New Poor in Taiwan: Problems and Policy Implications

Abstract

Currently, more people lose their jobs because of economic depression, labour market competition and transformation in industrial structure. These people, although some are protected by unemployment insurance, can no longer earn a decent living as before. Also, they may not be entitled to official support because, by definition, they are not ‘poor’. Possibly, they become ‘near poor’ or ‘new poor’. Therefore, the emergence of such group of people becomes a new challenge for social policy in Taiwan.

The issue of poverty is not new. And helping the poor has been an important task in social policy, especially in industrial countries. In social assistance, those individuals who live below the poverty line will receive assistance from the government, either in form of cash or kind or, in some cases, both. In Taiwan, both central and local governments provide various forms of services for households who live below the poverty line, based on Social Assistance Act. However, it has been criticised that criteria of poverty line are too restrictive to reflect real problems. In fact, one will not be eligible for any kind of assistance if any member of the household is working or owns assets. Currently, more people lose their jobs because of economic depression, labour market competition and transformation in industrial structure. These people, although some are protected by unemployment insurance, can no longer earn a decent living as before. Also, they may not be entitled to official support because, by definition, they are not ‘poor’. Possibly, they become ‘near poor’ or ‘new poor’. Therefore, the emergence of such group of people becomes a new challenge for social policy in Taiwan.

In this paper, we focus on the recent development of the ‘new poor’ problem. We begin by defining the ‘new poor’. Then we s discuss social and economic needs s of the new poor, from financial problems to health concerns. Finally, we put forth some recommendations for future policy consideration.

Defining the New Poor

In Taiwan, those households living below the poverty line through means test are considered as the ‘low income household’, and receive assistance from the government. However, the emergence of the ‘new poor’ or ‘near poor’ has challenged traditional concept of poverty in social and public policy. In contrast to the ‘new poor’ and ‘near poor’, it is hereby referred to conventional definition of poverty as ‘old poor’. In brief, the main difference between new poor and old poor lies in the poverty line in relation to means-test mechanism, which is usually set in social assistance programs. The ‘old poor’ are people who are living below the ‘poverty line’ assessed by the means test, and they are, by welfare laws, entitled to social assistance in kind or in cash. The ‘new poor’ are those who fail to earn a decent level of living and often have a strong feeling of insecurity and relative deprivation, although their household incomes are above the poverty line. Therefore, the new poor are usually excluded from the safety net of social assistance programs.

On the other hand, the concept of the new poor has often been confused with the ‘near poor’. The near poor are people who fail to meet the criteria of social assistance through means test, while their livings are actually near or below the poverty line. The new poor are people who can not maintain decent livings, although they may be far above the poverty line with means test. At present, the new poor are not qualified for state support from central and local governments in Taiwan.

Then, who are the new poor? The new poor can not maintain livings mainly because they are unemployed. It is obvious that economic depression has greater influence on them. Recently, many factories, particularly in labour intensive manufacturing sectors, are closed down or moved out; and workers are therefore laid off. Those who are the breadwinners of family, immediately face the problems of unemployment and immediately meet financial difficulty in daily life. Therefore, the majority of the new poor are probably those middle-aged unemployed workers. As shown in Table I, the number of people unemployed has doubled since 1998. And the mid-age unemployment has increased twofold at the same time.

Also, others may not be able to have subsistent livings. For instance, people are on part-time jobs. Young college graduates are waiting for suitable jobs. Single parents or housewives are under-employed. These individuals may not qualify for social assistance simply because the social assistance act has set up a strict level of application.

As to the population of the new poor, no formal statistic is available to show its real scale. However, the poor, also known as the low income household in Taiwan and currently receiving social assistance, have grown rapidly since 1998, as seen in table II. It can be estimated that the new poor has been increasing during the last decade.

Table I Middle and Old-age Unemployment (per thousand people)

Year	Total			Age between 45-64
	Total	Male	Female	Total	Male	Female	45-49			50-54			55-59			60-64
	Total	Male	Female	Total	Male	Female	T	M	F	T	M	F	T	M	F	T	M	F
1998	257	169	88	34	29	4	17	15	3	9	8	1	5	5	0	2	2	0
1999	283	188	95	40	35	6	21	17	4	11	10	1	6	5	1	2	2	0
2000	293	197	95	44	38	6	22	19	4	12	11	1	7	6	1	2	2	0
2001	450	302	148	76	62	14	40	32	9	23	19	4	10	9	1	4	3	0
2002	515	348	167	91	77	14	47	38	9	29	26	4	11	10	1	4	4	0
2003	503	326	177	106	79	27	50	36	14	34	26	8	15	12	3	7	5	2
2004	454	288	166	95	70	25	42	29	13	34	25	9	13	10	3	6	5	1
2005	428	259	169	86	62	24	39	26	13	29	22	7	13	10	3	5	5	1

Source: National Statistics, R.O.C. (Taiwan)

Table II Low-Income Households and Persons

Year	Households	Persons	As % of total Households	As % of total population
1998	54,951	125,426	0.86	0.57
1999	58,310	136,691	0.89	0.62
2000	66,467	156,134	0.99	0.70
2001	67,191	162,699	0.99	0.73
2002	70,417	171,200	1.02	0.76
2003	76,406	187,875	1.08	0.83
2004	82,783	204,216	1.15	0.90
2005	78,020	191,767	1.16	0.93

Source: Ministry of the Interior

Problems and Issues of the New Poor

The population of Taiwan who are assessed as living in poverty line accounts for 0.93 percent of the total population, and 1.16percent of total household in 2005 (see table II). They are, under current social assistance schemes, receiving monthly cash allowance and other forms of state cash and kind assistance, such as health insurance contribution, job training and employment services.

Nevertheless, the new poor have drawn more social attention in recent years. With the growing number of the new poor in last decade, most of them are unqualified for social assistance and other state supported schemes, and, therefore, are socially and psychologically excluded from the mainstreaming of the society. Since 1994, suicide death has nearly trebled, as shown in table III. This perhaps reflects a tip of iceberg of the new poor problems.

Table III Suicide Death Rate in Taiwan

(Per100,000 people)

Year	Suicide Death	Death Rate
1994	1451	6.88
1995	1618	7.61
1996	1847	8.61
1997	2172	10.04
1998	2177	9.97
1999	2281	10.36
2000	2471	11.14
2001	2781	12.45
2002	3053	13.59
2003	3195	14.16
2004	3468	15.31
2005	4282	18.84

While people living below the poverty line are receiving aids from the state, the new poor receive less support from the government. However, the majority of the new poor are really in great need of social assistance. In the following aspects, it is found that the new poor are in trouble.

Income insecurity. Most of the new poor are either unemployed at middle age or leaving college. They are forced to engage in irregular or part-time jobs in order to survive a daily life. Under current social welfare schemes, they are not entitled to social assistance due to failing to match criteria with means test. In the meantime, the unemployment benefits are too low to provide financial security. Income insecurity has undoubtedly become a serious problem for the new poor.

Health care. The need of health care for the new poor is closely related with income insecurity. Under current National Health Insurance scheme, everyone is safeguarded by public health care in time of sickness and illness. However, most of the new poor are unable to pay insurance contribution because they are short in regular income. Even with part-time jobs, they sometimes can not afford the contribution. Thus, they and possibly their family are often excluded from health care.

Unemployment. The new poor are caused by unemployment or irregular employment. At the same time, they face further unemployment mainly because they do not have competent skill and job opportunity. The rapid transformation of industrial structure in Taiwan from labour intensive industries into technical intensive ones, taking place in the 1990s, has substantially reduced job opportunities for the semi-skilled or un-skilled workers. Therefore, those new poor are at the verge of further unemployment. In this sense, new technological skill training and career consultation are important for the new poor.

Housing. Some of the new poor are taking mortgage and have to pay house loan on regular base. And some are in need of paying house rent. Without financial support, they may lose a place to stay at anytime. Clearly, allocation of the new poor with housing trouble is a key issue in term of dealing with the new poor problem.

Mental health. Individuals may suffer depression or traumatic experience when they are out of work. Because of sudden loss of jobs, the new poor may go through mental troubles, such as anxiety, distress, nervousness, worry and suicidal. Professional help in psychological counselling is therefore crucial. It is noticed that people do not look for professional help voluntarily when their mental health is in question. The new poor having psychological problems and refusing counselling becomes potential threats to the society, especially when they are violent.

Family problems. The ‘new poor’ is not just a personal issue. It also influences family members, particularly the children. They are affected by emotional defeat of adults; and their daily routine may be disturbed and education interrupted. Thus, kids from the new poor family need help in learning and mental health. Other adults of the new poor family also require assistance to beat difficult situation. They may have financial or psychological problems and can not support each other as usual. The family function has temporarily broken down.

Debt. The new poor perhaps borrow more than they can repay, excluding the mortgage. That is to say that the new poor are in credit card debt probably because they over-consume and are unable to pay back to the bank. When the new poor are not in regular work, obviously they are not capable of reimbursing the debt and their debt is getting worse. Moreover, for those new poor with mortgage the debt problem would become even a greater burden. They can not pay off both mortgage and debt while keep living cost at minimum with little or no income.

Policy Recommendation

In Taiwan, people who live below the poverty line are eligible for government support, provided by the authority. However, the social assistance scheme has been appraised as too rigorous and only few persons can get the help. The increasing number of the low income household in Taiwan is a warning signal for new poor problems. In order to alleviate the new poor problems, certain actions must be taken as soon as possible.

First of all, the government should target, statistically as well as practically, the new poor population. Although the new poor are an ongoing social problem, it is not clear how much the population is and what sort of burden it will put on current social assistance mechanism. More survey should be done or commissioned urgently. Accordingly, the nature of the new poor can rightly be clarified and their needs are spelt out. This certainly helps to shorten policy making process in handling the new poor problem while the goal is plainly set.

In a rational sense, the poverty line is suggested to be lifted higher, so that current social assistance programmes can protect more people. However, such expansion will definitely bring more financial burdens to the government and add more case loads to social workers. A sustainable programme to tackle the new poor problem is essential. It should be considered that, based on current social assistance program, the new poor partially receive government support. Also, it is suggested that governmental helps should be divided into different categories, according to how serious the problem is. Then the new poor are able to apply for aids that they really want.

In addition, positive strategies which can improve employment should be taken into account. An active labour market can benefit the unemployed. The government should encourage more job opportunities in public as well as private sectors. For example, the state ought to support more people to initiate small business through providing set up loan, tax reduction and management learning for small business. Or the state can offer more jobs in public sectors. On the other hand, investment in human capital is crucial, too. It helps individuals to overcome difficulty in the transition period; and also, it improves one’s capability of competition in the labour market. The government should deliver more chances in skill training and education that are needed in information technology and the service sector.

Professional establishment can only give helps, in term of treating mental problems. Generally speaking, individuals with the mental illness can be treated in hospitals. Special clinics healing psychological crisis are not common in Taiwan, although the National Health Insurance covers such therapy. And people are afraid of getting mental counselling because of stigmatisation of mind sickness. It is suggested that psychological specialist should be more widely available; and also the state should provide more free treatment for the new poor with psychological problems.

Social workers play a vital role in social assistance programmes. They are executors of social policies. Social workers have to visit clients to see if they match criteria for government aids. Also, social workers keep track of people who are currently with governmental schemes. Should the state plan to extend its service to the new poor, the mounting case loads will put more heavy responsibility on social workers. Thus, it has to be considered about adding more manpower of social workers, in particular at the level of the local authority, which is often in the front line of the new poor problems.

It is no doubt that debt is a personal affair. However, with rising figure of population who borrow more than they can return, debt management is becoming critical to individuals as to the public in general. Surely, if too many people can not pay the bank back, it would turn into an economic liability to society on whole. Therefore, the government and the monetary institution should work together to build up the mechanism of fiscal consultation that helps the new poor to control their debt.

Conclusion

During the first decade of the early twenty first century, problems concerning the new poor have attracted great attention in Taiwan. Those who live below the poverty line are receiving assistance from the government. In contrast to this group of people, those who are temporarily out of job and encounter pecuniary trouble may not get any help from the state. This is because the legislation has set up a high standard for people to apply for social assistance. If one owns assets and come across monetary problem, especially having little or no money to get through daily life, he or she will never fit the criteria for social assistance. Therefore, people who can not sustain their daily life and are not eligible for official aids by way of means test are referred as the ‘new poor’ by sociologists.

The new poor is becoming a serious social problem and attracting public attention. This is because its population is growing larger. Also, without any help, they are turning into idlers. In addition, if no help is available in the long tern, they may become suicidal or criminal. This creates more safety concerns to the public.

Difficulties concerning the new poor are recognised in various features, including financial, health and accommodation. The new poor are facing income insecurity and other troubles follow. They can not afford health care and are unable to repay debts or mortgage. Also, the new poor may suffer psychological disturbance, because of the sudden change of life pattern. Eventually, their family are affected, too. The new poor and their family may lose a place to stay. And children may have emotional problem and are interrupted in education. Most importantly, the new poor are having crisis in the labour market. They would fail to keep jobs without proper skill trainings.

Finally, to deal with the new poor problem following recommendations should be taken into consideration. Firstly, it is imperative to find out the real figures of the new poor. The feasible public policy therefore can be formulated. Secondly, the new poor should receive social assistance on the base of current programmes, depending on their circumstance. Thirdly, positive action in employment policy should be made to strengthen ability of the new poor in the labour market, as well as to generate more work opportunities for them. Fourthly, mental health of the new poor should be taken care of. Fifthly, the number of staff that carries out social policy should be raised, so that case loads can be shared. Sixthly, the mechanism of personal debt management should be provided for the new poor.

If the state does not act soon and actively, problems in relation to the new poor will accumulate rapidly. Subsequently, the society will pay the price for the mounting trouble. Thus, the new poor problem will get worse; and more attempts, including in manpower and finance, will be needed to tackle the problem in the future. Such development does not lead to a good direction for the government in future policy making, because other social programme has yet been built up, the National Pension Scheme in particular.

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