Reducing Average Family Income and Enlarging the Disparity between High Income and Low Income Households

The rising of unemployment rates does have great impacts on average family income.

According to the report of family income investigation released by the Statistic Bureau, the average family income is NT$ 1,159,120 in 2008. Comparing with average family income in 2007, it does

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reduce NT$11,454. The disposable income is NT$913,687 in 2008. Comparing with the disposable income in 2007, it does reduce NT$11,087. Consumption expenditure of each household is

NT$705,413. Comparing with 2007, it does also reduce NT$10,681. In Table 3, it also show that number of the lowest 20% income households increase, and their disposable income is NT$

303,517, which is 2.76% lower than the number of 2007. In 2008, the disposable income even lower than the consumption expenditure, which does mean each household have NT$5,902 deficit.

In 2008, the ratio of household income, top 20% to lowest 20% is 6.05, and the Gini

coefficient is 0.341. When income transferring to the poor had been excluded, the ratio reached 7.73, which was the highest number in Taiwan history. Above all, the biggest impacts of financial tsunami are reduction of employment opportunity, decreasing of working income, and enlarging the

disparity between the rich and the poor. Poverty and equity have become serious problems since 2008.

Table 3 Disposable Income and Personal Consumption

Unit: household; person; NT$; % Total

Household Year Average

Disposable Income According to Income Quintile

1 2 3 4 5

(the lowest

20%) ^{(the top}

20%)

Number (Household)

1998 6,273,056 1,254,611 1,254,611 1,254,611 1,254,611 1,254,611 2007 7,414,281 1,482,856 1,482,856 1,482,856 1,482,856 1,482,856 2008 7,544,629 1,508,926 1,508,926 1,508,926 1,508,926 1,508,926 Average

Number of household

(person)

1998 3.77 2.13 3.47 4.12 4.38 4.77 2007 3.38 1.93 2.94 3.65 4.07 4.32 2008 3.35 1.88 2.91 3.62 4.06 4.29 Disposable

Income (NT$)

1998 873,175 310,865 560,766 765,375 1,014,770 1,714,097 2007 923,874 312,145 571,128 799,418 1,069,885 1,866,791 2008 913,687 303,517 564,893 796,225 1,068,804 1,834,994 Consumption

Expenditure (NT$)

1998 646,343 288,889 496,500 632,744 763,930 1,049,654 2007 716,094 313,309 530,417 699,698 868,505 1,168,540 2008 705,413 309,419 522,744 687,699 849,967 1,157,234 Saving

(NT$)

1998 226,831 21,976 64,267 132,630 250,840 664,443 2007 207,780 -1,164 40,711 99,720 201,380 698,251 2008 208,274 -5,902 42,149 108,526 218,837 677,760 Saving Rates

(%)

1998 25.98 7.07 11.46 17.33 24.72 38.76 2007 22.49 - 7.13 12.47 18.82 37.40 2008 22.79 - 7.46 13.63 20.47 36.94 Source: Statistic Bureau, Executive Yuan, 2009.

Transformation of the NPOs – Toward Social Entrepreneurship?

In Taiwan, the law requests that any organizations must officially register, which is named as

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the People Organization. There are three categories within the People Organization: Political Organization (PO), Vocation Organization (VO), and Social Organization (SO). According to the Ministry of Interior, there are 31,994 registered SOs in 2008. Most of SOs is basically nonprofit organizations (NPOs). Within the SO category, the Social Service and Charity Organizations (SSCOs) is the largest group, and they are very important for Taiwan social welfare and social security. There are 10,288 SSCO. The second largest group is the Academic, Culture and Arts Organization (ACAO), whose number is 5,165.

In order to reach its mission and goal, how to have stable and sufficient financial resources is always a very important issue in SSCOs. Most of SSCOs mainly receive their financial support from general public donation and state subsidy. According to Shih’s investigation concentrated on SSCOs (1997), general public donation accounts for 39.9%, and state subsidy accounts for 28.7%.

Nevertheless, the state did make a research on social welfare organizations in 2006, and it found that state subsidy accounts for 45.4%, service income accounts for 37.2%, and public donation accounts for 9.6% (Statistic Bureau, 2006). Since some of the service income coming from the state, it is very clear that state subsidy is very important for SSCOs. On the other hand, according to another state investigation in 2004, 76% of PO indicates that they do have the problem of financial difficulty. Within them, 52.9% belongs to the SO (Statistic Bureau, 2003).

The financial tsunami did have serious impacts toward SO in Taiwan. Many public cut their donation immediately since their income had shrunk. In addition, Typhoon Morakot heavily beat Southern Taiwan on August 8 2009, and it took at least 677 people life because of great areas of mudslides. Many people focused their donation on this event, and they probably did not have other money for other NPOs. It meant that donation for the NPOs had been excluded because of the August 8 natural disaster. Wang, Yu-Ling(王幼玲), the secretary general of the League of Welfare Organizations for the Disabled, proclaimed in 2009 that public donation had reduced 30-40% at that year. For example, the famous Citizen Congress Watch only received NT$400,000, but it need to have at least NT$8,000,000 for its operation per year. Wang said “the NPOs have also attacked by serious disaster.” (Lin, 2009)

Tsao, Ai-Lan(曹愛蘭), advisor to the League of Welfare Organizations for the Disabled, also maintained that many NPOs had met a very difficult situation because of shortage of fund. “There will have a wave of NPOs’ shut down,” she said. However, NPOs did employ several approaches to prevent their shutdown. Some lay off their employees; some lent money from banks; some lessened their businesses; and etc. They also requested the state to help them. Representatives coming from 18 well-known SSCOs, for example the League of Welfare Organizations for the Disabled,

Federation for the Welfare of the Elderly, Child Welfare League Foundation, Federation for Family Care, made an official visit to the Premier of the Executive Yuan in December 2009. They hope the state can have much more subsidy or to propose some bail out packages for them and other NPOs.

Tsao said many experienced employees in NPOs did own great skills in their works, and they

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assisted the state for social service either planning or delivery. “It would be a great loss to the whole society if NPOs could not survive,” she indicated. (Lin, 2009)

On the contrary, request for social service has increased since 2008. Many people lose their jobs and income, and they are much more depended upon the society for their surviving. It was very important to supply necessary social services at this critical juncture. The Dandelion Counseling Center of the Garden of Hope Foundation indicated that cases of their counselors increase 38% in 2008. However, public donation had dwindled 40% comparing with the same month in 2007 (Hsieh, 2010: 6). The NPOs faced a contradictory and difficult situation. This was a common problem to the NPOs since the late 2008.

Another example did come from the Culture and Arts organizations. These organizations do heavily depend upon the state subsidy. The state has established the National Culture and Arts Foundation to assist them. The Foundation entrusted four investment trust corporations to handle its investment in stock market. Unfortunately, it did lose a great amount of money in 2008. The amount was NT$160,000,000 approximately, and the return on investment (ROI) was -20%. In addition, the investment operated by the Foundation itself did also lose money in 2008. The amount was around NT$70,000,000, and the ROI was -1.19%. (He & Wu, 2008) The Foundation also received negative investment results in 2009. It does have great impacts toward Cultural and Arts organizations since many organizations complained that they could not receive subsidy from the state.

This probably is one of major reasons that NPOs try to promote the idea of social

entrepreneurship. They would like to create business to make money for their social services. For example, members of the Garden of Hope Foundation do make hand-made chocolate and beautiful glass beads for sale. With the help from the state, the Sunshine Social Welfare Foundation operates a car wash and beauty center in downtown Taipei. The Eden Social Welfare Foundation operates a gas station in downtown Taipei. The Children Are Us Foundation (CAREUS) creates bakeries and restaurants at Kaohsiung, Taipei, and Hsinchu. Not only to make some money, these car wash, gas station, bakeries, and restaurants provide work opportunities to people with intellectual or physical disabilities, allowing them to show they are capable of being productive, thus reducing government and society’s burden of care. However, as a matter of fact, concerning with financial support how much money these businesses can contribute to their foundations or organizations is still not quite clear.

Transformation of the State – from Authoritarianism to Corporatism

The development of Taiwan was controlled by the authoritarian Nationalist Party (or

Kuomintang-KMT), which maintained a lock on political control over the island from the end of World War II until very recently. The KMT regime has mainly pursued economic growth since 1960, and the land has been basically treated as a productive base for industry. The result is that Taiwan is commonly touted as an economic miracle because of its rapid economic growth over the last several

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decades. Indeed, the numbers are impressive. The gross national product of Taiwan annually increased an average of 8.7 percent from 1953 to 1982. During the peak years 1963-1972, the country’s GNP averaged an extraordinary 10.8 percent increase per year. Trade surpluses occurred nearly every year from 1970, and foreign reserves amounted to $7 billion in 1980, $15.7 billion at the end of August 1984, nearly $76 billion in 1988, and $72 billion by February 1991.

The high economic growth rate is ascribed by Ranis (1992), Fei, Ranis, and Kuo (1979), Kuo (1983), Amsden (1985), Gold (1986), and Clark (1989) to the government’s single-minded policy focus on economic growth. In this regard, the state has been identified as the key growth-promoting institution. Thus, Amsden argues that the state in Taiwan played the leading role in the process of capital accumulation. She argues “to understand Taiwan’s economic growth, therefore, it is necessary to understand its potent state” (1985, 78). Gold has reached the same conclusion: “any explanation of Taiwan’s growth with stability must start with the national party-state” (1986, 122).

After allowing opposition parties—especially the Democratic Progressive Party (DPP)—to share the political stage since the late 1980s, the KMT tried to strengthen its political position by focusing on business relations with capitalists. Tending to the needs of its business partners and local political factions, it was able to remain the dominant force in Taiwan's political system. An island in the grip of political authoritarianism found itself yielding to corporatism after political controls eased. Under corporatism, the state relies on close alliances with large industrialists, big conglomerates, and local political factions to maintain its hold on power.

The political structure of state-corporatism was already resident in Taiwan before the late 1980s. The KMT had organized a comprehensive corporatist structure to represent the major sectors of Taiwanese society through government-controlled farmers’ associations, trade unions, and

industrial and commercial chambers. Nevertheless, the relation between these sectors and the state was not corporatist at that time, but more like a patron-client relation. The single-party state was the powerful patron with access to all of the society’s resources and could dispense them to clients in exchange for their political support. Since these clients were protected by the state, they were unwilling to challenge the state and, in any case, did not have the power to do so.

This relation of patron-client gradually transformed as the challenge of the opposition movements springing up in civil society in the mid-1980s left the state with little choice-either to crackdown but with unpredictable political consequences or find some means to compromise.

Finally, the KMT was forced to make political concessions as a result of the combined pressure of social dissent and restive capital. The state has increased its cooperation with the country’s major capitalists, and major capitalists have been elevated from their earlier status of clients to junior partners (Wang 1993, 89).

How to improve the domestic investment environment for capitalists in order to revive

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Taiwan’s economy has become the most important goal for the government, especially after the financial tsunami in 2008. Both of the central and local governments have proposed many Big Projects. They have tried to remove obstacles to major private investment projects. The big business conglomerates and local political factions have become major partners with the state in their pursuit of Taiwan’s economic growth. Although many local protests have emerged concerning the

environmental deterioration or eminent domain, the government still tries to use its hegemonic power to supply them with land at prices that are much cheaper than the market value. Regretfully, many important meanings and values of the land are all discarded because of power domination.

Emergence of Advocacy NPOs

Taiwan’s development is concentrated on economic growth, especially after the financial tsunami. The state itself has serious problem of financial deficit, and it need to have several ways to improve economic growth. To reach this goal the governing regime uses its hegemonic power to create pro-growth myths, institutions, policies, agenda and plans. For example, privatization, BOT, zone expropriation, Science Park, Big Plans are all related with this goal. To realization these plans, there is one common factor among these plans: they all request the land. Therefore, a great amount of good quality farmland and water resources in the western plain has been transferred to industrial and urban uses recently. The state employs the power of eminent domain, for example zone

expropriation, to condemn farmlands. Many farmers are excluded from the decision-making processes and are forced to leave their homes and farmlands. In eastern Taiwan, the state plans to release state-own land to big conglomerates, which plan to establish luxurious resort and villa around the sea coast because of beautiful sighting scene. Even though most of land officially belongs to the state, the land in eastern Taiwan is historically belonged to the indigenous people.

Many social movements have erupted recently because of these taking and selling out activities.

Several advocate NPOs have been created, and they try to help farmers, indigenous, and powerless people in Taiwan society. The most important organization is the Taiwan Rural Front (TRF), which has not yet officially registered. Cooperated with several young scholars, students, and local activists, the authors of this paper help to establish the TRF in February 2009. The TRF tightly works together with farmers and local residents coming from different communities to stop land grabbing activities from the state. They even demonstrated several times in front of the Presidential Office. The first big demonstrations took place on July 16, 2010 because of zone expropriation at the Dapu (大埔), Miaoli County, and they stayed there two days.