Welfare is the provision of a minimal level of well-being and social support for citizens and other eligible residents without sufficient current means to support basic needs. In most developed countries, welfare is mainly provided by the government from tax revenue, and to a lesser extent by NGOs, charities, informal social groups, religious groups, and inter-governmental organizations.
Social security expands on this concept, especially in welfare states, by providing all inhabitants with various social services such as universal healthcare, unemployment insurance, student financial aid (in addition to free post-secondary education), and others. In its 1952 Social Security (Minimum Standards) Convention (nr. 102), the International Labour Organization (ILO) defined the traditional contingencies covered by social security.
Terminology in this area is somewhat different in the United States than in the rest of the English-speaking world. The general term for an action program in support of the well being of poor people in the United States is welfare program, and the general term for all such programs is simply welfare. In American society, the term welfare arguably has negative connotations. In the United States, the term Social Security refers to the US social insurance program for all retired and disabled people. Elsewhere the term social security is used in a much broader sense, referring to the economic security that society offers when people are faced with certain risks.
Recent UK official use of the term welfare includes not only minimal help for people in need but also some services traditionally called benefits and social security in most English-speaking countries except the United States. The term is even used to include government help in finding employment.
Non-native English speakers are often confused by the use of welfare to refer to different things in different countries and in the same country, for example well being, but native speakers can usually understand from the context which meaning is intended.
In the Roman Empire, the first emperor Augustus provided the Cura Annonae or grain dole for citizens who could not afford to buy food every month. Social welfare was enlarged by the Emperor Trajan. Trajan's program brought acclaim from many, including Pliny the Younger. The Song dynasty government (c.1000AD in China) supported multiple programs which could be classified as social welfare, including the establishment of retirement homes, public clinics, and paupers' graveyards. According to economist Robert Henry Nelson, "The medieval Roman Catholic Church operated a far-reaching and comprehensive welfare system for the poor..."
Early welfare programs in Europe included the English Poor Law of 1601, which gave parishes the responsibility for providing welfare payments to the poor. This system was substantially modified by the 19th-century Poor Law Amendment Act, which introduced the system of workhouses.
Public assistance programs were not called welfare until the early 20th century when the term was quickly adopted to avoid the negative connotations that had become associated with older terms such as charity.
It was predominantly in the late 19th and early 20th centuries that an organized system of state welfare provision was introduced in many countries. Otto von Bismarck, Chancellor of Germany, introduced one of the first welfare systems for the working classes. In Great Britain the Liberal government of Henry Campbell-Bannerman and David Lloyd George introduced the National Insurance system in 1911, a system later expanded by Clement Attlee. The United States inherited England's poor house laws and has had a form of welfare since before it won its independence. During the Great Depression, when emergency relief measures were introduced under President Franklin D. Roosevelt, Roosevelt's New Deal focused predominantly on a program of providing work and stimulating the economy through public spending on projects, rather than on cash payment.
Modern welfare states include Germany, France, the Netherlands, as well as the Nordic countries, such as Iceland, Sweden, Norway, Denmark, and Finland which employ a system known as the Nordic model. Esping-Andersen classified the most developed welfare state systems into three categories; Social Democratic, Conservative, and Liberal.
In the Islamic world, Zakat (charity), one of the Five Pillars of Islam, has been collected by the government since the time of the Rashidun caliph Umar in the 7th century. The taxes were used to provide income for the needy, including the poor, elderly, orphans, widows, and the disabled. According to the Islamic jurist Al-Ghazali (Algazel, 1058–111), the government was also expected to store up food supplies in every region in case a disaster or famine occurred. (See Bayt al-mal for further information.)
Welfare can take a variety of forms, such as monetary payments, subsidies and vouchers, or housing assistance. Welfare systems differ from country to country, but welfare is commonly provided to individuals who are unemployed, those with illness or disability, the elderly, those with dependent children, and veterans. A person's eligibility for welfare may also be constrained by means testing or other conditions.
Provision and funding
Welfare is provided by governments or their agencies, by private organizations, or a combination of both. Funding for welfare usually comes from general government revenue, but when dealing with charities or NGOs, donations may be used. Some countries run conditional cash transfer welfare programs where payment is conditional on behavior of the recipients.
Prior to 1900 in Australia, charitable assistance from benevolent societies, sometimes with financial contributions from the authorities, was the primary means of relief for people not able to support themselves. The 1890s economic depression and the rise of the trade unions and the Labor parties during this period led to a movement for welfare reform.
In 1900, the states of New South Wales and Victoria enacted legislation introducing non-contributory pensions for those aged 65 and over. Queensland legislated a similar system in 1907 before the Australian labor Commonwealth government led by Andrew Fisher introduced a national aged pension under the Invalid and Old-Aged Pensions Act 1908. A national invalid disability pension was started in 1910, and a national maternity allowance was introduced in 1912.
During the Second World War, Australia under a labor government created a welfare state by enacting national schemes for: child endowment in 1941 (superseding the 1927 New South Wales scheme); a widows’ pension in 1942 (superseding the New South Wales 1926 scheme); a wife’s allowance in 1943; additional allowances for the children of pensioners in 1943; and unemployment, sickness, and special benefits in 1945 (superseding the Queensland 1923 scheme).
Canada has a welfare state in the European tradition; however, it is not referred to as "welfare", but rather as "social programs". In Canada, "welfare" usually refers specifically to direct payments to poor individuals (as in the American usage) and not to healthcare and education spending (as in the European usage).
The Canadian social safety net covers a broad spectrum of programs, and because Canada is a federation, many are run by the provinces. Canada has a wide range of government transfer payments to individuals, which totaled $145 billion in 2006. Only social programs that direct funds to individuals are included in that cost; programs such as medicare and public education are additional costs.
Generally speaking, before the Great Depression, most social services were provided by religious charities and other private groups. Changing government policy between the 1930s and 1960s saw the emergence of a welfare state, similar to many Western European countries. Most programs from that era are still in use, although many were scaled back during the 1990s as government priorities shifted towards reducing debt and deficits.
Danish welfare is handled by the state through a series of policies (and the like) that seeks to provide welfare services to citizens, hence the term welfare state. This refers not only to social benefits, but also tax-funded education, public child care, medical care, etc. A number of these services are not provided by the state directly, but administered by municipalities, regions or private providers through outsourcing. This sometimes gives a source of tension between the state and municipalities, as there is not always consistency between the promises of welfare provided by the state (i.e. parliament) and local perception of what it would cost to fulfill these promises.
Solidarity is a strong value of the French Social Protection system. The first article of the French Code of Social Security describes the principle of solidarity. Solidarity is commonly comprehended in relations of similar work, shared responsibility and common risks. Existing solidarities in France caused the expansion of health and social security.
The welfare state has a long tradition in Germany dating back to the industrial revolution. Due to the pressure of the workers' movement in the late 19th century, Reichskanzler Otto von Bismarck introduced the first rudimentary state social insurance scheme. Under Adolf Hitler, the National Socialist Program stated "We demand an expansion on a large scale of old age welfare". Today, the social protection of all its citizens is considered a central pillar of German national policy. 27.6 percent of Germany's GDP is channeled into an all-embracing system of health, pension, accident, longterm care and unemployment insurance, compared to 16.2 percent in the US. In addition, there are tax-financed services such as child benefits (Kindergeld, beginning at €192 per month for the first and second child, €198 for the third and €223 for each child thereafter, until they attain 25 years or receive their first professional qualification), and basic provisions for those unable to work or anyone with an income below the poverty line.
Since 2005, reception of full unemployment pay (60–67% of the previous net salary) has been restricted to 12 months in general and 18 months for those over 55. This is now followed by (usually much lower) Arbeitslosengeld II (ALG II) or Sozialhilfe, which is independent of previous employment (Hartz IV concept).
Under ALG II, a single person receives €391 per month plus the cost of 'adequate' housing and health insurance. ALG II can also be paid partially to supplement a low work income.
The Italian welfare state's foundations were laid along the lines of the corporatist-conservative model, or of its Mediterranean variant. Later, in the 1960s and 1970s, increases in public spending and a major focus on universality brought it on the same path as social-democratic systems. In 1978, a universalistic welfare model was introduced in Italy, offering a number of universal and free services such as a National Health Fund.
Social welfare, assistance for the ill or otherwise disabled and for the old, has long been provided in Japan by both the government and private companies. Beginning in the 1920s, the government enacted a series of welfare programs, based mainly on European models, to provide medical care and financial support. During the postwar period, a comprehensive system of social security was gradually established.
The 1980s marked a change in the structure of Latin American social protection programs. Social protection embraces three major areas: social insurance, financed by workers and employers; social assistance to the population’s poorest, financed by the state; and labor market regulations to protect worker rights. Although diverse, recent Latin American social policy has tended to concentrate on social assistance.
The 1980s had a significant effect on social protection policies. Prior to the 1980s, most Latin American countries focused on social insurance policies involving formal sector workers, assuming that the informal sector would disappear with economic development. The economic crisis of the 1980s and the liberalization of the labor market led to a growing informal sector and a rapid increase in poverty and inequality. Latin American countries did not have the institutions and funds to properly handle such a crisis, both due to the structure of the social security system, and to the previously implemented structural adjustment policies (SAPs) that had decreased the size of the state.
New Welfare programs have integrated the multidimensional, social risk management, and capabilities approaches into poverty alleviation. They focus on income transfers and service provisions while aiming to alleviate both long- and short-term poverty through, among other things, education, health, security, and housing. Unlike previous programs that targeted the working class, new programs have successfully focused on locating and targeting the very poorest.
The impacts of social assistance programs vary between countries, and many programs have yet to be fully evaluated. According to Barrientos and Santibanez, the programs have been more successful in increasing investment in human capital than in bringing households above the poverty line. Challenges still exist, including the extreme inequality levels and the mass scale of poverty; locating a financial basis for programs; and deciding on exit strategies or on the long-term establishment of programs.
Latin America’s most recent shift in social policies
The economic crisis of the 1980s led to a shift in social policies, as understandings of poverty and social programs evolved (24). New, mostly short-term programs emerged. These include:
Major aspects of current social assistance programs
- Conditional cash transfer (CCT) combined with service provisions. Transfer cash directly to households, most often through the women of the household, if certain conditions are met (e.g. children’s school attendance or doctor visits) (10). Providing free schooling or healthcare is often not sufficient, because there is an opportunity cost for the parents in, for example, sending children to school (lost labor power), or in paying for the transportation costs of getting to a health clinic.
- Household. The household has been the focal point of social assistance programs.
- Target the poorest. Recent programs have been more successful than past ones in targeting the poorest. Previous programs often targeted the working class.
- Multidimensional. Programs have attempted to address many dimensions of poverty at once. Chile Solidario is the best example.
New Zealand is often regarded as having one of the first comprehensive welfare systems in the world. During the 1890s a Liberal government adopted many social programmes to help the poor who had suffered from a long economic depression in the 1880s. One of the most far reaching was the passing of tax legislation that made it difficult for wealthy sheep farmers to hold onto their large land holdings. This and the invention of refrigeration led to a farming revolution where many sheep farms were broken up and sold to become smaller dairy farms. This enabled thousands of new farmers to buy land and develop a new and vigorous industry that has become the backbone of New Zealand's economy to this day. This liberal tradition flourished with increased enfranchisement for indigenous Maori in the 1880s and women. Pensions for the elderly, the poor and war casualties followed, with State-run schools, hospitals and subsidized medical and dental care. By 1960 New Zealand was able to afford one of the best-developed and most comprehensive welfare systems in the world, supported by a well-developed and stable economy.
Social welfare in Sweden is made up of several organizations and systems dealing with welfare. It is mostly funded by taxes, and executed by the public sector on all levels of government as well as private organizations. It can be separated into three parts falling under three different ministries; social welfare, falling under the responsibility of Ministry of Health and Social Affairs; education, under the responsibility of the Ministry of Education and Research and labor market, under the responsibility of Ministry of Employment.
Government pension payments are financed through an 18.5% pension tax on all taxed incomes in the country, which comes partly from a tax category called a public pension fee (7% on gross income), and 30% of a tax category called employer fees on salaries (which is 33% on a netted income). Since January 2001 the 18.5% is divided in two parts: 16% goes to current payments, and 2.5% goes into individual retirement accounts, which were introduced in 2001. Money saved and invested in government funds, and IRAs for future pension costs, are roughly 5 times annual government pension expenses (725/150).
The United Kingdom has a long history of welfare, notably including the English Poor laws which date back to 1536. After various reforms to the program, which involved workhouses, it was eventually abolished and replaced with a modern system by laws such as National Assistance Act 1948.
In more recent times, comparing the Cameron–Clegg coalition's austerity measures with the Opposition's, the respected Financial Times commentator Martin Wolf commented that the "big shift from Labour ... is the cuts in welfare benefits." The government's austerity programme, which involves reduction in government policy, has been linked to a rise in food banks. A study published in the British Medical Journal in 2015 found that each 1 percentage point increase in the rate of Jobseeker's Allowance claimants sanctioned was associated with a 0.09 percentage point rise in food bank use. The austerity programme has faced opposition from disability rights groups for disproportionately affecting disabled people. The "bedroom tax" is an austerity measure that has attracted particular criticism, with activists arguing that two thirds of council houses affected by the policy are occupied with a person with a disability.
In the United States, depending on the context, the term “welfare” can be used to refer to means-tested cash benefits, especially the Aid to Families with Dependent Children (AFDC) program and its successor, the Temporary Assistance for Needy Families Block Grant, or it can be used to refer to all means-tested programs that help individuals or families meet basic needs, including, for example, health care through Medicaid, Supplemental Security Income (SSI) benefits and food and nutrition programs (SNAP). It can also include Social Insurance programs such as Unemployment Insurance, Social Security, and Medicare.
AFDC (originally called Aid to Dependent Children) was created during the Great Depression to alleviate the burden of poverty for families with children and allow widowed mothers to maintain their households. The New Deal employment program such as the Works Progress Administration primarily served men. Prior to the New Deal, anti-poverty programs were primarily operated by private charities or state or local governments; however, these programs were overwhelmed by the depth of need during the Depression. The United States has no national program of cash assistance for non-disabled poor individuals who are not raising children.
Until early in the year of 1965, the news media was conveying only whites as living in poverty however that perception had changed to blacks. Some of the influences in this shift could have been the civil rights movement and urban riots from the mid 60s. Welfare had then shifted from being a White issue to a Black issue and during this time frame the war on poverty had already begun. Subsequently, news media portrayed stereotypes of Blacks as lazy, undeserving and welfare queens. These shifts in media don't necessarily establish the population living in poverty decreasing.
In 1996, the Personal Responsibility and Work Opportunity Reconciliation Act changed the structure of Welfare payments and added new criteria to states that received Welfare funding. After reforms, which President Clinton said would "end Welfare as we know it", amounts from the federal government were given out in a flat rate per state based on population. Each state must meet certain criteria to ensure recipients are being encouraged to work themselves out of Welfare. The new program is called Temporary Assistance for Needy Families (TANF). It encourages states to require some sort of employment search in exchange for providing funds to individuals, and imposes a five-year lifetime limit on cash assistance. In FY 2010, 31.8% of TANF families were white, 31.9% were African-American, and 30.0% were Hispanic.
According to the U.S. Census Bureau data released September 13, 2011, the nation's poverty rate rose to 15.1% (46.2 million) in 2010, up from 14.3% (approximately 43.6 million) in 2009 and to its highest level since 1993. In 2008, 13.2% (39.8 million) Americans lived in relative poverty.
In a 2011 op-ed in Forbes, Peter Ferrara stated that, "The best estimate of the cost of the 185 federal means tested Welfare programs for 2010 for the federal government alone is nearly $700 billion, up a third since 2008, according to the Heritage Foundation. Counting state spending, total Welfare spending for 2010 reached nearly $900 billion, up nearly one-fourth since 2008 (24.3%)". California, with 12% of the U.S. population, has one-third of the nation's welfare recipients.
In FY 2011, federal spending on means-tested welfare, plus state contributions to federal programs, reached $927 billion per year. Roughly half of this welfare assistance, or $462 billion went to families with children, most of which are headed by single parents.
The United States has also typically relied on charitable giving through non-profit agencies and fundraising instead of direct monetary assistance from the government itself. According to Giving USA, Americans gave $358.38 billion to charity in 2014. This is rewarded by the United States government through tax incentives for individuals and companies that are not typically seen in other countries.
Current programs have been built as short-term rather than as permanent institutions, and many of them have rather short time spans (around five years). Some programs have time frames that reflect available funding. One example of this is Bolivia’s Bonosol, which is financed by proceeds from the privatization of utilities—an unsustainable funding source. Some see Latin America’s social assistance programs as a way to patch up high levels of poverty and inequalities, partly brought on by the current economic system.
Some opponents of welfare argue that it affects work incentives. They also argue that the taxes levied can also affect work incentives. A good example of this would be the reform of the Aid to Families with Dependent Children (AFDC) program. Per AFDC, some amount per recipient is guaranteed. However, for every dollar the recipient earns the monthly stipend is decreased by an equivalent amount. For most persons, this reduces their incentive to work. This program was replaced by Temporary Aid to Needy Families (TANF). Under TANF, people were required to actively seek employment while receiving aid and they could only receive aid for a limited amount of time. However, states can choose the amount of resources they will devote to the program.
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