats are subsidized public housing.
It is easily to find that government had interfered a lot in the housing supply. The population covered not just focus on the minority. Therefore, it differs from the principles of residual welfare model.
In the field of social care, it provides a wide range of services taking care of the elderly, children, young people, disabilities, the victims of domestic violence, etc. This is quite different from the RWM since the population covered is large. The most common method adopted by the HK Government to provide the welfare services is to form partnership with non-government organizations. The government give a “Lump Sum Grant’ to the NGOs and they provide the services to those in need. The expense on the Social Welfare Organization occupied the third large proportion of the total expense on welfare in Hong Kong.
Fig.3, The expense of the social services organization
Social Security – Comprehensive Social Security Assistance Scheme
The characteristics on providing services on social security seem more close to the RWM. The aim of social security is to provide for the basic and special needs of the members of the community who are in need of financial or material assistance (Social Welfare Department, 2008). It is a short- time help.
CSSA is a safety net for those who cannot support themselves financially and bring their income up to a prescribed level to meet their basic needs (Social Welfare Department, 2008). The old age, single parent and unemployment are the three major groups of people of to apply CSSA (Statistics on Comprehensive Social Security Assistance Scheme 1998-2008, 2009).
In order to select the most needed, people apply for CSSA should go through the financial tests. They need to pass the income and assets tests. Office interview and home visit will conduct to investigate and verify the applicants’ circumstances and information provided.
Since this is a short-time help, the government do not want people rely on it, there is some special arrangement for those aged 15-59 in normal health to actively seek full-time jobs and participate in the Support for Self-reliance Scheme of the Department (Social Welfare Department, 2008).
In the 5 main kinds of social policies, only the social security seems to be the typical example of residual welfare model. Social security just provides short-term help and to fulfill the basic needs of the recipients. Moreover, a series and comprehensive investigation and financial test are needed. And the CSSA may cause the Stigmatization. People may have bias on those CSSA recipients. Besides Government pays effort to teach and encourage the recipient to work in other to leave the safety net. In this sense, it conforms to the principle of residual welfare model.
On the other hand, the other four categories of social welfare policies are not much like the residual welfare model. They are more like universal benefits and services having no or less selectivity, because benefits available to everyone. Those policies not only provide basic needs of individual but also to improve the quality of life, cultivate the citizens, and so on. Therefore, the expenditure on welfare keeps increasing. Thus, Hong Kong is not a typical example of residual welfare model.
The East Asian Welfare Model (the EAWM)
There is another model related to social welfare policy which is the East Asian Welfare Model. It shares the Confucian ethics and value emphasizing on education, strong family relations, benevolent paternalism, social harmony, discipline, respect for tradition and strong work ethic. To determine whether Hong Kong is a typical example of The East Asian Welfare Model, we can see if it matches the elements of the model.
Dominated on economic concerns
In the EAWM, welfare policies are dominated on economic concerns in order to improve the productivity of labour force and provide strong working incentive. As it aims to help increasing the productivity of an economy, it is also called as a “productivist” social policy. Hong Kong does match this element.
There is a concept of “from welfare to work”in Hong Kong. When more people have their own jobs, the numbers of CSSA recipients will decreases and the productivity of an economy will be increased too.
Targeted employment assistance for various CSSA Recipients
In Hong Kong, the government targets employment assistance for various CSSA recipients. For example, the Three trial Enhanced Community Work Projects which includes training elements in 2005 to 2006 were aimed to enhance the employability of participants. Up to October in 2006, there were 145 Intensive Employment Assistance Projects which provided intensive employment assistance services to unemployed CSSA recipients. Hong Kong government also supports for Self-reliance Scheme (SFS) that encourages and assists employable recipients to take up paid employment so as to make them to become self-reliant. This scheme includes Active Employment Assistance programme and Community Work programme. They aimed to help people finding jobs and thus increase the productivity of Hong Kong.
Regulator rather than provider
The Hong government acts as a regulator of welfare policy rather than a provider in EAWM. Hong Kong matches this element since Hong Kong government contracts out the services by giving funds to different organizations and asks them to provide welfare services for it. For example, it provides funds to The Neighbourhood Advice-Action Council to build Family Crisis Support Centres in order to tackle family crisis. It also gives funds to Po Leung Kuk and Childtime International Nursery Limited to build up child care centre so as to provide child care services. It gives funds to St. James’ Settlement and Hong Kong Society for the Aged to provide elderly services such as building up Elderly Community Centres.
Way to maintain social stability and legitimacy
In the EAWM, welfare has been seen and used as a key element to maintain social stability, to get the legitimacy of governments which lacked democratic legitimacy and to ameliorate grievances. Hong Kong matches this element. In Hong Kong, the Chief Executive and government officials are not elected by universal suffrage. With less legitimacy, welfare service becomes one of the tactics to pacify the grievances and to maintain social stability. Welfares can keep social stability as when people’s needs have been satisfied, they are expected not to commit crimes. Hong Kong government does do a lot to give financial assistance to the poor. For example, CSSA Scheme gives financial assistance to those who cannot support themselves. Social Security Allowance (SSA) Scheme provides monthly allowance to Hong Kong residents who are severely disabled or 65 years old or above. It shows that Hong Kong government uses welfare as a tool to maintain social stability, and so as to retain the legitimacy of the government.
Low social welfare expenditure
Hong Kong Government expenditure on social welfare is low compared with the Western countries. The welfare expenditure (% of GDP) of some western countries is above 20%, some are up to 29%. In Hong Kong, the welfare expenditure (% of GDP) is around 8% due to the low tax rate and the reliance on the market and the family to provide welfare.
Hostile to the idea of welfare state
Hong Kong is also hostile to the idea of welfare state. In the welfare states, the tax rate is high such as the corporate tax rate is 25% and the personal tax is up to 58% in Denmark. The high tax can support rate of large welfare expenditure. Welfare states provide comprehensive coverage of welfare including old-age pensions, unemployment benefits health and childcare services. The welfare is also very favourable since is more than the basic needs. In Sweden, the unemployed will receive 80 percent of his or her normal income under the unemployment benefits. However, in Hong Kong, the tax rates are extremely low compared with the OECD standards. The corporation tax rate is 17.5% and personal tax rate is only 16%, around 1/3 of the OECD standard. Hong Kong is one of the places with the lowest tax rates, named as tax haven. The low tax rates encourage competition i.e. the harder you work and more you gain.
In the White Paper – Social Welfare into the 1990s, government stated that it worked hard to improve the dependency culture and remind the citizen’s incentive to work and undermines the productive engine of the economy”. It is to encourage self- independence and responsibility.
Significant role of the family
The family plays a significant role in Hong Kong social welfare. Hong Kong is influenced by the traditional Confucian culture which is family oriented. The role of family is measured not just by its affluence but also by its core values, the kindness, caring for others and mutual support. The family members support and look after each other. The number of elderly living with their son is higher than that in Western countries. The Government policies also promote the family values to lighten the dependency on social welfare system. Under Hong Kong tax system, allowances are given to the taxpayers who taking care of their children, parents and grandparents. It is to encourage family members to look after the youth and the elderly. Besides, the Public housing allocation policy will give special consideration to the family with elderly. The housing policy is family oriented. In the Policy Address 2009-2010, CE suggested to set up a “Happy Family Info Hub” to promote family core values, and to introduce family education as well as support services for the family. (Policy Address 2009-2010)
Piecemeal, pragmatic and ad hoc welfare development
Welfare development in Hong Kong is piecemeal, pragmatic and ad hoc. There is no comprehensive long term development plans on social welfare, for example, the public housing policy in 50s, the aims of the policy is to settle the fire victims of Shek Kei Mei squatter areas. Besides, The Government legitimacy is shattered in the 67 riot. After that, Government started the social security policy including public assistance scheme, old age and disability allowances in the early 70s. The aims of the social security policy are to deal with critical issues and maintain society stability. Social welfare policies are reactive measures to address ad hoc issues without long term planning.
In conclusion, only social security policy in Hong Kong fit the Residual Welfare Model but other policies such as housing, education, health care and social care do not fit the model. On the other hand, the social welfare systems in Hong Kong fit most of the elements of The East Asian Welfare Model. Therefore, we do not agree that Hong Kong is a typical example of both models since it is not a typical example of the Residual Welfare Model but a typical example of the East Asian Welfare Model.