China Establishes Urban Subsistence Security System

China Establishes Urban Subsistence Security System

Ministry of Civil Affairs

3 April 2000

I. China institutes a subsistence security system for urban residents in a major reform of its traditional social relief system

The urban subsistence security system is a new type of social relief system under which the government grants allowances to people living in poverty in accordance with the subsistence security standard. It is an important part of our modern social insurance system and represents a major reform of China's traditional social relief system.

The traditional social relief system, formed in the 1950s and 1960s under the planned economy, was mainly designed to provide a fixed amount of relief on a regular basis and temporary relief for solitary senior citizens in urban areas who have no ability to work, no source of income, and no legal supporters to provide for their lives (or "three-no people" in short), as well as families with financial difficulties, laid-off workers in the 1960s and people entitled to special allowances in line with the relevant government regulations. Each year the number of regular urban relief recipients ranged from 600,000 to 800,000, while that of temporary relief recipients exceeded two million person-times. Over the past decades the social relief work has so evolved that an operating system is in place, which has played a positive part in guaranteeing the subsistence rights and interests of the weak in society and promoting social stability and development. However, with the deepening of reform and opening-up and the establishment of the socialist market economy, great changes have taken place in both the size and composition of poverty-stricken population in urban areas. In the course of readjusting ownership structure, establishing a modern enterprise system and improving the pattern and mode of distribution in particular, cities have witnessed an increase in the percentage of poverty-stricken population in the employed, laid-off, unemployed and retired workers. This poses a new task to those engaged in urban social relief work. The traditional social relief system, with its limited coverage, low standard and unstandardized working system, fails to meet the demands of the socialist market economy and calls for immediate reform and improvement.

In 1993, the Shanghai municipality government introduced, with good results, a system of subsistence security guarantee for its urban residents, the first of this kind in China, in line with the local conditions and the international experience in formulating poverty lines for regulating the delivery of relief. The Ministry of Civil Affairs summarized Shanghai's experience promptly, and at the 10^th National Conference on Civil Affairs in 1994 put forward in clear-cut terms a proposal of "establishing and improving the social security system as the economic restructuring continues" and "gradually implementing the system of providing allowances for urban social relief recipients in accordance with local subsistence security standards". In September 1997, the State Council issued a Circular on Establishing Urban Subsistence Security System Nationwide (Guo Fa No. [1997] 29) requiring that all cities and towns in which the people's governments at the county level are situated set up such a system by the end of 1999 so that this work can be carried out in full swing.

By September 1999, all of the 667 such cities and 1638 such towns set up this system, fulfilling the task set by the State Council three months ahead of schedule. In the meanwhile, the Regulations on Subsistence Security for Urban Citizens of the State Council formally went into effect as of October 1, 1999, making it possible for the relevant work to be done in a standardized manner and managed in accordance with the law. At present, for the purpose of fully implementing the Regulations we are redoubling our efforts to standardize and improve the urban subsistence security system, paying special attention to guaranteeing sources of the funds, delivery of allowances to the targeted recipients and improving overall management.

II. Implementation of the urban subsistence security system

A.Recipients of the subsistence security allowances

At various localities the recipients of the subsistence security allowances are selected through a serious verification process, in an effort to ensure access to the allowances for all eligible poverty-stricken people in urban areas. In places where efforts were made mainly to guarantee such an access for the "three-no people", new documents have been handed out which include requirements on standardization. At this stage, almost all places concerned have expanded the coverage of urban subsistence security to include poverty-stricken population among the employed, unemployed, laid-off and retired workers. By the end of 1999, a total of 2.81 million urban residents received subsistence security allowances across China. In terms of the composition of the recipients, the "three-no people" accounts for one quarter of the recipients, while the employed, laid-off, unemployed and retired workers and other people living in poverty, three quarters.

B.Formulation of subsistence security standard at various localities

Subsistence security standards are set by various localities in accordance with their respective expenditures on basic daily necessities, financial sustainability and other factors. Due to the big gap among them in economic situation and consumption level, subsistence security standard of different places also differs from one another greatly. Even a single province or autonomous region does not have a uniform standard for all its cities and counties. The subsistence security standards of thirty-six major cities in China (including municipalities directly under the Central Government, capital cities of provinces and cities with separate budgets from the central finance) stand roughly as follows: Shenzhen has the highest subsistence standard of 319 RMB yuan, followed by Xiamen 315 yuan, Guangzhou 281 yuan, Shanghai 280 yuan, Beijing 273 yuan and Tianjin 241 yuan. Cities like Dalian, Haikou, Hangzhou, Ningbo, Ji'nan and Qingdao also have a standard above 200 yuan. The subsistence security standards of other cities are all below 200 yuan, of which Huhhot, Nanchang and Yinchuan are the lowest at 143 yuan. The above-mentioned figures are all the highest in their respective provinces, autonomous regions and municipalities, which by and large reflect the local economic development level and financial situation. Generally speaking, allowances will be given to cover the gap between the standard subsistence allowance and the per capita income of a household with the exception of the "three-no people" who will get a full amount of allowances set by the standards. In this way, the subsistence needs of the poverty-stricken population have been basically met. In line with the requirements of the central authorities, urban subsistence security standard was raised by 30% as of 1 July 1999. By 16 September 1999, the increase was completed in all 31 provinces, autonomous regions, municipalities directly under the Central Government and the production and construction corps in Xinjiang Autonomous Region. This policy has further improved the living standards of relief recipients.

C. Implementation of the guaranteed subsistence allowances

In accordance with the regulations of the State Council, almost all local governments have incorporated the fund for guaranteed subsistence allowances into their budget. In places where the cost used to be split between the government budget and the working units, the government budget now has taken over as the sole source of fund. According to statistics available, in 1999 a total of RMB 1.969 billion was paid in subsistence allowances from the state and local revenues, including a central government subsidy of RMB 400 million. To help their underdeveloped cities and counties to set up the system of guaranteed subsistence allowances for urban residents and ensure minimum living standards of poverty-stricken families of employees working for enterprises directly under the provincial and central governments, twenty-one provinces (autonomous regions, municipalities) have established in their budget stand-by funds ranging from RMB 3 million to RMB 30 million.

III. Major difficulties and problems involved in implementing the system of guaranteed subsistence security for urban residents

Although civil affairs departments have extended subsistence allowances to qualified employees in economic difficulty, there are still some families who do not receive subsistence allowances. The reason is that according to the notification of the State Council, only those whose per capita household income is lower than the local guaranteed minimum subsistence level after receiving salary or minimum salary from the enterprises in the case of the employed, retirement benefits in the case of retirees or basic living allowances in the case of the laid-off, are entitled to subsistence security. The subsistence security system is the "last security line" after the basic living security and unemployment insurance for layoffs from the state owned enterprises. Only when developed in a balanced fashion can the "three security lines" be more effective for addressing the difficulties facing the workers.

What's more, in some old industrial bases and places with a concentration of enterprises directly under the central government, due to the local financial strain, many people await help and huge sums of money are needed. For the time being, in some of the localities, employees working for enterprises directly under the central government are not yet covered by subsistence security. In the central and western regions, due to the sheer size of the poverty-stricken population and the funds needed as well as the strained local financial resources, it is more difficult to set up and implement the subsistence security system for urban residents. Although some of the cities and counties in those areas have already set up the system, due to their fiscal difficulties, they have yet to place all residents with per capita household income below the local security line under the subsistence security network.

IV. To implement the subsistence security system for urban residents according to law

To implement, regulate and improve the urban subsistence security system according to law, efforts should, by centering on the "Regulations on the Subsistence Security for Urban Residents", be devoted to setting up a subsistence security net that covers all urban residents in difficulty so that the system can play a greater role in protecting the basic living rights and interests of the citizens and pushing for the sustained economic and social development.

A.To accelerate the implementation, regulation and improvement of the subsistence security system for urban residents

Following the promulgation of the "Regulations on the Subsistence Security for Urban Residents", civil affairs departments at various levels are required to carefully examine the implementation of the system and focus on fund readiness and recipient verification so as to avoid fund insufficiency or cases of recipients being neglected and effectively meet people's basic living needs. At the same time, efforts have to be stepped up to enhance public awareness and implementation of the Regulations. To this end, different localities are required to formulate and modify the local methodology and rules and align them with the Regulations, strengthen field research and policy and theoretical study, address problems indicative of tendencies, summarize, share and apply widely advanced working experiences and to highlight models of excellence, correct aberrations and regularize operations.

B.To link up the subsistence security with the two preceding security lines

Civil affairs departments are required by the Notification on Linking Up the Basic Living Security and Unemployment Insurance of Layoffs of State Owned Enterprises with the Subsistence Security for Urban Residents issued by the Ministry of Labor and Social Security, Ministry of Civil Affairs and the Ministry of Finance to give play to the comprehensive role of social security and better solve the difficulties of those poverty-stricken urban population by actively linking up the three aspects prescribed in the Notification. They are also required to learn the most up-to-date developments of those poverty-stricken population among the laid-off and unemployed in their regions and to take the lead in establishing working arrangements with the local departments of labor and social security and finance for information-sharing, consultations and coordination so as to link up the above-mentioned three "security lines". With the changing situation, as urban subsistence security will be serving an increasingly larger target group, civil affairs departments should be fully prepared to work hard to establish a sound "net of last security line".

C.To ensure the subsistence security for poverty-stricken families of those working for enterprises directly under the Central Government

Given the difficulty of relegating, on a geographic basis, the subsistence security for those working for enterprises directly under the central government, it is required that relevant regions attach great importance to ensuring the subsistence security and overcome the "wait-and-rely" mentality by enhancing fiscal input, especially by earmarking budget for the subsistence security in those provinces where no budgetary provisions have been made for this purpose. The local authorities are required by the State Council to include the families in their own regions with people working for enterprises directly under the Central Government in the subsistence security program. On the other hand, research and study should be continued and effective measures and recommendations put forward to address the difficulties of regions with many such enterprises and of the old industrial bases.