Warwick China Public Affairs and Social Service Society

Welfare Panel

INEQUALITY OF RESOURCE DISTRIBUTION

The remarkable economic growth in east asia over the last four decades has generally improved living standards. However, much of the world witnessed a substantial increase in economic and social inequalities as well. Different sections of East Asian society are becoming richer at uneven rates, leading to growing income disparities. Income inequality has been low in Korea, but has increased with globalization. Trends in Southeast Asia, including Thailand, Malaysia and Indonesia, have been harder to discern as poverty declined and inequality rose in conjunciton with economic liberalization. With rapid growth and strengthened property rights, China has also experienced a swift increase in inequality and unemployment despite considerable poverty reduction. Recognising the problem

It is often the case that lower income groups experience slower income growth than higher income ones, resulting in widening income inequality. Concerns about a widening urban-rural income divide are one reason why governments in countries like China are renewing their focus on rural and agricultural development policies, China has tak- en a number of steps simce early this decade to lift rural incomes, including abolishing an agricultural tax that had existed for millennia.

Welfare systems of East Asian countries

The current welfare systems of east asian countries are redistributive regressively, they sometimes reinforce socio-economic inequalities. At one end of these service sectors (e.g., finance and information technology) are a small number of extremely well-compensated individuals while at the other end of the spectrum (e.g., temporary hires) are far more numerous lowly paid individuals. For those who are weak, vulnerable of poor, they are not only in trouble but even stigmatised for being so. The most target groups of social security in developing countries are still state employees and selected groups, such as those who are employed, as the pursuit of economic growth, leaving vulnerable groups behind. The question is that these welfare systems may be cheaper, but are they producing less “welfare”?

Political parties become aware of the potential of social policy for political mobilization. While these welfare systems have been constructed and sustained whthin a framework of authoritarian politics, the challenges of democratisation lead to greater pressure for more comprehensive welfare provision.

The Challenges ahead

Building more complete and productive welfare system with better redistributive effects is under economic pressures which are threatening all welfare systems. Increasing social expenditure and some welfare policies such as mandated individual saving exert burden on taxpayers and the economy. The question is finding balance between economic policies and welfare policies, making welfare policy sustainable, correspondence with economic growth. When it comes to reducing poverty, the issue is that whether it is better to increase GDP per capita or provide more productive and comprehensive welfare systems.


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