CHAPTER TWO EVOLUTION OF SOCIAL SECURITY

1. CHAPTER TWOEVOLUTION OF SOCIAL SECURITY Objectives of the lecture: After completing this lecture, the students should be able to: 2.1 Explain the historical development of social security in developed countries. 2.2 Explain the historical development of social security in developing countries.

2. HISTORICAL DEVELOPMENT OF SOCIAL SECURITY IN DEVELOPED COUNTRIES • In its early history, the United States is predominantly agricultural economy (1870). In the years that followed, industry developed rapidly and lead to industrialization, specialization, and urbanization. • In earliest colonial times, local villages and towns recognized an obligation to aid the needy when family effort and assistance provided by neighbors and friends were not sufficient and it was carried out through the poor relief system and almshouses or workhouses. • Gradually, measures were adopted to provide aid on a more organized basis, usually through cash allowances to certain categories among the poor.

3. Cont… • In the mid-twenties, a few States began to experiment with old-age assistance and aid to the blind. • Social insurance first began with workers’ compensation. A Federal law covering civilian employees of the Government in hazardous jobs was adopted in 1908, and the first State compensation law to be held constitutional was enacted in 1911. • By 1929, workers’ compensation laws were in effect in all but four States. These laws made industry responsible for the costs of compensating worker or their survivors when the worker was injured or killed in connection with his or her job. • Retirement programs for certain groups of State and local government employees date back to the 19th century to early 1900s and 1920

4. Cont… • Another area where the Federal Government accepted an early responsibility was in the provision of benefits and services for persons who served in the Armed Forces. • In 1935, President Franklin D. Roosevelt proposed to Congress economic security legislation embodying the recommendations of a specially created Committee on Economic Security. There followed the passage of the Social Security Act, signed into law August 14, 1935. • This law established two social insurance programs on a national scale to help meet the risks of old age and unemployment: a Federal system of old-age benefits for retired workers who had been employed in industry and commerce, and a Federal- State system of unemployment insurance.

5. HISTORICAL DEVELOPMENT OF SOCIAL SECURITY IN DEVELOPING COUNTRIES • MALAYSIA • Similar to US and other countries, Malaysia was a predominantly agricultural economy. Then in year 1900s, the process of urbanization and the establishment of several industries took place in this country. • On that time, workers in Malaysia were covered for the eventualities of industrial accidents under the provisions of the Workmans Compensation Ordinance, 1959. • WCO required all employers to take out Workmans Compensation Insurance to avoid the problems of inability of employers to pay such a substantial compensation to injured workers.

6. Cont.. • Then in 1965, a Study Group with the assistance of the ILO conducted a study on the WCO. The report proposed a new and comprehensive Social Security Scheme for Malaysian workers. • The model or scheme was based from the British Social Security Scheme. • The introduction of social security schemes into Malaysia initially as a pilot scheme in Johor Bharu and then extended to cover the whole of the country. • Social security, embodying the concept of social insurance, was introduced in Malaysia with the passage of the Employees Social Security Act, 1969 on the 2nd April 1969. • The act provides the social security protection to all workers employed under a contract of service against the contingencies of industrial accident, occupational disease and invalidity.

7. Cont.. • Also not only to compensate for the effect of injuries sustained at work but for invalidity from whatever cause. • It also the victims are compensated but their dependents on death. • These benefits were brought under two Social Security Schemes • Employment Injury Scheme • Invalidity Pension Scheme • The social security scheme arose out of a realization that the existing legislation on the welfare of workers, namely the Employees Provident Fund Act 1951 (which is essentially a force saving scheme for retirement) and the Workmen’s Compensation Act 1952 (which is an employers liability scheme and purely compensatory in nature) were inadequate in providing social security protection to the working population because of their inherent limitations and inadequacies.

8. Cont.. • The scheme is both compulsory and contributory in character. • Since its inception in 1969, the Employees Social Security Act 1969 has undergone 3 major legislative changes till 1987 with new benefits introduced and the existing benefits were enhanced or improved upon. • The scheme is administered by the Social Security Organization (SOCSO) and was formally established on 1st January 1971 as a department within the Ministry of Labour. • Now, SOCSO has about 45 offices situated in most major towns throughout the country and responsible for administering the Act in their respective areas.

9. factors • Awareness • Increase of accidents • Budget allocation • Role of NGO • Role of ILO • industrialization

10. Tutorial Find the development of Social Security in any developed and developing countries.