World Developments in Social Security
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World Developments in Social Security by CARL H. FARMAN* term risks of income loss resulting Almost without exception the nations of the world are com- from old age, invalidity (of nonoccu- mitted to programs of social security-programs that vary from pational origin), and death of the country to country but have in common the establishment of worker are most commonly met protection, generally through compulsory social insurance, against such risks as sickness and the economic consequences through a system of contributory old- age, invalidity, and survivors insur- of unemployment, disability, old age, and death. The follow- ing survey, based largely on a longer report.1 is an attempt to ance, in which benefits are provided show in broad outline the evolution in such legislation for the without an income test to persons who years 1939-49 and the extent and general character of such pro- meet the qualifying requirements. In grams at the end of that time. a number of countries pensions are paid to all aged, disabled, or survivor claimants with insufllcient means, NE of the most widely shared Soon after the beginning of the war, provided they meet citizenship or resi- objectives of the people of the many countries enacted legislation dence requirements. Such pensions 0 world in the mid-twentieth that either created new systems or subject to income test are the only century is social security. The sys- (more frequently) fundamentally benefits in Australia, Canada, Den- tems of social insurance and assist- amended programs already in exist- mark, Norway, Spain, and the Union ance that constitute the common ence. At the beginning of 1950 the of South Africa. In another group of basis of social security affect hun- situation with respect to the types of countries, assistance payments on the dreds of millions of persons in all protective legislation in force in all basis of need supplement insurance parts of the world. The most widely countries of the world, as compared programs; this is the case in Argen- established programs are old-age, in- with January 1939, was as follows: tina, Belgium, Czechoslovakia, France, validity, and survivors insurance (or Great Britain, the Netherlands, New pensions), health and maternity in- Zealand, Sweden, Switzerland, the Number of countries United States, and Uruguay. In Ire- surance, workmen’s compensation, with laws in opera- unemployment insurance, and family tion land, old-age pensions require an in- Type of program allowances. Some countries have all come test, but insurance Programs January December govern payments to invalids and five types of protection; a few have 1939 1949 none. The present review under- widows and orphans. takes to show the extent to which Old-age,invalidity, and SW The amount of the beneflt payable vivors insurance and pen- the various regions of the world have sion (or assistance) pro- under old-age, invalidity, and SUrvi- grams ____- __.___________-- 33 44 vors insurance ordinarily varies with adopted such social security legisla- Health and maternity insur- tion, with particular attention to the Bnce-.-.------.------------ 24 36 the years in covered employment and Workmen’s compensation-.-- (1) changes taking place during the 11 Unemployment insurancesT- 21 ii the previous earnings of the insured years 1939-49. Familyallowances. _________ 7 27 worker. Almost invariably the method of determining the rate PaY- One of the clearest facts that 1Approximately the same as in 1949. emerges will be familiar to students of able favors lower-paid workers by fix- social security; namely, that the sec- More significant in terms of the ing a minimum amount, by including ond great war of the century-like the number of persons affected than the a basic sum that is the same for all first conflict-released or accelerated number of new laws in force have been beneficiaries, or in other ways. Some social forces making for a greater ef- the major legislative changes in Great countries-mainly British and Scan- fort to achieve social security. The Britain, France, and other countries. dinavian-pay a flat-rate benefit in- Beveridge Report, the Atlantic Char- Earlier measures have been expanded stead of a variable figure. Survivor ter, the “Declaration of Philadelphia” to cover more people, make benefits benefits are as a rule smaller than the issued by the 1944 International La- more adequate, and otherwise increase benefits to the aged or disabled worker bor Conference, and the creation of the effectiveness of social security. himself, but for a widow with children the Inter-American Committee on Before considering the speciilc devel- the benefits may commonly reach, as Social Security were examples of this opments, it is desirable to examine a maximum, the level for old age or trend. briefly the essential character of each permanent disability. To qualify for type of social security under review. a beneflt for himself, or for his de- *Division of Research and Statistics, pendents in case of his death, the in- Ofbe of Commissioner. sured must customarily have had 5 1Carl H. Farman and Veronica Marren Summary or 10 years in covered employment. Hale, Social Secwity Legislatton Through- out the World, Division of Research and Old-age, invalidity, and survivors This period, however, is subject to Statistics, Bureau Report No. 16, 1949. imurance and assistance.-The long- considerable variation: it is much Bulletin, March 1950 3 shorter in several COWdrieS for Per- grams of protection against employ- stitutional) , Japan, and-with limited manent disability than for old age. ment injuries, including occupational coverage-Greece and Uruguay. In most insurance systems (21 out diseases, have generaIIy been put The recent trend has been toward of 38) the insured, the employer, and into operation in advance of other compulsory rather than voluntary un- the Government share in the flnanc- social security measures. All stages employment insurance. In 1939, of ing. Under nine laws the employer of development are therefore to be the 22 programs then existing, nine and insured meet the full cost. Five found. In several countries a labor were of the type in which the govern- countries, all in eastern Europe, levy code or a special work-accident law ments subsidized trade-union systems. the entire assessment on the em- imposes on the employer fixed obliga- At the end of 1949, 18 of the 22 sys- ployer-generally the nationalized tions for cash benefits and provision tems in operation were compulsory industry. In two, countries the in- of medical care, without creating and only Denmark, Finland, Sweden, sured person and the Government are guarantees that these obligations will and Switzerland had trade-union responsible: and in,one, the employer be met if the risk materializes. Else- plans. and the Government. Of the six where compulsory insurance is re- The amount of benefit is generally countries having systems that pay quired. In the latter case, private about 50 or 60 percent of earnings benefits only after an income test, in insurance companies or employers’ (often increased for dependents). The three the pensions are financed by the mutual associations may carry the ‘maximum period for which benefits employer and the insured, in two by insurance, or, as in 27 countries, the may be paid usually ranges from 4 to 6 the Government only, and in one by program may be administered by a months and may be longer if an in- ap three sources. public agency exclusively. come test-as in Australia, Austria, Health and maternity insurance.- Provision for compensating and Chile, and New Zealand-is or may be The customary health insurance sys- providing medical attention for sched- imposed. tem provides both cash benefits in uled occupational diseases like sili- The rate of contributions varies but case of disability and medical atten- cosis is customary. Some of the is most generally from 1 to 4 percent tion when necessary. The maximum programs establish and enforce stand- of taxable earnings. The insured, em- duration of the cash benefits is gen- ards of industrial hygiene and safety, ployer, and Government contribute in erally 26 weeks, after which the and some provide for the vocational nine countries; insured and employer worker may be entitled to invalidity rehabilitation of the disabled worker. in six; insured and Government in benefits (usually under the old-age, Although under most plans the four; and the employer only in four. invalidity, and survivors insurance worker sustaining permanent injury Family allowances.-Subsidies to system). Mast countries provide receives a pension that is not subject families with children have proved medical attention to the dependents to a time limit, this is not universal increasingly popular as an instrument of the covered workers. practice. A maximum in the amount of national social policy. Only seven The maternity benefit commonly payable, or in the duration of benefit, such programs (in Belgium, Chile, consists of medical attention, either is found in 16 countries-Argentina, France, Hungary, Italy, New Zealand, b,y a midwife or attending physician Australia, Brazil, Colombia, Costa and Spain) were in operation in early or in a hospital, and cash payments Rica, the Dominican Republic, Egypt, 1939. By the end of 1949, 27 coun- for a Period that is generally 6 weeks El Salvador, India, Japan, New Zea- tries had enacted such legislation. before confinement and 6 weeks fol- land, Nicaragua, Panama, the Philip- Other countriesDenmark and the lowing. Nursing benefit in the form Pine Republic, Syria, and the United United States, for example-provide of milk or of cash with which to pur- States of America (more than half assistance to families with children in chase it is often also provided. the States). Some of these countries case of need and in specified circum- stances. In some countries, medical services pay lump sums only.