TNAG-0531-FCO40-626-Application-of-International-Labour-Convention-to-Hong-Kong-1975 — Page 212

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the near and distant future associated with any particular system of social security benefits. Otherwise there vas a danger that a system would be adopted which was more costly than the economy could support over the long run, with all the attendant consequences.

about the feasibility One participant asked

of covering under a social security system agricultural workers who receive no regular fixed salary or wage, with particular reference to the method of financing such coverage.

Several possibilities for assessing contributions

"land were mentioned on the basis of: revenues"; special rural taxes in the agriculturally more productive areas; specifically designated taxes from the urban sectors; and state subsidies derived from general revenues.

Reference was made by several participants to the rising cost of living and the effect on pensions paid to retired persons. It was noted that many social security systems automatically adjusted for changes in wage levels up to the time of retirement by basing the pension on the average wage during а limited number of years immediately prior to retirement; and that pensions could be adjusted for ccst-of-living changes after retirement, with a corresponding increase

in cost. This latter adjustment was being made in an increasing number of systems. It was pointed out that a provident fund, by its nature, was less effective in recognising cost-of-living changes.

5.

Social security and national economy

(working paper prepared by Koji Taira)

After discussing the application of macro and micro economics for the purpose of social security administration, the seminar noted that there vere dangers in relying exclusively on the economic arguments in promoting the idea and scheme of social security in developing countries; social security was essentially a social institution; while it could not be denied that it had important impacts on a society's economy, its first objective was directly related to social aspects of human life.

The seminar felt that in general, total social well-being could be said to have increased, if gainers from a given change, notably economic growth, could compensate the losers and still have a margin left by which they considered themselves better off than before. One of the most effective methods to ensure such

a compensation would be some sort of progressive taxation and the use of tax proceeds for the relocation of losers from the economic sector in which they have lost, to another sector in which perspective gains were quite clear. Much of the compensation policy related to economic growth could be implemented through the ordinary economic policy associated with public fiscal policy.

The seminar noted that as developing countries of Asia spent more and more of the gross national product for the purpose of social security and indeed on the whole area of their most recent improvements in social aspects of human life, the process worked in such a way as to push the allocation of resources to social security nearer and nearer the ceiling of economic resources.

In this connection, it was also pointed out that the resources directly routed through social security systems were not the only resources that were used for meeting the social needs cf the ordinary people in a given country ; resources for social security purposes were going to individuals through cther

arrangements. The GNP figures tended to be rather unreliable and the money economy itself was only a fraction of total economy. One should not, therefore, be too greatly impressed by inter-country differences based on such figures.

Noting that the basic family institution had an important bearing on the determination of the scope of social security, the seminar felt it necessary to take account of variability in such traditional social arrangements. It was true that the family institutions in many Asian countries accepted substantial responsibility for the well-being of their members, but to the extent to which they were inevitably variable in this respect, the burden of social security had to be imposed on the national and local governments. Since the relative balance between pre-existing traditional social arrangements and the emerging industrial sector vas rapidly changing in the course of socio-economic evolution, the role to be played by organised social security would become increasingly important.

The seminar discussed tripartite participation (employers, employees and government) in the financing of a social security scheme. When the situation was

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