Poverty Elimination and Social Security System
Dr. Zhao Yong
Tsing-Hua University of China
The issue of poverty is a common issue that the contemporary world faces. In
our times, the population in poverty is constantly increasing, the condition of poverty
is getting worse continuously, the gap between the rich and the poor is becoming
greater and greater, and the globalization trend of the poverty issue is much more
obvious than ever. The worsening of the issue of poverty demands the strengthening
of social security system construction. The social security system is naturally linked
with the elimination of poverty. The elimination of poverty is one of the objectives for
the setting up a social security system, which in turn is an important way and method
to eliminate poverty.
Freedom From Poverty and Social Security are Basic Contents of Human Rights
Protection
Freedom from poverty is the basic content of the right to survival and the right to
development of human beings. The Universal Declaration of Human Rights has
confirmed ‘human beings shall enjoy freedom of speech and belief and freedom from
fear and want.’ Article 11 of International Convention on Economic, Social and
Cultural Rights states that ‘The States Parties to the present Covenant recognize the
right of everyone to an adequate standard of living for himself and his family,
including adequate food, clothing and housing, and to the continuous improvement of
living conditions. The States Parties will take appropriate steps to ensure the
realization of this right, recognizing to this effect the essential importance of
international co-operation based on free consent. ’ Poverty means that these basic
demands cannot be met and one is deprived basic human rights. Poverty is a violation
of basic human rights. Everybody should enjoy the right to be free from poverty. In
developing countries, poverty is one of the main obstacles of enjoying human rights.
Human rights are closely related with development level. When hundreds and
thousands of a population --even including populations in developed countries – still
live in indecent unfit housing and cannot have access to social help in the event of old
age and sickness, it is hard to guarantee their human rights. Only by offering
protection for the basic conditions of life, and by improving citizen's professional
competence and cultural levels, can basic human rights be respected and a more
humanitarian and fair society be established. Without the elimination of poverty, it is
very hard to respect human rights and basic freedoms. With regard to this, the
“Declaration on Rights Development” adopted by the United Nations General
Assembly in December of 1986 declares that ‘the right to development is an
unalienable human rights, and because of this right, everybody shall enjoy the right to
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participate in, promote and enjoy the development of economy, society, culture and
politics, and in such development, all human rights and basic freedom can be fully
realized. ’
Social security is an important aspect of ensuring survival of the human race and
an essential condition to realize overall emancipation and the full development of
human beings. Article 9 of International Covenant on Economic, Social and Cultural
Rights states that ‘ the states parties to the present Covenant recognize the right of
everybody to the social security, including social insurance.’ From a worldwide
perspective, the modern social security system provides protection for the basic life of
the members of society through legislation and a series of public measures with the
aim of eliminating or preventing poverty and the risks caused by some economic and
social calamities and to respect the dignity of human beings. Here, the purpose of
providing social security is not only to offer protection for some members of society
that are threatened by poverty, but also offers a sense of safety for the basics of life to
all members of society, and to safeguard the dignity of human beings. The subject
responsibility for providing social security is the state, to be accurate, the
governments at all levels or their designated representatives, and the methods to
implement social security provision are laws and regulations, social policies,
distribution policies and other administrative measures of the government. Therefore,
the modern social security system is preconditioned by the recognition of the right to
social security as a basic human right, with the government as the main obligation
carrier to undertake and guarantee the realisation of these rights.
As a fundamental right, the justification of the right to social security originates
from the justification of maintaining survival of oneself and the dignity of human
personality under large-scale social production and the market economy. In
pre-industrial society survival of human beings is based on self-sufficiency and the
family as the most basic unit. With the development of a large-scale market economy,
promotion of industrialisation and urbanisation, this situation has made great changes.
Risks such an unemployment, bankruptcy, diseases and unexpected deaths, etc.
caused by large–scale market economy based on the complicated social division of
labour may affect anybody, the majority of members of society cannot make full
preparations for fighting against these risks on their own. Therefore, it is necessary to
rely on the support from government and society instead of only relying on individual
families to ensure the continuity of life of human beings and reproduction, and to
ensure the healthy function of laborers as a man. And this has become the essential
condition for normal operation of market economy and a necessary requirement for
the social stability.
Inadequate Social Security System may Cause Poverty or Worsening of the
Poverty
From a worldwide perspective, there the following relationships between the
poverty and the economic development: (a) the poverty caused by backward economy,
which exist in many undeveloped countries and regions. With an undeveloped
economy, the material wealth of the whole social production is inadequate. The
typical features of the poverty are low per capita income in the region, insufficient
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necessities for basic life, poor ability to resist the natural calamities in the economic
and production activities, poor social services such as public medical services and
education services, high infant mortality rate and short average life expectancy of the
population. This kind of poverty mainly exists in the poor rural areas of developing
countries, and the basic requirement to eliminate the poverty is to improve per capita
income level through implementing regional economic development programmes, and
providing the most basic social security and public services for the population in
poverty; (b) the poverty in the well-off societies which exists in many developed
countries. Although the economy is advanced in industrialized countries, serious
poverty still exists. The application of science and technology and the development of
economic globalization led to the adjustment of the industrial structure, which
resulted in serious unemployment and increased the possibility of falling into the poor.
At the same time, with the relatively stable market economy system and unfair social
structure, labour market, educational institutions and other important social
participation opportunities have obvious repelling or discrimination against some
workers and members of society, therefore the poor are lacking in equal chances,
which develops into a kind of stable, institutional and cultural poverty mode. From
point of view of anti-poverty, government and society have adopted the policy of antidiscrimination in education and labour market, and the poor have access to the basic
rights and relatively equal chances. Meanwhile, the social security and the welfare
development adopted by the government and society have directly alleviated life
difficulties to certain extent, whereas this in turn has caused the reliance of the poor
on government's social welfare in varying degrees and insufficient motivation to get
rid of poverty by themselves. It requires high spending on the social welfare from the
government, which can not alleviate the poverty in the city fundamentally; (c) the
poverty in the high economic development societies, which exist in many developing
countries. The urban economic development has attracted a large amount of migration
labourers, resulting in insufficient job opportunties, low income of the lower labourers
in the cities, inadequate housing and infrastructure. Under this situation, the policy for
anti-poverty is to is to make reasonable macroscopic development policies and
urbanisation policies, standardise the flow of population, offer more employment
opportunities to poor population in urban areas, improve the urban housing and
various kinds of infrastructures and set up basic social security system. Measures for
the elimination of poverty shall be taken in accordance with the specific conditions
listed above, otherwise, it is extremely easy to form the wrong social security policies,
which are not merely ineffective in the alleviation of poverty alleviation, but may
worsen the situation.
At the same time, for studying the poverty issue we need to study the
relationship between poverty, employment and social security. An inadequate
employment system and social security system is also one of the factors accounting
for poverty. Under the planned economic system, employment and social security are
unified, they develop in the same direction. However, under the market economy,
employment and social security no longer develop in the same direction, even
opposite to each other. This is the profound reason for poverty in urban areas in the
countries within a transitional economy.
Function of the Social Security in Poverty Elimination
The elimination of poverty is a systematic engineering, in which social security
plays the role of relief of poverty in the population, poverty reduction and the
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prevention of a new population in poverty emerging. Social security plays the role of
balancer and stabilizer in a society in which resources and interests are not distributed
equally, and it is one of the methods for realisation of redistribution.
A social security system can eliminate poverty. Research by American scholars
shows that if there was no social security, nearly half (47.6%) of the population over
65 years old in the USA would live in poverty in 1997. Among all the programs that
the government carries out helping the old get rid of poverty, social security plays an
obvious function. Among the people who have shaken off poverty, supported by the
government programs (including programmes at national level and state level), nearly
90% benefited from the social security programmes. The social security system
reduces the poverty rate of the old population from 75% to 11.9%. In 1997, the social
security programme reduced the population of the old in poverty from 15,300,000 to
3,800,000 . That is to say, with the help of social security, 11,400,000 of the
population of the old have got rid of the poverty. In the same year, the poverty line of
a single old person in the U.S.A. was 7,698 dollars, and that of an old couple was
9,712 dollars. In addition, the research on poverty issues in South Africa also indicates
that the social security plays a key role in eliminating poverty.
The social security can reduce the degree of poverty. The concept of the
‘ poverty gap’ was used by American researchers to weigh the degree of poverty for
studying this issue. The ‘poverty gap’ refers to the total income of all the poor people
under the poverty line. In 1997, before being covered by the social security scheme,
American old population’s ‘poverty gap’ was 70,000,000,000 dollar (70 billion). After
being covered by the social security system, their " poverty gap " was 10,000,000,000
dollar (10 billion). The social security system is also very important to those old
people who are not poor even. To half of the old population, nearly 50% of their
income comes from the social security. And for 15% of the old population, social
security is the only source of their income.
The social security system may also narrow the poverty difference among
different poverty groups. Social security has narrowed poverty differences between
men and women. The research by American scholars shows that among the old people
who have shaken off poverty because of social security, old women account for the
majority of them. Nearly 3/5 of the old population who have shaken off poverty were
women. Furthermore social security has narrowed the poverty differences of old
people of different age groups. The older population are more likely to fall into
poverty than general old people. From 1995 to 1997, among old women in U.S. A.
aged from 65 to 75 years old, nearly 46% were in the poverty population before being
covered by the social security. But among old women in U.S. A. aged above 85 years
old in the same period, 65.3% were in the poverty population before being covered by
social security. With the social security system, the poverty rate of older women aged
from 65 to 75 years old is only 12.7%, and the poverty rate of old women over 85
drops to 20. 6%.
The great function of social security in poverty elimination is realized by
capacity building. Just as what Amartya Sen, the Nobel economics Prize winner of
1998 said in his book Poverty Resulting from Deprivation of Capacity: ‘when
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analyzing social equity, personal interest, which is also the ability of the individual to
choose the life that he or she thinks are valuable with actual freedom, is very
important. From this view point, poverty must be considered to be the deprivation of
basic abilities, and not merely low income, and this is the standard to judge poverty. ’
Therefore, capacity building is of great importance to the elimination of poverty. It is
not merely because that better basic education and health care directly improves the
quality of life, it also improves the abilities of individuals to make more money to
avoid being getting into poverty. With better basic education and health care, potential
poverty population are likely to have better chances to get rid of the poverty. Hence,
the function of the social security system should not be only confined to the amounts
of the money offered, but lies in developing potential abilities of the poor families and
their children at the fundamental level. This is just like a prevailing poster in China at
present: Knowledge changes fate.
Social security is of great importance for China to eliminate poverty. It is very
essential that the modern social security system be set up according to Chinese
traditional culture and actual situations. There is an idea of " raising sons to support
one in one's old age " in China's traditional culture, and there is also the custom to "
save up money to support parents " at the same time. Dependence on " self-insurance
" between kinsfolks is an important way to prevent and reduce the poverty of the old.
But present Chinese family structure is developing towards the " 421 " type family,
which means that each family have grandparents and parents in law (4 people), father
and mother (2 people), and one child. This makes the " self-insurance " style of
traditional family face the challenge, and the social security must replace the
traditional guarantee method; otherwise, there will be more and more families who
will fall into poverty.
Poverty in Urban Areas in China and Reform of the Social Security System
Since 1990s, China has begun to go through the transition of the economic
system and social structure. During this key period, increasingly serious poverty in
urban areas becomes one of the main issues that hinders Chinese social and economic
development. The factors related to urban poverty during the economic and social
transition process mainly include the industrial structure adjustment, economic system
reform and social security system reform and etc. The poverty in China is the poverty
produced in the high-speed development of the economy. In the later period of 1990s,
the sudden and large-scale lay-offs and unemployment all over China cities and towns
are considered to be the greatest challenge ever faced by China. According to the Blue
Book for the Year 2000, by the end of 1998, there were 6,100,000 laid-off workers in
state-owned enterprises and 5,800,000 in the unemployed population, totaling
11,900,000 population. According to the statistics produced by the State Statistics
Bureau of China, by the end of 1999, there were 6,500,000 laid-off workers in
state-owned enterprises and 6 million registered unemployment population with
registered unemployment rate of 3.2%, totaling 12, 500,000 population. By the end of
June of 2000, the laid-off workers increased to 6,990,000 persons. Calculating by the
above-mentioned figures, the total laid-off and unemployed population will amount to
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more than 13,500,000 people in 2000. In 1999, about 10% of the laid-off workers who
has entered job-waiting centre had not received or had only received inadequate living
allowance. And according to the statistics at the end of June of 2000, 220,000 laid-off
workers in state-owned enterprises have not been covered by the social security
scheme, 170,000 of the 6,770,000 laid-off workers on job- waiting list do not receive
living allowance, and 330,000 people have not received the living allowance in full
amount. According to investigation and estimation by different departments, the
population in poverty in urban areas in China is between 15 to 31 million, accounting
for 4%-8% of China's urban population.
The income of people in urban poverty in China is low and unstable, and a large
portion of the income is used for food consumption with inadequate nutrition, simple
clothing, daily necessities and poor housing. In view of the income level, the sample
survey by State Statistics Bureau of China has shown that in 2000, the annual per
capita available income of the 5% of the investigated poor households is 2325 Yuan,
which is less than 36.9% of the average income of the urban residents, and that of
10% of the high-income households is 5.7 times that of the poor families. The Gini
coefficient of urban residents increased to 0.32 in 2000 from 0.16 in 1978. In view of
property, the lowest income households only own 1.5% of all financial assets with
average 4298 Yuan per household, only 1/12 of the average level, and compared with
20% of the high financial assets families it differs by 34 times. In view of the
consumption, in 2000 the per capita consumption expenditure by urban poverty
population was 2320 Yuan, 51% lower than the average level of urban residents (per
capita 4798 Yuan), including food spending 1173 Yuan, and the Engel's coefficient is
50.6%, 11 percentage points higher than average level of urban residents.
The development of the poverty issue in urban areas in China shows that the
urban social relief system developed in matching with the planned economic system
in the 1950s to 1960s is far from being suitable for the new situation. The traditional
social relief system demonstrates the following defects: (a) the relief scope is very
limited. In 1992, before adoption of subsistence allowance for the urban poor, there
were only 190,000 urban poor people getting fixed and regular national relief,
accounting for only 0.06% of the total urban population; (b) the relief standard is
relatively low. In 1992, the fixed and relief for urban poor families was 87, 400,000
Yuan, and the per capita relief of the relief targets is 38 Yuan per month accounting
for 25% of the per capita living expenditures of urban residents in that year; (c)
inadequate relief fund. The direct reason for low relief standard is the serious shortage
of the relief fund. In 1992, the social relief fund used for urban relief targets was 120
million in total, accounting for 0.05‰ of the gross domestic product of that year and
is less than 0.03% of national finance revenues.
In order to reform the social security system, observe provisions in International
Convention on the Economic , Social and Cultural Rights and respond to the United
Nations proposal, the Chinese Government has made great efforts in poverty
elimination in recent years. From 1992 to 2000, China has reduced 74 million poverty
populations, about 6 million each year. Whereas in the same period poverty
population in other developing countries increased by 50 million. With regard to the
poverty elimination in rural areas, in May of 2001 China held the poverty alleviation
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and development working conference and have put forward ‘Poverty Alleviation and
Development Outline for China Rural Areas for 200l-2010 ’. The population in
poverty in rural areas without adequate food and clothing is reduced from 250 million
in 1978 to 30 million in 2000, dropping to 3% in 2000 from 30.7% in 1978, and the
strategic aim of providing adequate the food and clothing for rural population has
been basically realized at the end of last century. In urban areas, a social security
system comprised of social insurance, social relief, social welfare, helping and settling
poor people and social mutual support, with financing from multi-channels and
commercial management services has been set up after practices in many years. At
present, the basic policies for social insurance have already been made and enacted
and adopted successively, covering majority urban workers and retired personnel.
Some cities even include migration workers into the scheme and the system of
subsistence allowance for the urban poor has been generally set up.
In order to prevent urban poverty, the Chinese Central Government especially
emphasizes ‘two guarantees’ in the social security, which has become the important
link in the anti-poverty policy. The ‘two guarantees’ means to ‘guarantee the basic
life of the laid-off workers of state-owned enterprises, guarantee pension of the retired
workers of enterprises be paid in full amount and on time ’. The state finance has paid
great amount for this. The subsidy for the ‘two guarantees’ by state finance was 9,970
million Yuan in 1998 and reached 54,700 million Yuan including pension 408 million
in 2002. And the subsidy on pension is 40,800 million Yuan. Another important social
security policy against the poverty in urban areas is urban residents’ minimum living
security systems ( MLSS). It was started nationwide from 1997, and by September of
1999, 668 cities and townships in 1638 county governments have set up MLSS with
MLSS targets amounting to 2.81 million. Since the second half of 2001, the MLSS
experiences fast development and by the end of 2002, the urban population covered
by the MLSS was 20,530,000 and government finance used for that was 11,260
million Yuan.
However, it must be noticed that the level of China's poverty alleviation is still
very low at present, and still has greater disparity with the international community.
The poverty standard generally used by international society is one dollar per capita
per day. The poverty standard of China is per capita annual income 625 Yuan, less
than two Yuan per day. This is a level that can maintain basic survival only, and also a
working standard determined according to the financial ability for poverty alleviation
by the Chinese government. Measured by this standard, the poverty alleviation of
China has made great achievements. But when compared with international standards,
it is far from enough. The reason is that the Chinese standard for identification
poverty is neither the internationally used standard nor the relative poverty standard,
but the minimum living standard according to actual situation of China, a standard to
maintain simple reproduction and basic surviving.
It shall be pointed out that the efforts made to eliminate poverty by international
community including China can not succeed without international cooperation. Article
11 of International Convention on Economic, Social and Cultural Rights has
emphasized the importance of voluntary international cooperation. We shall be clear
that worldwide poverty aggregation has many reasons, such as extreme uneven
economic development, widening gap between the rich and the poor. Relevant
information of the United Nations shows that after the 1996, globalization of the
worldwide economy further widens the gap between the North and the South. 46
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developed countries with population less than 20% of the total world’s population has
86% of global gross national product, While the national revenues of more than 80
undeveloped countries out of 140 developing countries decreased than that ten years
ago. The statistics show that nearly 2/3 of the countries are in unfavorable status in the
course of economic globalization, and more than 60 undeveloped countries among
them are repelled outside the economic globalization. Only more than 20 ‘countries
with newly developed market’ are making great efforts to catch up with and get up the
train of the economic globalization due to their fast development speed. In the past 20
years, the economic globalization has functioned in helping to lighten poverty in lots
of developing countries. But because the poorest developing countries have not
incorporated themselves into global economy successfully, their economy is declining
and their poverty is aggravated. So, economic globalization must be made better use
of to help to lighten the poverty in the poorest countries. Only by setting up new
politics and economy order in the world, can we solve the global poverty problem
fundamentally. Just as the Article 2 of International Convention on Economic,
Social and Cultural Rights states: ‘Each State Party to the present Covenant
undertakes to take steps, individually and through international assistance and
co-operation, especially economic and technical, to the maximum of its available
resources, with a view to achieving progressively the full realization of the rights
recognized in the present Covenant by all appropriate means, including particularly
the adoption of legislative measures. ’
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