By Mark Raygan E. Garcia, MPPG Student, The Education University of Hong Kong

Taiwan’s Social Protection ProfileA Shift to Asset Accumulation Welfare Provision: TFDA Case Study

Summary

Historical Footnotes

Approach to Policy Innovation

Compelling Landscape

The Family Development Accounts (TFDA)

TFDA Features

TFDA Rollout

Results

Analysis Against Aging Population

Social Protection Debate

Historical Footnotes

Nationalist government lifted martial law in 1988; end of authoritarian regime; spurred wider participation among LGUs and civil groups

1991 - Taiwan’s economic slump; income inequality worsened (4.2% in 1980 - 6.39% in 2001); asset value of rich16.8 times higher than poor (doubled by 2001)

1994 - first election in Taipei City; Chen Hsiu-Bien won as mayor; ushered in many economic and social policy-oriented reforms; responded to need for more social contracts

Pre-2000: reliant on private/familial transfers; income-based welfare provision 2000: Launch of first poverty anti-poverty campaign (and first PP partnership: Taipei Family Development Accounts (TFDA); 3-year experimental program

Approach to Policy Innovation

Problem Identificati

on

Networking/

Advocating in Policy

Areas

Shaping Policy

Debates

Building Support

Coalitions

Compelling Landscape

Targets asset accumulation for future economic sufficiency

Changing family composition (extended to nuclear)

Encouraged savings and employment; decrease welfare

Efficient government transfers amidst low private transfers

From remedial/curative to preventive/proactive

Integrate low-income earners into economic mainstream

TFDA Features

“Family” (from “Individual” - in keeping with filial relations)

Capitalized on Chinese values highlighting importance of savings and assets

Savings matching at 1:1 (progressive: from NT$2,000 to NT$4,000/month)

Program implementation; 3 years (July 2000 - June 2003)

Requirements: (a) current welfare recipient, (b) employed for at least pas 3 months; (c) per capita income below 60% mean-consumption expenditure

3 goals: (a) higher education, (b) micro-enterprise, (b) home purchase

TFDA Rollout

Polaris Securities Group (Pai Chen-Hsi Foundation) volunteered to raise funds to finance TFDA - NT$14,4000 (for 100 accounts)

July 2000 - 184 applicants; 100 selected

Recipients: majority female, 41-50 years old; single mothers and high school graduates

Of the 100 selected 68 dropped out by end of 2000

Including replacements

75 made regular deposits for 12 mos

72 continued for another year

3 left due to family emergency

By 2003 69 completed 3-year savings period

Note: Monthly deposit levels changed over the years, indicating increased interest in savings.

Results

Note: Significant drop in goal # 3 - Home purchase.

Results

But let us view Taiwan in the context of its aging population.

Analysis Against Aging Population

Birth Rate 8.5 Global Rank: 232

Fertility Rate 1.10 Global Rank: 220

Projected Years of Aging (65+) 14% (2017), 20% (2025), 30% (2040)

Age Dependency Ration

12.7 (7.8 working people support 1

elderly)Global Rank: 58

Social Protection Debate

Dependency Discourages savings

Sustainability Overburdens government; resource displacement

Utilization Prone to abuse; leakages

Equality / Equitability Disincentive; taxation strains

Political Considerations Costly; divisive; fluctuating

By Mark Raygan E. Garcia, MPPG Student, The Education University of Hong Kong

Taiwan’s Social Protection ProfileA Shift to Asset Accumulation Welfare Provision