The State Council Information Office today published a white paper
titled
Labor and Social Security in China. The full text of
the white paper follows, giving an overview of what China has done
and will do to guarantee citizens' rights to work and to enjoy
social security:
Labor and Social Security in China
Foreword
I. Overall Stability in Employment Situation
II. Formation of New Labor Relations
III. The Establishment of a Social Security
System
IV. Development in the Early Period of the 21st
Century
Foreword
The right to work and enjoy social security is a fundamental right
of citizens, having a direct bearing on their vital interests. As
the most populous and largest developing country in the world with
a relatively low level of economic development, China is faced with
an onerous task of promoting its work in this regard.
Proceeding from China's actual conditions, and in accordance with
the Constitution of the People's Republic of China and the Labor
Law of the People's Republic of China, the Chinese government has
made remarkable achievements in ensuring its citizens' right to
work and enjoy social security, and in improving labor and social
security management and services.
Immediately after the founding of the People's Republic of China in
1949, the Chinese government took a series of effective measures,
successfully solving the serious problem of unemployment left over
by the old China and ensuring the people's basic livelihood. Under
the planned-economy system, China adopted highly concentrated
employment, wage and labor insurance systems, which played a
positive role in making comprehensive arrangements for employment,
guaranteeing the livelihood of employees, and promoting economic
construction and social stability at that time. However, with the
progress of history, the old labor and social security system had
become unadaptable to the requirements of economic and social
development.
Since 1978, China has adhered to the policy of reform and
opening-up, with the focus on economic construction, and has
gradually stepped onto the road of establishing a socialist market
economy system. As a result, labor and social security undertakings
have developed rapidly. By rationally readjusting the employment
structure, increasing overall employment and setting up a
market-oriented employment mechanism, the Chinese government has
brought about a basically stable situation in employment. By
maintaining harmonious and stable labor relations and reforming the
wage and income distribution system, the government has improved
the labor standards system step by step, and helped to basically
establish a new type of labor relations. The reform and improvement
of the social security system has enabled the social insurance
system to cover the vast majority of employees and retirees in
urban areas. The system for ensuring a minimum standard of living
for residents has been set up in cities, and the building of a
social security system is being vigorously promoted in rural areas.
After years of trial and effort, a labor and social security system
corresponding to the socialist market economy system is now
basically in place.
Based on the principles of mutual respect, equality and mutual
benefit, the Chinese government actively participates in
international labor affairs. In the field of labor and social
security, China has conducted fruitful exchanges and cooperation
with many countries and international organizations, such as the
International Labor Organization, United Nations Development
Program, World Bank and Asian Development Bank. It has played a
positive role in the international community in promoting
employment, eliminating poverty and protecting the legal rights and
interests of workers.
Entering the 21st century, China has embarked on a new development
stage, the stage of starting the full-scale construction of a
comparatively well-off society and accelerating modernization. The
major goals of China's labor and social security efforts at the
beginning of the new century are promoting employment, protecting
employees' rights and interests, coordinating labor relations,
raising people's incomes and improving social security.
I. Overall Stability in Employment
Situation
Employment presents a great pressure on China due to its huge
population, abundant labor resources and economic restructuring.
The Chinese government regards increasing employment opportunities
as a major strategic task in economic and social development, and
controlling the rate of unemployment as a main target in
macro-economic regulation and control. It has rationally readjusted
the employment structure, established a market-oriented employment
mechanism, put great efforts into increasing overall employment and
maintained basic stability in the general employment situation. By
the end of 2001, the country's population had reached 1.27627
billion (excluding the populations of the Hong Kong and Macao
special administrative regions and Taiwan Province), and 730.25
million people were employed, accounting for 77.03 percent of the
total labor force. Employees in urban areas accounted for 32.8
percent of the total, and those in rural areas for 67.2 percent.
The unemployment rate on record in urban areas was 3.6 percent.
Implementing the Policy of Vigorously Increasing
Employment
Focusing on economic construction, the Chinese government promotes
employment through economic growth, carries out an active policy of
employment, and adopts various effective measures to increase the
rate of employment.
Rationally readjusting the employment structure. In line
with the readjustment of the industrial structure, the government
guides the development of industries and enterprises capable of
offering more job opportunities. While increasing capital
construction investment, vigorously expanding the domestic demand
and maintaining the high-speed development of the national economy,
the government stresses the development of labor-intensive
enterprises with comparative advantages and market potential,
especially service enterprises and small and medium-sized
enterprises capable of offering employment to a large number of
people, through readjustment of its industrial policies. It also
increases employment and expands employment channels by vigorously
developing the economy with diverse forms of ownership, such as
collective, private and individual ownerships, and by encouraging
various forms of employment.
Establishing a market-oriented employment mechanism.
Carrying out the employment policy of "laborers finding employment
on their own initiative, the market adjusting the demand for
employment and the government promoting employment," the Chinese
government encourages securing employment through fair competition,
encourages employers to decide the number and quality of their own
employees, and adopts measures to promote the shaping of a
market-oriented employment mechanism. In the meantime, the labor
market information network has started to display its worth,
promoting exchanges of information concerning labor supply and
demand, and helping the jobless find employment or reemployment
through the labor market. In order to set up a labor market with a
sound mechanism, standardized operation and good service, and under
effective supervision, the Chinese government has conducted trials
to set up a scientific, standardized and modernized labor market in
100 cities. In recent years, the Chinese government has started to
trial-implement a pricing mechanism for the labor market, in order
to enable the market mechanism to play its basic regulatory role in
the allocation of labor resources, wage formation and labor
flow.
Enhancing workers' quality. In order to raise the cultural
level and professional skill of the work force, the Chinese
government has striven to promote all forms of education through
various channels, and laid equal stress on academic and vocational
qualification credentials. At present, the system of nine-year
compulsory education covers 85 percent of the total population, and
the illiteracy rate among the young and middle-aged has dropped to
5 percent. There are currently 1,225 regular institutions of higher
learning, with 7.19 million students; 686 adult institutions of
higher learning, with 4.56 million students; and 80,400 regular
middle schools, with 79.19 million students. China is aiming to
establish an all-round, multi-level vocational and technical
education and training system by developing higher vocational and
technical schools, secondary vocational and technical schools,
secondary polytechnic schools, technical schools, employment
training centers, community-run vocational training institutions
and enterprise-run on-the-job training centers, thereby
strengthening the training of new workers, on-the-job employees and
laid-off workers. Pre-job training courses of one to three years
are offered to secondary-school graduates who have failed to gain
higher education. Technical schools and employment training centers
are being readjusted and restructured into comprehensive training
bases. A mechanism by which "the market guides training, and
training promotes employment" is being formed. The vocational
qualification credentials system is being introduced, and a
vocational qualification system has been set up covering workers at
all levels, from basic workers to senior technicians. At present,
in urban areas over 80 percent of newly employed people are
graduates of senior high schools or above, or have received job
skill training. Nearly 35 million people have obtained vocational
qualification credentials.
Developing the employment service system. Since the 1980s,
China has set up and improved the employment service system, which
includes employment agencies, employment training, unemployment
insurance and employment service enterprises. The system offers
guidance, consultancy and agency services to job seekers and
employers, offers pre-job training and vocational training courses
to seekers of employment and reemployment, and provides
unemployment insurance. The system also offers job openings to
those of the weak group in the employment field. In the meantime,
the government encourages the formation of community-run employment
agencies as a part of the multi-level employment service
network.
Making overall plans for urban and rural employment. China
has a serious problem of insufficient employment opportunities in
rural areas, where there are abundant labor resources. Attaching
great importance to the employment of the rural labor force, the
Chinese government has explored new ways for comprehensive
employment planning in urban and rural areas in line with the
urbanization and western development strategies. Two basic policies
have been worked out. The first is to encourage the rural labor
force to find work locally. Making full use of the advantages of
local resources in rural areas, the government will vigorously
readjust the structure of agriculture and that of the rural
economy; develop profitable and labor-intensive agriculture
alongside non-agricultural industries in rural areas; guide
township enterprises to develop in line with the construction of
small cities and towns; enlarge the construction scales of
infrastructure facilities such as water conservancy, communications
and transportation, and electricity in the rural areas; and promote
elementary education and vocational training in the rural areas.
The second is to guide the rural labor force to find employment in
other areas. As success in rural reform has greatly raised
agricultural productivity, the surplus agricultural labor force has
started to flow from rural to urban areas, and from western inland
to eastern coastal areas. The Chinese government guides the flow of
rural labor to different areas according to need, and, by
strengthening information network building and employment agency
services, offers pre-transfer training to rural workers and
organizes an orderly flow of the rural labor force, so as to ensure
the highest possible level of employment in this regard. The
government has also established an employment mechanism for the
two-way flow of rural workers, whereby to help the latter to find
jobs in other areas or return to their native places to start
businesses. At present, 1,000 rural labor flow and employment
monitoring stations have been set up in 100 counties and cities
around the country to analyze the flow of and demand for workers
from the countryside and regularly release information, so as to
guide the rational flow of migrant rural labor force.
Enlarging Employment Scale, Optimizing Employment
Structure
Through the common efforts of the government and all sectors of
society, total employment in China has grown remarkably. Since
1978, the number of employees in urban and rural areas has
increased by 328.73 million, of which 144.26 million are urban
employees.
The employment structure, too, has changed dramatically. In 2000,
employees in the primary, secondary and tertiary industries
accounted for 50 percent, 22.5 percent and 27.5 percent,
respectively. In recent years, the employment percentage of the
primary industry has dropped markedly, while the employment
percentages of the secondary and tertiary industries have risen
rapidly. Particularly, the growth rate of the employment percentage
of the tertiary industry has been higher than that of the secondary
industry. The employees of state and collective enterprises and
institutions accounted for 37.3 percent of the total urban
employees in 2001, down from 99.8 percent in 1978. Meanwhile, the
number of employees of private, individually owned and
foreign-invested enterprises has increased drastically. In the
countryside, the household is still the dominant unit of
agricultural employment. However, with the implementation of the
urbanization strategy and the development of non-agricultural
industries, non-agricultural employment and the transfer of rural
labor have increased rapidly. By the end of 2000, the number of
employees of township enterprises had reached 128.195 million, of
which 38.328 million were employed by township collective
enterprises, 32.525 million by township private enterprises and
57.342 million by individually owned township enterprises. Since
the 1990s, the labor force transferred from rural to urban areas
has topped the 80-million mark.
Promoting Reemployment of the Laid-off and Unemployed
With the speeding up of the economic restructuring, the
long-accumulated contradictions in the operating mechanism of
enterprises have become increasingly apparent, and large numbers of
redundant employees in enterprises have been laid off. Most of the
laid-offs from state-owned enterprises are relatively older, poorly
educated and skilled in few jobs. Therefore, it is rather difficult
for them to find reemployment. To settle the problem of the
laid-off and unemployed personnel, the Chinese government, while
guaranteeing their basic livelihood, has formulated a whole slue of
policies, complete with a variety of measures, to ease the way for
their reemployment.
Adopting active employment service measures. Reemployment
service centers have been established in all those state-owned
enterprises that have laid-off workers and staff members. After
they have registered with the centers, governmental public
employment service organs will provide them once with occupational
guidance, thrice with employment information and once with free job
training, all on a six-month basis. Beginning in 1998, the
government started to implement the first phase of the "ten million
in three years" reemployment training program, which was aimed at
training ten million laid-off jobless persons in the course of
three years. By mobilizing all the training forces in society,
employing the beneficiaries of training and other effective
measures, the government has convinced laid-off and unemployed
persons to participate in reemployment training. From 1998 to 2000,
more than 13 million laid-off and unemployed persons nationwide had
taken part in retraining, and the reemployment rate after six
months of training had reached 60 percent. The government began to
carry out the second phase of the reemployment training program in
2001. Moreover, a total of 30 cities so far have carried out a
"starting a business" training program, offering training to
laid-off and unemployed persons who wish to establish small
businesses, helping them register with the industrial and
commercial administration authorities and acquire small loans after
the completion of training, thereby to increase their reemployment
opportunities through the establishment of small businesses.
Improving and implementing preferential reemployment
policies. By simplifying the procedures of registration with
industrial and commercial administration authorities, arranging
business premises, reducing or waiving taxes and fees, and granting
loans, the government helps laid-off and unemployed people set up
economic entities or labor organizations to support themselves,
seek reemployment or otherwise to find their own means of
livelihood. Taking employment in community services as the main
orientation of the reemployment efforts, the government has spared
no pains to develop those small enterprises and employment service
enterprises that can provide more employment opportunities.
Unfolding the "Reemployment Assistance Action." To
appropriately resolve the practical difficulties laid-off employees
face after they leave reemployment service centers, the government
has organized a "Reemployment Assistance Action" drive to extend
prompt and effective service to guarantee their basic livelihood,
reemployment and social insurance through various assistance
measures.
From 1998 to 2001, over 25.5 million people were laid off from
state enterprises, of whom over 16.8 million have been
reemployed.
Guaranteeing Women's Right to Employment
Special concern has been given to the employment of women in China.
The Constitution of the People's Republic of China, Labor Law of
the People's Republic of China, and Law of the People's Republic of
China on the Protection of the Rights and Interests of Women all
contain special provisions on the protection of women's right to
employment. The state protects the right of women to work on equal
terms with men, applies the principle of equal pay for equal work
to men and women alike, and gives special protection to women
during the menstrual period, pregnancy, maternity and
breastfeeding. The Chinese government and all sectors of society
energetically conduct job skill training for women, develop and
expand the fields and trades suitable for women to work in, and
adopts more flexible forms of employment, so as to provide
employment opportunities for women to meet their different
requirements.
Helping the Disabled and Other Special Groups to Find
Work
The Chinese government attaches great importance to the rights of
the disabled to social labor and employment. China adopts the
principles of combining centralization and decentralization and
encouraging seeking employment on one's own initiative to help the
disabled find work. Welfare enterprises are an important form of
centralized employment for the disabled. The government grants
preferential policies, such as reducing and waiving taxation, to
encourage the development of welfare enterprises, so as to increase
employment for the disabled. Meanwhile, the government requires all
enterprises and institutions to hire a certain proportion of
disabled persons, and those which fail to do so must pay a certain
amount of money to the employment guarantee fund for the disabled.
In the five years of 1996-2000, more than 1.1 million disabled
persons were given skill training, and another 1.1 million found
jobs, on the strength of government allocations and the employment
guarantee fund for the disabled, and the employment rate of the
disabled jumped from 70 percent to 80.7 percent.
In
addition, the government has established an employment service
system for badly-off jobless urban residents, and for older
laid-off and unemployed persons. It seeks to arrange jobs for
destitute persons by providing funds to support community
welfare-type employment organizations, developing community
environmental protection, hygiene, security and other services, and
providing free employment services. All these measures have
achieved the desired effects.
II. Formation of New Labor Relations
In
the course of establishing and improving the socialist market
economy system, labor relations in China have become increasingly
complicated and diversified. China commits itself to the
maintenance of harmonious and stable labor relations. It has formed
an initial system of laws and regulations, with the Labor Law of
the People's Republic of China as the main body, to adjust labor
relations, and has established the labor contract and group
contract systems, tripartite coordination mechanism, labor standard
system, labor dispute handling system and labor protection
supervisory system, basically shaping up a new type of labor
relations in consonance with the socialist market economy.
Instituting a Labor Contract System
China started to try out a labor contract system in the mid-1980s,
and energetically promoted it in the 1990s. As a result, the labor
contract system is now universally implemented in urban enterprises
of every description. Chinese laws stipulate that employers and
employees shall establish labor relations in accordance with the
law, and conclude written labor contracts, with or without fixed
periods, or with a period to complete the prescribed work; during
the conclusion of the labor contract, the two parties to the
contract must abide by the principles of equality, voluntariness
and reaching unanimity through consultation. The labor contract
system clarifies the rights and obligations of the employers and
employees, and safeguards the employees' right to select jobs and
the employers' right to select employees.
Establishing a Group Contract System
The Chinese government encourages enterprises to continuously
strengthen the functions of the workers' congresses and trade
unions, and improve the system of employees' democratic
participation. To form a self-coordination mechanism of labor
relations in enterprises, China has trial-implemented and promoted
a group contract system through equal consultation. Chinese laws
and regulations stipulate that employees of an enterprise may
conduct equal consultation and sign group contracts with that
enterprise via trade union representatives or representatives
directly recommended by the employees themselves, with regard to
labor remuneration, working hours, rest and vacation, labor safety,
labor hygiene, insurance, welfare and other matters. Equal
consultation takes diversified forms, and group contracts have
wide-ranging contents. Signing group contracts through consultation
between the trade union and the enterprise has now been adopted by
most enterprises.
In
recent years, the group contract system has not only been
popularized in non-state enterprises, but also been gradually
carried out during the reform of state-owned enterprises. By the
end of 2001, the number of group contracts signed by enterprises
nationwide and submitted to the labor and social security
administration departments for the record had reached 270,000.
Setting Up a Tripartite Coordination Mechanism
China has made active efforts to establish a government-trade
union-enterprise tripartite coordination mechanism in conformity
with its actual conditions. In this mechanism, representatives from
government labor and social security departments at all levels,
trade unions and enterprises constitute a coordination organ to
conduct communication and consultation on major problems relating
to labor relations, and put forth suggestions on the drafting of
labor and social security regulations, major reform programs,
policies and measures concerning the interests readjustment of the
three parties.
In
August 2001, the Ministry of Labor and Social Security, All-China
Federation of Trade Unions and China Enterprise Association jointly
established the State Tripartite Conference System of Labor
Relations Coordination, and convened the first national tripartite
conference of labor relations coordination, setting a standard and
stable operating mechanism for China's labor relations
coordination. So far, a dozen provinces and municipalities,
including Beijing, Tianjin, Hebei, Shanxi and Jiangsu, and the two
cities of Shenzhen and Dalian have set up regional tripartite
coordination mechanisms for labor relations. Among them, Shanxi and
Jiangsu provinces have established such mechanisms at the
provincial, prefecture/city, and county/district levels.
Bettering the Labor Standard System
The Chinese government attaches great importance to rationally
determining, legally promulgating and timely adjusting labor
standards to guarantee the lawful rights and interests of workers
and promote economic and social development. At present, a labor
standard system is basically in place, centering on the Labor Law
of the People's Republic of China and covering areas such as
working hours, rest and vacation, wage, prohibition of the use of
child labor, special labor protection for women employees and
under-age workers, work quotas and job safety and hygiene. The
system has been adjusted and improved along with the country's
economic and social development.
To
ensure that all workers enjoy the right to work, rest and vacation,
China adopts an eight-hour-day, 40-hour-week system. When the
employing unit needs to extend working hours, they must consult
with the trade union or the workers, and generally the extension
should not surpass one hour a day, in special cases not more than
three hours a day or not more than 36 hours a month. All workers
are entitled to enjoy legal holidays and at least one day off a
week.
The state prohibits hiring people under the age of 16, and punishes
the illegal employment of child labor. The state prohibits all
employers from hiring women and minors (ages 16 to less than 18)
for tasks explicitly prohibited by state regulations. China has
formulated national, trade and local standards on job safety and
hygiene. In order to improve the management system of job safety
and hygiene, in 1999 the Chinese government promulgated related
standards, at the same time starting attestation work. So far,
China has worked out more than 200 national and trade standards on
work and personnel quotas. It has also promulgated other labor
standards, such as job classification standards and job skill
standards.
To
ensure that labor standards are scientific and rational and that
they are implemented smoothly, the government solicits suggestions
from trade unions, enterprises, specialists and scholars while
formulating, promulgating or adjusting labor standards. The Chinese
government has always maintained that labor standards must be in
sync with the country's level of economic and social development,
that they should guarantee basic human rights and promote economic
development and social progress, and on this basis should be
gradually improved. China values the experience of other countries
in formulating and implementing labor standards and, in time, will
accede to relevant international labor conventions in line with the
actual conditions of its economic and social development.
Improving the System for Handling Labor Disputes
The Chinese government holds that all labor disputes should be
handled according to law and in a timely fashion, and that the
lawful rights and interests of both parties involved should be
protected. It encourages both parties in a dispute to solve their
problems through negotiation and consultation. Chinese laws and
regulations clearly define the procedures and organs responsible
for the settlement of labor disputes. According to the regulations,
whenever a labor dispute arises between a worker and an enterprise,
either party may apply to the labor dispute mediation committee at
the enterprise for mediation. If the mediation fails or if neither
party wants mediation, then they may apply to the local labor
dispute arbitration committee for arbitration. If either party is
not satisfied with the decision of the arbitration committee, he or
she may file a lawsuit with a people's court.
By
the end of 2001 China had established 3,192 labor dispute
arbitration committees at the county-level or above, consisting of
nearly 20,000 full-time and part-time arbitrators. From August 1,
1993, when the Regulations of the People's Republic of China
Concerning the Handling of Labor Disputes in Enterprises was
promulgated, to the end of 2001, labor dispute arbitration
committees across the country officially handled 688,000 labor
disputes, which involved 2,368,000 workers. More than 90 percent of
these disputes were settled. Besides, labor dispute arbitration
committees at various levels handled 503,000 labor disputes that
did not officially file for the record with them.
Setting Up a Labor Security Supervision System
In
1993, China embarked on the establishment of a supervision system
for labor security. The Labor Law of the People's Republic of China
and Law of the People's Republic of China on Administrative
Punishment stipulates the responsibilities and work procedures of
labor security supervision organs. Labor and social security
administration departments supervise all employers to make sure
they observe labor and social security laws and regulations. They
have the right to halt any violation of these laws and regulations
and order the violator to correct it; they may also issue
disciplinary warnings or impose fines on the violator. Any
organization or individual has the right to report or file a
complaint about any act that violates labor and social security
laws or regulations. When a person concerned thinks that a labor
and social security administration department has violated his or
her legitimate rights in the course of supervision and execution of
the laws, he or she may initiate an administrative review or bring
an administrative suit.
According to the principle of promoting law-based administration
and enforcing laws strictly, labor and social security
administration departments at all levels have constantly
strengthened their law enforcement and established or improved
labor security supervision organizations. By the end of 2001, China
had set up 3,174 labor security supervision organs, with 40,000
labor security supervisors.
Reforming the Wage and Income Distribution System
The Chinese government adheres to a diversified distribution system
with distribution according to work as the main form. The principle
is to give priority to efficiency with due consideration to
fairness. Reforms are being made to the wage system so that market
mechanism can play its regulatory role in the distribution of
income and that workers' incomes can increase as the economy
develops and enterprises' economic returns increase. The Labor Law
of the People's Republic of China, Regulations on Minimum Wages in
Enterprises and Provisional Regulations on Wage Payments contain
clear-cut provisions on standardizing the distribution of wages.
The Chinese government formulates minimum wage standards according
to law and makes timely adjustments to them, standardizes wage
payment methods, and regularly issues information regarding wage
guidelines, guidance wage levels for the labor market, and labor
costs. It encourages enterprises to trial-implement the system of
collective wage negotiation and guides them to adopt diverse wage
systems and distribution forms. While safeguarding enterprises'
right to independent decision-making in the matter of wage
distribution, the government also guarantees workers' right to
receive the remuneration for their work according to law. At
present, a minimum wage system has been basically established
across the country, and more than 10,000 enterprises have started
to experiment with pilot wage schemes through collective
negotiations. Twenty-six provinces, autonomous regions and
municipalities directly under the Central Government regularly
release wage guidelines, and 88 cities publicize guidance wage
levels for the labor market.
Since China adopted the reform and opening-up policy in late 1978,
the national economy has developed rapidly, and the wages of urban
employees have kept increasing. By the end of 2001, their annual
per-capita money wages had reached 10,870 yuan, 16.3 times the
figure for 1978. After allowing for inflation, the average annual
increase rate was 5.5 percent in real terms.
III. The Establishment of a Social Security
System
In
order to promote economic development and social stability, and to
gradually raise the living standards and social security benefits
of the general public, the Chinese government has made every effort
to establish a sound social security system that corresponds with
the socialist market economy system. After years of exploration and
practice, a social security system has been basically set up,
consisting mainly of social insurance, social relief, social
welfare, social mutual help and special care for disabled
ex-servicemen and family members of revolutionary martyrs, and
featuring the raising of funds through various channels and the
gradual socialization of management and services.
Reforming the Social Security System
Since the early 1980s, the Chinese government has carried out a
sequence of reforms in its social security system with the goal of
establishing a standardized social security system independent of
enterprises and institutions, funded from various channels, and
with socialized management and services a system characterized
mainly by basic security, wide coverage, multiple levels and steady
unification. Under this mandatory state basic security, people's
basic living needs will be met corresponding with China's economic
development level, and the social security network will cover all
citizens step by step. Besides basic security, the state will
actively promote other types of social security so as to form a
multi-level social security system. Through reform and development,
a nationally unified social security system will be put into
practice step by step. Through more than a decade's efforts, basic
social insurance policies have been formulated, and successively
promulgated and implemented, covering the vast majority of urban
staff and retirees, and in some regions even rural people working
in cities are included. A social security system that guarantees
urbanites a minimum standard of living has been established across
China. In 2001, the Chinese government began a pilot program in
Liaoning Province, aimed at improving the existing social security
system in cities.
Since the mid-1990s, the Chinese government has undertaken reforms
to the social security management system in order to bring all
social security systems under unified planning, and better manage
and supervise the use of social security funds. Social insurance,
which was previously governed by a number of administrative
departments, is now under the centralized management of the labor
and social security administration departments. Labor and social
security administration departments at all levels have established
offices to handle the daily routine of social insurance. The
handling of social insurance affairs that used to be the
responsibility of enterprises are gradually being transferred to
social organizations, namely beneficiaries now get their social
insurance benefits from organizations in their own communities and
are subjected to the latter's administration. The Chinese
government has strengthened administrative and social supervision
over social insurance funds. These funds have been orbited into
special accounts and a system has been set up, whereby revenue and
expenditure are managed separately and the funds are used for
specified purposes only. Labor and social security administration
departments at all levels have established supervisory organs to
examine and supervise the collection, management and payment of
social insurance funds. They also investigate and punish those who
violate the pertinent laws and regulations. In addition, the
Chinese government has adopted a large body of measures to increase
the sources of social security funds, such as strengthening the
collection of social security funds and raising the ratio of such
funds in the overall financial expenditure. In 2001, the central
finance allocated 98.2 billion yuan to be used for social security
payments, 5.18 times the figure for 1998. The Chinese government
has established a National Social Security Fund Executive Council
specially responsible for the operation and administration of the
funds acquired from reducing state shareholding, the funds put in
by the central finance and social security funds collected from
other channels. The National Social Security Fund comes from the
central finance appropriations as well as from other channels.
Since 1998, the Chinese government has adopted a "two guarantees"
policy. The first is a guarantee of the basic livelihood of the
laid-off personnel from state-owned enterprises. Reemployment
service centers for those laid-offs have been established in all
state-owned enterprises. They give laid-off personnel allowances
for basic living expenses and pay social insurance premiums for
them, with the required funds coming from the government budget,
enterprises and other sources (mainly unemployment insurance
funds). They also provide job guidance and organize reemployment
training programs to help laid-off personnel find new jobs. The
second guarantee is to ensure basic livelihood for all retirees and
that they receive basic pensions in full and on time. To ensure the
implementation of the "two guarantees," the Chinese government has
put forth three corresponding policies: Laid-offs from state-owned
enterprises can receive a basic living allowance from the
reemployment service centers for a maximum of three years; if they
still haven't found a job by then, they can receive unemployment
insurance payments for a maximum of two years; at the end of the
two-year period, if they still haven't been reemployed, they can
apply for the minimum living allowance paid to urban residents. By
2001, the vast majority of people laid off by state-owned
enterprises were receiving a basic living allowance, and retired
personnel were receiving their pensions in full and on time. Thus
the "two guarantees" policy has played a major role in safeguarding
the legitimate rights and interests of laid-off and retired
personnel, and in maintaining social stability.
The Old-Age Insurance System
Reform of the old-age insurance system was initiated throughout
China in 1984. In 1997, the Chinese government adopted a Decision
on Establishing a Uniform Basic Old-Age Insurance System for
Enterprise Employees, in light of which efforts were started along
this line in urban areas nationwide.
The basic Chinese old-age insurance system combines mutual
assistance programs with personal accounts. Employees of all urban
enterprises may participate in the basic old-age insurance program,
and all enterprises and employees in towns and cities have the
obligation to pay the basic old-age insurance premiums. At present,
about 20 percent of the enterprise wage bill and 8 percent of
personal wage should go to such insurance. Part of the basic
insurance premiums from enterprises is used to set up mutual
assistance funds, and the rest goes to personal accounts. The basic
old-age insurance premiums paid by the individuals go entirely to
their personal accounts. The basic old-age pension is in two parts:
the base pension and the pension in personal accounts. The base
pension is covered by the mutual assistance funds, the monthly sum
amounting to 20 percent of the average social wage of the employees
and the monthly pension in personal accounts come to 1/120 of the
accumulated amount in personal accounts. Pensions in personal
accounts can be inherited. Those who started working before, and
retired after, the implementation of this new system are entitled
to an additional pension for the transitional period.
Employees participating in the old-age insurance program increased
from 86.71 million in late 1997 to 108.02 million by the end of
2001, after several years of implementation of the program. The
number of those enjoying basic old-age pension also increased from
25.33 million to 33.81 million, with the average monthly basic
pension per person growing from 430 yuan to 556 yuan. To ensure the
timely and full payment of the pension, the Chinese government in
recent years has tried to raise the basic old-age insurance fund
under the mutual assistance program gradually to the provincial
level, coupled with a steady increase of the financial input in
that direction. From 1998 to 2001, the subsidy outlay for this from
the central finance alone attained the grand total of 86.1 billion
yuan. Now basic old-age pensions are mostly delivered through
social service institutions, such as banks and post offices. In
2001, 98 percent of these pensions were delivered in this way. The
existing old-age security system for employees and retirees from
government institutions remain unchanged.
In
1991, China began to try out the old-age insurance system in some
of the rural areas. The basic principle for the rural old-age
insurance system is that the premiums are to be paid mainly by the
beneficiaries themselves, supplemented by collectively pooled
subsidy and supported by government policies, the accumulation of
funds taking the form of personal accounts.
The Medical Insurance System
In
1988, the Chinese government began to reform the free medicare
system in government institutions and the labor protection medicare
system in state-owned enterprises. In 1998, the government issued
the Decision on Establishing the Basic Medical Insurance System for
Urban Employees, enforcing a basic medical insurance system for
urban employees throughout the country.
China's basic medical insurance system also combines social mutual
assistance programs with personal accounts. In principle, the basic
medical insurance funds come in the form of mutual assistance
programs at prefectural and city levels. The basic medical
insurance covers all urban employers and employees, and all
enterprises, state administrative departments, institutions and
other organizations and their staff members and workers have the
obligation to pay the basic medical insurance premiums. At present,
about 6 percent of the wage bill of employing units and 2 percent
of personal wages should be paid as part of the medical insurance
premiums. Part of the insurance premiums from employing units goes
to the funds under the mutual assistance program, and the rest to
the employees' personal accounts. The personal insurance premiums
go entirely to personal accounts. The mutual assistance funds and
personal accounts are used to pay for different types of medical
costs: The former mainly for hospitalization and outpatient
services in the case of certain chronic diseases, with a set
starting standard and a maximum norm, and the latter mainly for
general outpatient services.
To
ensure that employees covered by the insurance program enjoy basic
medical service and the service charges do not increase too
rapidly, the Chinese government has strengthened its administration
of medical services by specifying a list of medicines, medicare
service items and standards of medicare facilities to be covered by
basic medical insurance and evaluating the qualifications of the
medical institutions and pharmacies that provide basic medical
insurance service, and allowing those who participate in the
program the right to make their own choices. To support the reform
of the basic medical insurance system, the government has also
initiated a reform of the medical institutions and the medicine
production and circulation system. A mechanism of competition
between medical institutions and a market operating mechanism for
medicine production and circulation have also been set up for
"better medical service at lower cost."
Apart from the basic medical insurance, a system of mutual help in
the case of large-amount medical costs has been set up throughout
the country to cover medical costs in excess of the maximum
coverage under the mutual assistance program. The state has also
set up a medical subsidy program for civil servants. Enterprises
are encouraged to set up enterprise supplementary medical insurance
for their employees, where conditions permit. The state will also,
step by step, institute a social medicare assistance system to
provide basic medical security for the impoverished population.
The reform of the basic medical insurance system is being carried
out steadily in China, with a continued increase in the coverage of
basic medical insurance. By the end of 2001, 97 percent of
prefectures and cities had started such reform programs, and 76.29
million employees had participated in basic medical insurance
programs. In addition, free medical service and other forms of
medicare security systems cover over 100 million urbanites. The
Chinese government is now working to incorporate these people
gradually in the basic medical insurance system.
The Unemployment Insurance System
Shortly after the founding of the People's Republic of China in
1949, an unemployment relief system was introduced for a short
period of time. Later, with the institution of the employment
system featuring unified job assignment under the planned economy
system, the relief system had gradually gone out of the picture.
Following the adoption of the reform and opening-up policy the
Chinese government began to set up an unemployment insurance system
in 1986 to adapt to the changes in the operating mechanism of
state-owned enterprises and the major reform of the labor system,
so as to guarantee basic livelihood for laid-off employees.
In
1999, the Chinese government issued the Regulations on Unemployment
Insurance, pushing the unemployment insurance system building onto
a new stage of development. This system covers all urban
enterprises and institutions and their staff, whereby all
enterprises and institutions and their staff must pay the insurance
premiums, the former paying 2 percent of their wage bill and the
latter 1 percent of their personal wages. Three conditions are to
be met to enjoy the benefits of the unemployment insurance: One
full year of the insurance premium has been paid; suspension of
employment is not voluntary; and unemployment has been registered
and application for reemployment filed. Unemployment insurance
benefits consist mainly of unemployment insurance money, which the
beneficiary can draw every month, with the standard lower than the
minimum wage but higher than the minimum living allowance for urban
residents. The period for drawing insurance money depends on the
length of period for which one has paid the premiums, the maximum
being 24 months. If the employed person is ill during the period he
or she is entitled to draw unemployment insurance money, he or she
is also entitled to medical subsidies. If the unemployed person
dies during this period, his or her family can receive funeral
subsidies and his or her dependants can receive pension for the
deceased. In addition, the unemployed person may receive vocational
training and subsidies for job agency services when drawing the
unemployment insurance money.
In
recent years, the coverage of unemployment insurance has grown
continuously, with the number of the insurance policy underwriters
increasing from 79.28 million in 1998 to 103.55 million in 2001.
The number of people who did not draw unemployment insurance money
was 3.12 million in 2001. With the improvement of the unemployment
insurance system, the basic livelihood guarantee system for
laid-offs from state-owned enterprises is being gradually orbited
into this system.
The Industrial Injury Insurance System
In
the late 1980s, the Chinese government began its reform of
insurance covering injuries suffered on the job. In 1996, the
government issued the Trial Procedures for Industrial Injury
Insurance for Enterprise Employees, to be followed by the
establishment of relevant systems in some of the regions. In the
same year, the Standards for Appraising Industrial Injuries and
Disabilities Caused by Occupational Diseases was adopted by the
government department concerned, providing the basis for such
appraisal.
The Trial Procedures for Industrial Injury Insurance for Enterprise
Employees states that industrial injury insurance premiums shall be
paid by enterprises instead of by employees themselves. The rate of
industrial injury insurance premium varies according to different
trades, and it may fluctuate with the situation of the individual
enterprise. The rate of premiums is determined on the basis of the
level of industrial injury risks and that of occupational danger in
different trades. Based on the trade insurance rates, the specific
premium rate of the year for an enterprise is decided according to
its actual number of industrial injuries and risks and the outlays
of the insurance funds in the previous year.
Payment of industrial injury insurance funds covers mainly medical
costs sustained during the treatment of the injury, and the injury
or disability subsidies, pension for the disabled person or family
of a deceased person, and injury or disability nursing charge, all
of which are to be determined according to the degree of disability
upon termination of the medical treatment. By the end of 2001, the
national average rate of industrial injury insurance premium was
about 1 percent, with over 43.45 million employees covered by the
industrial injury insurance scheme. Enterprises not having acceded
to such scheme are responsible for covering the industrial injury
expenses themselves.
The Childbirth Insurance System
Reform of the childbirth insurance system started in some
enterprises in China in 1988. Based on a summing-up of the
experience gained, the Chinese government mapped out the Trial
Procedures for Childbirth Insurance for Enterprise Employees in
1994, which stipulates that the childbirth insurance premiums shall
be paid by enterprises instead of by employees themselves. The
insurance benefits cover mainly medical treatment for childbirth
and monthly childbirth allowance for employees during maternity
leave. By the end of 2001, the national average childbirth
insurance expense rate was 0.7 percent, with 34.55 million
employees covered by the insurance scheme. Enterprises not having
acceded to such scheme are responsible for paying the childbirth
expenses for their employees.
The Minimum Living Standard Security System
In
the early years after the founding of the People's Republic of
China, the government set up a social relief system for the urban
and rural poor. In 1993, it began to reform the social relief
system in cities, at the same time seeking to try out a minimum
living standard security system. In 1999, this security system was
established in all cities and organic county towns throughout the
country. In the same year, the Chinese government officially
promulgated the Regulations on Guaranteeing Urban Residents'
Minimum Standard of Living to ensure the basic livelihood of all
urban residents.
Funds for this purpose are included in the fiscal budgets of the
local people's governments, which determine the minimum living
standard according to the cost necessary for maintaining the basic
livelihood of the local urbanites. Urban residents whose average
family income is lower than the minimum living standard can apply
for the minimum living allowance. Investigation of the family's
income shall be conducted before issuance of the minimum living
allowance, the level of which is calculated in terms of the
difference between the family per-capita income and the minimum
living standard.
In
2001, there were 11.707 million urban residents nationwide drawing
the minimum living allowance, with 2.301 billion yuan for the
minimum living allowance coming from the central finance. In recent
years, part of the rural areas has started to set up a similar
minimum living standard security system.
The Social Welfare System
The social welfare system is a system established by the Chinese
government to provide funds to ensure the livelihood of senior
citizens, orphans and the handicapped persons who are in
extraordinarily straitened circumstances. To protect the rights and
interests of this special group of people, the government issued
the Law of the People's Republic of China Guaranteeing the Rights
and Interests of Senior Citizens, Law of the People's Republic of
China on Protection of the Handicapped and Regulations Concerning
Work on Providing "Five Guarantees" in the Rural Areas. The laws
stipulate that in cities elderly widows and widowers who are
childless and helpless and living alone, and eligible handicapped
persons and orphans shall be supported and reside in special
concentrated homes, while a combination of concentrated and
scattered forms shall apply to those in the rural areas.
Concentrated establishments include social welfare homes, old-age
homes, sanatoriums, and children's welfare homes. For handicapped
persons, government aid efforts include the formulation of
preferential policies for establishing social welfare enterprises
of diverse types to help create job opportunities for those who are
able to work.
China has achieved marked progress in its social welfare work. By
the end of 2001, there were 3,327 government-run social welfare
institutions with 191,000 inmates, 35,000 collective-run social
welfare institutions with 668,000 inmates, 934 private-run social
welfare institutions with 34,000 inmates, and 38,000 social welfare
enterprises employing 699,000 handicapped people. Meanwhile,
special lotteries have been instituted to collect funds for social
welfare undertakings. In 2001 alone, the funds raised for these
undertakings reached 4.2 billion yuan.
The Special Care and Placement System
This refers to the system aimed at compensating or commending the
special group of people who have rendered meritorious services to
the state and society. At present, more than 38 million people are
included in this category. To ensure their rights and interests,
the government has issued the Regulations on Honoring Revolutionary
Martyrs, Regulations on Special Care and Treatment for Servicemen
and Regulations on the Resettlement of Ex-Servicemen in Cities and
Towns. These regulations stipulate that a regular and fixed-amount
subsidy shall be given to the key recipients, such as dependents of
fallen servicemen, disabled revolutionary servicemen and demobbed
veterans, that dependents of conscripts be granted special
allowances; that medical costs be reduced or waived for disabled
revolutionary servicemen and other key special-care recipients;
that demobbed soldiers shall enjoy a just-for-once job assignment
from the government and those who wish to find jobs on their own be
given subsidy in one lump sum. Special-care allowances to the tune
of 29.2 billion yuan were allocated from state budgets at all
levels from 1996 to 2001.
The Natural Disaster Relief System
China frequently suffers the ravages of natural disasters, such as
floods, droughts, windstorms and hailstorms, which have adversely
affected people's lives. The Chinese government has set up a
special social relief system to relieve the sufferings of victims
of unexpected natural calamities. Every year, relief funds are
allocated from government budgets at central and local levels for
this purpose. From 1996 to 2001, such expenditures reached 21.26
billion yuan-worth nationwide, providing food, clothing and quilts
for 390 million disaster victims. This disaster relief system has
gone a long way toward guaranteeing the basic livelihood of the
people in the disaster-stricken areas.
The Social Mutual Help System
Mutual help among neighbors is one of the Chinese nation's fine
traditions. Issued in 2000, the Law of the People's Republic of
China on Public Welfare Donations institutionalizes and encourages
regular donations for social welfare. In 2001, civil affairs
departments received 1.59 billion yuan of donations from the
general public (including goods converted into money). The Chinese
government also encourages enterprises, institutions and mass
organizations to organize efforts to help the poor shake off
poverty and get rich. Governments at the grassroots levels also
operate community services for the poor and needy. Since 1994,
trade unions at all levels have organized "heart-warming
activities" every year to offer help to badly-off families. Over
the past few years, a total of 10.44 billion yuan for this purpose
have been raised and sympathy visits paid to families of 39.75
million poverty-stricken employees, model workers, retirees, and
injured, sick or disabled employees.
IV. Development in the Early Period of the
21st Century
With the implementation of the Tenth Five-Year Plan, for National
Economic and Social Development (2001-2005) in 2001, China's labor
and social security buildup has entered a new phase of development.
During the early stage of the new century, these efforts face both
problems to be solved and new opportunities for development. The
overall progress of the reform and opening-up and modernization
drive has created favorable conditions for solving the problems of
employment and social security. The further growth of the national
economy and the increase of economic strength have provided a firm
material foundation for the enlargement of employment and the
improvement of social security. The market-oriented employment
mechanism and social security system now basically in place across
China have already laid a good foundation for further promotion of
the labor and social security undertakings. At the same time, the
Chinese government is also fully aware that the employment problem
in both the rural and urban areas will remain sharp, and structural
unemployment will become more serious for a long time to come.
Labor relations are expected to become more complicated, the aging
of the population and the increase of unemployment will put more
pressure on social security, and promotion of social security in
rural areas will still have a long way to go.
Targets and Tasks
The targets for labor and social security development in the early
part of this century are as follows: initially forming a
comparatively complete labor and social security system
corresponding to the development level of China's productive forces
and meeting the requirements of the socialist market economy;
ensuring well-nigh full employment and basic social security for
the majority of workers; safeguarding the legal rights and
interests of both employees and employers; enhancing the material
and cultural wellbeing of rural and urban residents; and promoting
economic development and social stability. The main tasks are to
gradually improve the quality of workers and the employment
structure, initially form a market-oriented employment mechanism,
strive to promote employment, standardize and improve the
statistics on unemployment rate, and control the registered rural
and urban unemployment rate to within 5 percent; actively adjust
labor relations and keep them harmonious and stable; improve the
macro regulation and control system of income distribution, work
out a rational income distribution relationship, and achieve an
approximately 5 percent annual increase in both the per capita
disposable income of urban residents and the net per capita income
of rural residents; speed up the development of the urban social
security system, improve the methods and operating mechanism of
fund raising, and promote the socialization of social security
management and services; with farmers' old-age security and health
security of multiple forms as the guide, actively explore in rural
areas a basic security system suited to the socialist market
economy system and the country's economic development level and set
up a system to help the weak group in society to take care of their
own life and work.
Policies and Measures
- Carry out an active policy for promoting employment and do
everything possible to enlarge the scale of employment. Rapid
economic growth shall be maintained, domestic demands shall be
expanded, and new employment opportunities created to the full, so
as to increase total employment. The employment structure for labor
force should be improved, and great efforts made to develop
labor-intensive industries and enterprises. Tertiary industry,
small and medium-sized enterprises and the non-public sectors of
the economy shall be taken as the main channels for the enlargement
of employment. Preferential policies shall be further carried out
so as to help laid-off and jobless people to find
reemployment.
- Establish a unified and standardized labor market, make a
unified plan for rural and urban employment, and ameliorate the
employment service system. The reform of the labor personnel system
and the household registration system shall be deepened, and
efforts made to guide the orderly flow of the labor force between
urban and rural areas or between regions so as to promote the
transfer of surplus agricultural labor. The service of public job
agencies shall be improved and community-run job agencies
encouraged to develop along healthy lines.
- Improve the quality of workers in an all-round way and adopt
flexible forms of employment. The labor reserve system and
employment permit system shall be carried out. Vocational
education, continuing education and reemployment training shall be
strengthened, and the professional qualification certification
system enforced. More attention shall be paid to job skill training
for rural workers, and a sound job training system established and
improved in rural areas step by step. Flexible forms of employment
shall be adopted, and finding employment on one's own
encouraged.
- Consolidate and improve the labor contract system, make great
efforts to carry forward the group contract system and promote the
establishment of a tripartite coordination mechanism for labor
relations. Active efforts shall be made to formulate and revise the
state's basic labor standards, and a labor standard system suitable
to China's actual conditions be perfected. The system of handling
labor disputes shall be further improved, gradually enhancing the
comprehensive ability to prevent and handle labor disputes.
- Promote the reform of the wage and income distribution system
and establish an incentive and restraining mechanism for income
distribution. The minimum wage system shall be improved and the
wage guidelines and the guidance price level system for the labor
market be enforced across-the-board. Efforts shall be made to
continue the experiments in the collective wage consultation
system, standardize the payment of wages and guarantee the legal
rights and interests of employees with respect to their work
remuneration.
- Deepen the reform of the social security system, speed up the
building of the social security system and actively implement the
pilot program for its improvement. For this, we need to establish a
reliable and stable social security fund-raising mechanism,
restructure financial expenditure, increase necessary input and the
amount of social security funds, and rationally adjust the payment
rate and substitution level, and improve the operational efficiency
of social security funds and the efficiency rate of investment. The
social security macro-regulation and supervision system shall be
bettered and its management level and efficiency raised, so as to
ensure the stable, healthy and orderly operation of the social
security system.
- Improve the basic old-age insurance and basic medical insurance
systems and encourage employing units, where conditions are
favorable, to set up annuity and supplementary medical insurance
programs for their employees. Further steps shall be taken to
improve the unemployment insurance system and make the basic
livelihood guarantee system for laid-off personnel from state-owned
enterprises part of the unemployment insurance scheme. Development
of the industrial injury and childbirth insurance systems shall be
accelerated. The basic old-age pension insurance system for
employees of state organs and institutions shall be improved. The
system for ensuring a minimum standard of living for urban
residents shall be standardized. We shall accelerate community
building and promote the socialization of social security. We shall
explore diverse forms of security and push forward the building of
the basic security system in the rural areas. We need to improve
our policies concerning social relief, social mutual aid, the
special care and placement system and social welfare, and safeguard
the legal rights and interests of women, minors, the elderly and
the handicapped.
- Establish a supervision and management system concerning social
security funds through a combination of administrative supervision,
social supervision and internal institutional control. While
establishing and improving the social security system, we shall
explore the right path for investment management and establish a
fund supervision and management system coordinative with the fund
management system in accordance with the fund management principles
of different security projects. We shall work hard to guarantee or
increase the value of the social security funds and resolve the
operational risks of the security funds, so as to safeguard social
safety and stability.
- Press ahead with the legal system building in the labor and
social security fields, improve the labor and social security
supervision system, steadily enhance the overall quality of
supervision and law-enforcement personnel, carry out supervision
activities of diverse forms, and push forward the organic
integration of labor security supervision and law-enforcement
departments with all social sectors in implementing legal
supervision. We shall strengthen the building of the labor security
management information system and the popularization of the
scientific findings in this aspect so as to improve the scientific,
standardized, institutionalized and IT management of the labor and
social security undertakings. China will continue to actively
participate in international activities in the fields of labor and
social security, and expand cooperation and exchange with other
countries, so as to continue to play its promotional role in
international labor affairs. We will adapt ourselves to the new
situation arising from our WTO entry, and work hard consistently to
carry our labor and social security cause further forward.
(china.org.cn, April 29, 2002)