Malaysia As A Welfare State – The Need For Paradigm Shift

RSOG-UNICEF Malaysia Joint Seminar

 “Malaysia as A Welfare State? The Need for Paradigm Shift”

 with

Dr. Amjad Rabi

About the Seminar

The principal idea of welfare state is the assurance that citizens are able to satisfy their basic needs – shelter, education, and healthcare. Government ensures the wellbeing of citizens by providing regardless of income bracket, entitlements to benefits such as child care, schooling, and healthcare. The provisions may come in the form of subsidies or grants – financed by progressive taxation. Proponents of welfare states argue that its advantage is its principles of inclusiveness – with no one excluded or left behind. Critics of welfare state model argue that it may lead to crutch mentality – overreliance and high dependence on state’s intervention, lessening citizens interest in economic virtues which could be harmful to the economy at large. Is Malaysia a welfare state? The idea of welfare state differs from one country to another, so what does it mean in Malaysia? What provisions of social protection has it provided for its citizens, migrants, undocumented migrants and refugees? As the issue of sustainability and resource constraints mounts, what direction should Malaysia be taking? These are some of the questions to be explored in the seminar with Dr. Amjad Rabi.

Summary

The role of welfare state and the extent in which it provides benefits for its people continues to be up for debate. Social welfare can be best described as state intervention in two main areas; income security and social services. While families, markets, social networks and membership institutions play a role in providing social welfare, it is the presence of the state that should be highlighted as a key contributor as its absence will run the risk of undersupplying. In addition to the traditional objective of welfare state, the state is important in introducing the element of the stimulus to expand social protection coverage.

In his presentation, Dr. Amjad Rabi discusses different government approaches to welfare in three OECD countries:

•  Following the Bismarck era, Germany continues to practice welfare following the principle of subsidiarity. This implies that services are decentralised and independently managed in a corporatist structure with little intervention from the state.

• In the United States, federal provisions were established during the Roosevelt administration of the 1930s and manifested itself during the “War on Poverty in the 1960s” during the Johnson administration. Welfare is managed in a Keynesian, “liberal” (i.e.: laissez-faire and residual) manner, where central government, state government and private interests all contribute to an inclusive, albeit complex, welfare system.

• Sweden offers institutional care in its country, which promotes the idea of equality of results. Despite its constituents being subjected to high taxation, Sweden’s institutional care is considered ideal as it aims for the ‘decommodification’ of utilities which results in universal welfare policies.

In implementing welfare in Malaysia, several factors must be accounted for. The high number of young population since the 1980s has now brought about a large workforce, subsequently offering a high potential for Malaysia’s economic growth. However, it was cautioned that Malaysia’s demographic window of opportunity (when the working-age population expands at a higher rate than the general population) is projected to end in 2020, before it is projected to reach an aged population in 2044.  Another aspect to consider in Malaysia is the labour force participation in terms of gender, where women (approximately 55%) sees less participation than men (approximately 70%).

Malaysia is thus left with a choice between which two modalities should be pursued with regards to social benefit planning; Residual Social Protection or Institutional Social Protection. While the general aim of welfare is to shift the population over the poverty line, there must be careful consideration in deciding which between the two modalities Malaysia should employ.

According to renowned economist Amartya Sen, “Benefits meant exclusively for the poor often end up being poor benefits”. In the absence of perfect information, one of the main challenges for policymakers is to first identify the poor and to address them in a way that does not stigmatise their social standing.

To approach this issue, it may be more beneficial for governments to approach poverty by targeting the underlying vulnerabilities that may lead to poverty (i.e. childcare, unemployment, maternity leave, retirement) rather than through ‘unobserved poverty’. Additionally, factors such as affordability, transparency and administration emerge as key concerns.

By and large, the discussion relating to welfare is akin to giving and receiving – where it is quite natural for preference as a receiver.  Nonetheless, the ever rising expectations and depleting resources have made policymaking relating to welfare much harder than before.  Be as it may, the direction to be taken by Malaysia in the future is likely to take into account the targeted group’s potential as well as the principle of social justice.

Key Issues Raised

•  With its large working force, Malaysia is at a considerable advantage to grow its economy. Accordingly, Malaysia must capitalise on this aspect before it reaches an aged population in 2044 by implementing adequate welfare policies.

•  Data on population should be collected to obtain a general idea of the problems faced by the country. However, it should not be substituted for data analysis on an individual level. Governments must continue to engage with their constituents on a personal level to obtain a full picture of the issues at hand and its underlying causes.

• The potential of a country is directly related to how a state nurtures its children. Therefore, welfare policies dealing with maternity, children, nutrition and education should be given priority in cultivating a healthy and progressive nation.

About the Speaker

Dr. Amjad Rabi joined UNICEF Malaysia in October 2016 as the deputy representative and senior policy specialist. Prior to this, he taught at the Balsillie School of International Affairs, Canada. Dr. Rabi previously served in UNICEF country offices including: Nepal, Zimbabwe, Egypt, Argentina, and the HQ office in NY. He earlier worked for the ILO’s social security department, Geneva. Dr. Rabi has authored and co-authored several publications and developed costing models that have been replicated in several countries. Amjad holds a Doctorate degree in International Relations, an MPP in Social Policy Financing, an MS in Mathematics (Actuarial Science), and an MA in Economics.

Contact

To get more information on this event, you can contact us via email at programmes@rsog.com.my