McConnellSSChina - Social Security Reform in Transitional...

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Social Security Reform in Transitional China O’Connell 1 Social Security Reform in Transitional China Protection against the insecurities associated with old age and employment disability have long been an integral part of government activities. Yet comprehensive coverage was not provided by any state until the implementation of a modern social security system by Germany in 1889. In the United States, coverage for retired workers did not exist until the “depths of the Great Depression” in 1935, when the government passed the Old Age and Survivors Act, and created the basis for today’s social security 1 system (North, 1980, p. 201-202). Worldwide, analyses of governmental expenditures on social security and other related programs serve as important measures of social progress. Because social welfare programs are in competition with other sectors for limited national funds, expenditures on such programs can reveal the degree of a government’s commitment to its people and to the satisfaction of human needs (Kurvian, 1997, p. 104). Under the assumption that the ultimate goal of economic development is the social well- being of people, it follows that “economics and social aspirations go hand in hand,” and that social security ought to be a feature of all developed economies (Sankaran, 1994, p. 29; Myles, 1995, p. 446). It has been said that “Social security growth begins as a natural accompaniment of economic growth and its demographic outcomes; it is hastened by the interplay of political elite perceptions, mass pressures, and welfare bureaucracies” (Chow, 1988, p. 4). Yet the proportion of the population covered and the adequacy of such programs has remained extremely low in most developing countries, thus limiting their developmental success (Sankaran, 1994, p. 23-24). In China, the country containing roughly one-fifth of the world’s population, social insurance reform is an important priority (Feldstein 1999, p. 99). In 2003, approximately $60.8 1 “Social security” is the specific name given to the United State’s program. In recent years, the term has become internationalized, and is generally understood to refer to any official or unofficial act to promote social well-being. This may occur in a multitude of areas, including education, healthcare, living conditions, and income and resource distribution. Here and throughout this paper, I will use “social security” to refer to any government’s acts to provide coverage against an individual’s inability to work, with a focus on income protection for the retired and the disabled.
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Social Security Reform in Transitional China O’Connell 2 billion yuan ($7.3 billion U.S. dollars) was spent on living expenses and old-age pensions alone, an increase of more than 13% from only the previous year. This figure totaled more than 23% of China’s GDP in 2003—yet reached a far lesser percentage of the population ( People’s Daily Online , March 6, 2004). The aim of social security to protect the elderly and disabled sectors of
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McConnellSSChina - Social Security Reform in Transitional...

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