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CHAPTER TWOCHAPTER TWO

EVOLUTION OF SOCIAL EVOLUTION OF SOCIAL SECURITYSECURITY

Objectives of the lecture:Objectives of the lecture:After completing this lecture, the students should After completing this lecture, the students should

be able to:be able to:2.1 Explain the historical development of social security 2.1 Explain the historical development of social security

in developed countries.in developed countries.2.2 Explain the historical development of social security 2.2 Explain the historical development of social security

in developing countries.in developing countries.

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HISTORICAL DEVELOPMENT OF HISTORICAL DEVELOPMENT OF SOCIAL SECURITY IN SOCIAL SECURITY IN

DEVELOPED COUNTRIESDEVELOPED COUNTRIES In its early history, the United States is In its early history, the United States is

predominantly agricultural economy (1870). In the predominantly agricultural economy (1870). In the years that followed, industry developed rapidly and years that followed, industry developed rapidly and lead to industrialization, specialization, and lead to industrialization, specialization, and urbanization.urbanization.

In earliest colonial times, local villages and towns In earliest colonial times, local villages and towns recognized an obligation to aid the needy when recognized an obligation to aid the needy when family effort and assistance provided by neighbors family effort and assistance provided by neighbors and friends were not sufficient and it was carried out and friends were not sufficient and it was carried out through the poor relief system and almshouses or through the poor relief system and almshouses or workhouses. workhouses.

Gradually, measures were adopted to provide aid Gradually, measures were adopted to provide aid on a more organized basis, usually through cash on a more organized basis, usually through cash allowances to certain categories among the poor.allowances to certain categories among the poor.

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Cont…Cont… In the mid-twenties, a few States began to In the mid-twenties, a few States began to

experiment with old-age assistance and aid to the experiment with old-age assistance and aid to the blind.blind.

Social insurance first began with workers’ Social insurance first began with workers’ compensation. A Federal law covering civilian compensation. A Federal law covering civilian employees of the Government in hazardous jobs employees of the Government in hazardous jobs was adopted in 1908, and the first State was adopted in 1908, and the first State compensation law to be held constitutional was compensation law to be held constitutional was enacted in 1911.enacted in 1911.

By 1929, workers’ compensation laws were in effect By 1929, workers’ compensation laws were in effect in all but four States. These laws made industry in all but four States. These laws made industry responsible for the costs of compensating worker or responsible for the costs of compensating worker or their survivors when the worker was injured or killed their survivors when the worker was injured or killed in connection with his or her job.in connection with his or her job.

Retirement programs for certain groups of State Retirement programs for certain groups of State and local government employees date back to the and local government employees date back to the 19th century to early 1900s and 192019th century to early 1900s and 1920

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Cont…Cont… Another area where the Federal Government Another area where the Federal Government

accepted an early responsibility was in the accepted an early responsibility was in the provision of benefits and services for persons who provision of benefits and services for persons who served in the Armed Forces.served in the Armed Forces.

In 1935, President Franklin D. Roosevelt proposed In 1935, President Franklin D. Roosevelt proposed to Congress economic security legislation to Congress economic security legislation embodying the recommendations of a specially embodying the recommendations of a specially created Committee on Economic Security. There created Committee on Economic Security. There followed the passage of the Social Security Act, followed the passage of the Social Security Act, signed into law August 14, 1935.signed into law August 14, 1935.

This law established two social insurance This law established two social insurance programs on a national scale to help meet the risks programs on a national scale to help meet the risks of old age and unemployment: a Federal system of of old age and unemployment: a Federal system of old-age benefits for retired workers who had been old-age benefits for retired workers who had been employed in industry and commerce, and a employed in industry and commerce, and a Federal- State system of unemployment insurance.Federal- State system of unemployment insurance.

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HISTORICAL DEVELOPMENT OF HISTORICAL DEVELOPMENT OF SOCIAL SECURITY IN DEVELOPING SOCIAL SECURITY IN DEVELOPING COUNTRIESCOUNTRIES

MALAYSIAMALAYSIA

Similar to US and other countries, Malaysia was Similar to US and other countries, Malaysia was a predominantly agricultural economy. Then in a predominantly agricultural economy. Then in year 1900s, the process of urbanization and the year 1900s, the process of urbanization and the establishment of several industries took place in establishment of several industries took place in this country.this country.

On that time, workers in Malaysia were covered On that time, workers in Malaysia were covered for the eventualities of industrial accidents under for the eventualities of industrial accidents under the provisions of the the provisions of the Workmans Compensation Workmans Compensation Ordinance, 1959Ordinance, 1959. .

WCO required all employers to take out WCO required all employers to take out Workmans Compensation Insurance to avoid the Workmans Compensation Insurance to avoid the problems of inability of employers to pay such a problems of inability of employers to pay such a substantial compensation to injured workers.substantial compensation to injured workers.

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Cont..Cont.. Then in 1965, a Study Group with the assistance of Then in 1965, a Study Group with the assistance of

the ILO conducted a study on the WCO. The report the ILO conducted a study on the WCO. The report proposed a new and comprehensive Social Security proposed a new and comprehensive Social Security Scheme for Malaysian workers.Scheme for Malaysian workers.

The model or scheme was based from the The model or scheme was based from the British British Social Security Scheme.Social Security Scheme.

The introduction of social security schemes into The introduction of social security schemes into Malaysia initially as a pilot scheme in Johor Bharu Malaysia initially as a pilot scheme in Johor Bharu and then extended to cover the whole of the and then extended to cover the whole of the country. country.

Social security, embodying the concept of social Social security, embodying the concept of social insurance, was introduced in Malaysia with the insurance, was introduced in Malaysia with the passage of the passage of the Employees Social Security Act, Employees Social Security Act, 19691969 on the on the 2nd April 19692nd April 1969..

The act provides the social security protection to all The act provides the social security protection to all workers employed under a contract of service workers employed under a contract of service against the contingencies of industrial accident, against the contingencies of industrial accident, occupational disease and invalidity.occupational disease and invalidity.

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Cont..Cont.. Also not only to compensate for the effect of injuries Also not only to compensate for the effect of injuries

sustained at work but for invalidity from whatever sustained at work but for invalidity from whatever cause.cause.

It also the victims are compensated but their It also the victims are compensated but their dependents on death. dependents on death.

These benefits were brought under two Social These benefits were brought under two Social Security SchemesSecurity Schemes Employment Injury SchemeEmployment Injury Scheme Invalidity Pension SchemeInvalidity Pension Scheme

The social security scheme arose out of a The social security scheme arose out of a realization that the existing legislation on the realization that the existing legislation on the welfare of workers, namely the welfare of workers, namely the Employees Employees Provident Fund Act 1951Provident Fund Act 1951 (which is essentially a (which is essentially a force saving scheme for retirement) and the force saving scheme for retirement) and the Workmen’s Compensation Act 1952Workmen’s Compensation Act 1952 (which is an (which is an employers liability scheme and purely employers liability scheme and purely compensatory in nature) were inadequate in compensatory in nature) were inadequate in providing social security protection to the working providing social security protection to the working population because of their inherent limitations and population because of their inherent limitations and inadequacies. inadequacies.

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Cont..Cont.. The scheme is both compulsory and contributory in The scheme is both compulsory and contributory in

character.character.

Since its inception in 1969, the Employees Social Since its inception in 1969, the Employees Social Security Act 1969 has undergone 3 major legislative Security Act 1969 has undergone 3 major legislative changes till 1987 with new benefits introduced and changes till 1987 with new benefits introduced and the existing benefits were enhanced or improved the existing benefits were enhanced or improved upon.upon.

The scheme is administered by the The scheme is administered by the Social Security Social Security OrganizationOrganization (SOCSO) and was formally (SOCSO) and was formally established on 1st January 1971 as a department established on 1st January 1971 as a department within the Ministry of Labour.within the Ministry of Labour.

Now, SOCSO has about 45 offices situated in most Now, SOCSO has about 45 offices situated in most major towns throughout the country and responsible major towns throughout the country and responsible for administering the Act in their respective areas.for administering the Act in their respective areas.

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factorsfactors

AwarenessAwareness Increase of accidentsIncrease of accidents Budget allocationBudget allocation Role of NGORole of NGO Role of ILORole of ILO industrializationindustrialization

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TutorialTutorial

Find the development of Social Find the development of Social Security in any developed and Security in any developed and developing countries.developing countries.