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Monday 1 December 2008
Laid-off Migrant Workers Test China’s Fragile Social Security System
A wave of unemployment among migrant workers, triggered by the closure of many of China’s financially straitened factories, is testing the country’s fragile social security system.
Laid-off Migrant Workers Test China’s Fragile Social Security System
Niu Zhijing, Shanghai 1 December 2008
A wave of unemployment among migrant workers, triggered by the closure of many of China’s financially straitened factories, is testing the country’s fragile social security system.
In the past 30 years, a host of farmers who have lost or given up on their rural livelihoods have swarmed into the cities of eastern and coastal areas, forming much of the workforce of “made in China.” Now, with factories closing and no guarantee of social services, many of these workers are migrating back to their home regions in the interior.
A Ministry of Human Resources and Social Security (MHRSS) official reported that since the beginning of October this year, there have been three major changes in China’s employment picture: a decline in the new jobs growth rate in urban areas, a demand decline for employment in companies, and a serious shedding of existing positions in businesses.
The average monthly growth rate of new jobs in urban areas in the first 9 months was 9%. From October, growth is 8%, the first decline in recent years.
Also, according to MHRSS data on the labor market supply and demand in 84 cities, employment since the third quarter has declined by 5.5 percent, also the first decline in recent years.
Thirdly, based on MHRSS observation, there are losses of jobs among half of the enterprises surveyed and new jobs are not making up the number of those lost.
In recent times, vast numbers of peasants have swarmed into the cities. An estimated 180 million of them account for the big majority of China’s low-end factory jobs, and are the main reason for China’s low labor costs. The average annual income of Chinese migrant workers in 2004 was around 8,000 yuan, while that of resident workers in cities and towns was around 15,000 yuan.
These migrant workers for the most part lack any basic government-provided social net, and get little or no social security funds. Statistics from Sichuan Province, which is China’s largest exporter of migrant workers, show that among migrant workers working in enterprises above the county level, only 3.41% have industrial injury insurance, 0.84% are covered by medical insurance, 0.83% receive unemployment insurance, and 2.99% provided with pension payments. In eastern provinces with more developed economies, the numbers may be higher, but not much.
And those who do receive pension or medical benefits find it very difficult to bring them home because cross-province transfer of social security is not yet available in China. Migrant workers, who are among the poorest in the population, must only rely on their own accumulated funds rather than social security.
Some provinces have been trying to implement cross-province social security transfer, but so far there is no effective means as there is no unified social security standard nationwide. Well-off provinces tend to be concerned that social security funds will be transferred to other less prosperous provinces and will not agree to full transference.
It is not clear how many migrants have lost their jobs because of the financial crisis, but it is clear that a large number of migrant workers are preparing to go home or have left. Usually the migration home occurs in February or March for Spring Festival (Chun Jie), China’s major new year’s holiday and a traditional time for the homeward journey, but this year many are leaving months ahead of schedule.
The Chinese government is considering expanding the use of unemployment insurance funds that have been accumulating for the past few years, in order to promote changes in employment form. New policies would include: suspension of unemployment insurance payments for firms in difficulty; providing grants for unemployed workers to receive retraining and job-transfers; encouragement of companies to increase post rotation instead of layoffs;, and, providing wage subsidies or grants through social insurance funds.
1 comment:
Laid-off Migrant Workers Test China’s Fragile Social Security System
Niu Zhijing, Shanghai
1 December 2008
A wave of unemployment among migrant workers, triggered by the closure of many of China’s financially straitened factories, is testing the country’s fragile social security system.
In the past 30 years, a host of farmers who have lost or given up on their rural livelihoods have swarmed into the cities of eastern and coastal areas, forming much of the workforce of “made in China.” Now, with factories closing and no guarantee of social services, many of these workers are migrating back to their home regions in the interior.
A Ministry of Human Resources and Social Security (MHRSS) official reported that since the beginning of October this year, there have been three major changes in China’s employment picture: a decline in the new jobs growth rate in urban areas, a demand decline for employment in companies, and a serious shedding of existing positions in businesses.
The average monthly growth rate of new jobs in urban areas in the first 9 months was 9%. From October, growth is 8%, the first decline in recent years.
Also, according to MHRSS data on the labor market supply and demand in 84 cities, employment since the third quarter has declined by 5.5 percent, also the first decline in recent years.
Thirdly, based on MHRSS observation, there are losses of jobs among half of the enterprises surveyed and new jobs are not making up the number of those lost.
In recent times, vast numbers of peasants have swarmed into the cities. An estimated 180 million of them account for the big majority of China’s low-end factory jobs, and are the main reason for China’s low labor costs. The average annual income of Chinese migrant workers in 2004 was around 8,000 yuan, while that of resident workers in cities and towns was around 15,000 yuan.
These migrant workers for the most part lack any basic government-provided social net, and get little or no social security funds. Statistics from Sichuan Province, which is China’s largest exporter of migrant workers, show that among migrant workers working in enterprises above the county level, only 3.41% have industrial injury insurance, 0.84% are covered by medical insurance, 0.83% receive unemployment insurance, and 2.99% provided with pension payments. In eastern provinces with more developed economies, the numbers may be higher, but not much.
And those who do receive pension or medical benefits find it very difficult to bring them home because cross-province transfer of social security is not yet available in China. Migrant workers, who are among the poorest in the population, must only rely on their own accumulated funds rather than social security.
Some provinces have been trying to implement cross-province social security transfer, but so far there is no effective means as there is no unified social security standard nationwide. Well-off provinces tend to be concerned that social security funds will be transferred to other less prosperous provinces and will not agree to full transference.
It is not clear how many migrants have lost their jobs because of the financial crisis, but it is clear that a large number of migrant workers are preparing to go home or have left. Usually the migration home occurs in February or March for Spring Festival (Chun Jie), China’s major new year’s holiday and a traditional time for the homeward journey, but this year many are leaving months ahead of schedule.
The Chinese government is considering expanding the use of unemployment insurance funds that have been accumulating for the past few years, in order to promote changes in employment form. New policies would include: suspension of unemployment insurance payments for firms in difficulty; providing grants for unemployed workers to receive retraining and job-transfers; encouragement of companies to increase post rotation instead of layoffs;, and, providing wage subsidies or grants through social insurance funds.
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