The Welfare System of Universal Integration in China (Understanding China) 9811648387, 9789811648380

Table of contents :
Preface
Objective
Basic Concepts
Universal Welfare
Universal Integration
Theoretical Perspectives
Model Construction
Institutional Integration and System Integration
Theoretical Discussion
Layout of the Book
Contents
Part I Model Construction
1 The Development Path of Social Welfare—From System Cover to System Integration
1.1 System Cover: A Monument as Well as a Starting Point
1.1.1 A Turnaround Landmark Event
1.1.2 Innovative Measures to Open Up New Situation
1.1.3 A New Starting Point for the Better
1.2 Institutional Integration: An Emphasis as Well as a Key Point
1.2.1 Fragmentation: An Unreasonable Result from a Reasonable Process
1.2.2 Institutional Integration: Key to Making the System More Equitable and Sustainable and Ensuring the Smooth Transfer of Social Security Accounts Between Localities
1.2.3 Institutional Integration Requires Both Basic Conditions and Active Efforts
1.2.4 Feasible Plan for Institutional Integration—Baseline Equality
1.3 System Integration: An Idea as Well as a Policy
1.3.1 Integration of Financial Guarantee with Service Guarantee
1.3.2 Integration of Labor with Welfare
1.3.3 Integration of Education with Welfare
1.3.4 Integration of Government Transformation with Welfare
1.3.5 Integration of Neighborhood Communities with Welfare
1.4 Summary: Integration of Social Welfare System is the Base of Modern State System Integration
References
2 The Analysis of Social Welfare Model in Contemporary China
2.1 Social Transformation and Welfare System Transformation
2.1.1 Social Welfare in the Planned Economy Stage
2.1.2 Social Welfare in the Market Economy Stage
2.2 Social Welfare During Social Development Stage
2.3 The Features of Social Welfare in Contemporary China
2.3.1 Governing Philosophy Affects Social Welfare Development
2.3.2 Challenges from All Facets of Society
2.3.3 Mindset of Special Welfare Prevails
2.3.4 Government Role Shifts at Different Stages
2.3.5 Prominent Role of Families, and Limited Role of Market and Social Mechanisms
2.4 The Responsibility of the Development of China’s Social Welfare
2.4.1 Expand Universality
2.4.2 Improve Integration
References
3 The Theoretical Basis of Universally Integrated Welfare Model
3.1 The Universal Welfare Theory
3.1.1 Introduction of Universal Welfare Theory
3.1.2 Content of Universal Welfare Theory
3.1.3 Importance of Universal Welfare Theory
3.2 The Basic Integration Theory
3.2.1 Introduction of Basic Integration Theory
3.2.2 Content of Basic Integration Theory
3.2.3 Importance of Basic Integration Theory
3.3 The Baseline Equality Theory
3.3.1 Introduction of Baseline Equality Theory
3.3.2 Content of Baseline Equality Theory
3.3.3 Importance of Baseline Equality Theory
3.4 The Appropriate All-Inclusive Idea and Shared-by-All Idea
3.4.1 Appropriate All-Inclusive Thinking
3.4.2 Shared-by-All Idea
References
4 The Basic Features of Universally Integrated Welfare Model
4.1 The Universality of Social Welfare System
4.1.1 Universality of Social Welfare Objects
4.1.2 Comprehensiveness of Social Welfare Contents
4.1.3 Comprehensiveness of Social Welfare Forms
4.1.4 Diversification of Social Welfare Subjects
4.1.5 Diversification of Welfare Supply Modes
4.2 The Integration of Social Welfare System
4.2.1 Integration of Management Bodies
4.2.2 Integration of Social Welfare Systems
4.2.3 Integration of Social Welfare Policies
4.2.4 Integration of Social Welfare Information System
4.2.5 Integration of Social Welfare Monitoring System
References
5 The Universally Integrated Social Welfare System
5.1 The Baseline Welfare System
5.1.1 Features of Baseline Welfare System
5.1.2 Baseline Welfare System Programs
5.2 The Non-baseline Welfare System
5.2.1 Features of Non-baseline Welfare System
5.2.2 Forms of Non-baseline Welfare System
5.3 The Cross-Baseline Welfare System
5.3.1 Features of Cross-Baseline Welfare System
5.3.2 Forms of Cross-Baseline Welfare System
References
6 The Mechanisms of the Universally Integrated Social Welfare
6.1 The Responsibility Mechanism of the Universally Integrated Social Welfare
6.1.1 Overview
6.1.2 Responsibility Division Mechanism
6.1.3 Responsibility Sharing Mechanism
6.2 The Adjustment Mechanism of the Universally Integrated Social Welfare
6.2.1 Overview of Adjustment Mechanism
6.2.2 State of Social Welfare Adjustment Mechanism
6.2.3 Design of Adjustment Mechanism for Social Welfare System
6.3 The Supply-Demand Mechanism of the Universally Integrated Social Welfare
6.3.1 Supply-Oriented Mechanism
6.3.2 Demand-Oriented Mechanism of Social Welfare System
6.3.3 Supply–Demand Balancing Mechanism
References
Part II System Construction
7 The Scientific Basis of Welfare Realization Process
7.1 The Meaning of the Scientific Basis of Welfare Realization Process
7.2 The Basic Proportional Relationship of the Scientific Basis of Welfare Realization Process
7.2.1 Proportion of Welfare Expenditure in GDP
7.2.2 The Proportion of Welfare Expenditure in Fiscal Revenue
7.2.3 Relationship of Social Welfare Responsibility
7.3 Construct a Balanced Structure of the Scientific Basis of Welfare Realization Process
7.3.1 Balance Between Demand and Supply
7.3.2 Principles and Channels of Social Benefits Distribution
7.3.3 Adjustment Mechanism and Efficiency Evaluation of Social Welfare
7.4 Scientific Attitude Towards the Scientific Basis of Welfare Realization Process
7.4.1 Avoid Politicization in Social Security and Social Welfare Endeavor
7.4.2 Avoid Empiricism in Social Security and Social Welfare Construction
7.4.3 Avoid “Emergency Response” Approach to Social Security and Social Welfare Policies
References
8 The Construction Goals of the Universally Integrated Social Welfare System
8.1 The Demand of the Universally Integrated Social Welfare System
8.1.1 Expand Universality of Social Welfare System
8.1.2 Enhance the Integration of Social Welfare System
8.2 The Index of the Universally Integrated Social Welfare System
8.2.1 Indicator Construction
8.2.2 Indicator Composition
8.3 The Realization of the Universally Integrated Social Welfare System
8.3.1 Construction Goal
8.3.2 Conditions for Realizing Goal of Universally Integrated Social Welfare System
8.3.3 Ways to Achieve Goal of Universally Integrated Social Welfare System
References
9 The Universal Integration of Retirement Pension System
9.1 The Problems of the Retirement Pension System
9.1.1 Problems of Universality
9.1.2 Problems of System Integration
9.1.3 Necessity of Universal Integration
9.2 The Principles and Goals of the Universal Integration of Retirement Pension System
9.2.1 Principles
9.2.2 Goals
9.3 The Ways of the Universal Integration of Retirement Pension System
9.3.1 Retirement System Reform for Staff of Government Organs and Public Institutions
9.3.2 Reform of Basic Old-Age Insurance System for Enterprise Employees
9.3.3 Universal Integration of Social Old-Age Insurance System for Rural and Non-working Urban Residents
9.3.4 Approaches for Universal Integration of Old-Age Service System
9.3.5 Conditions for Universal Integration of Retirement Pension System
References
10 The Universal Integration of Medical Insurance System
10.1 The Operation and Problems of Medical Insurance System
10.1.1 Operation of Medical Insurance System
10.1.2 Main Problems in Medical Insurance System
10.1.3 Urgency of Universal Integration of Medical Insurance System
10.2 The Design and Validation of the Universal Integration of Medical Insurance System
10.2.1 System Design for Medical Insurance System Universal Integration
10.2.2 Validation of Medical Insurance System Universal Integration
10.3 The Practical Exploration of of the Universal Integration of Medical Insurance System
10.3.1 Medical Insurance System Universal Integration in Hangzhou
10.3.2 Universal Integration of Medical Insurance System in Suzhou
10.3.3 Universal Integration of Community Health Services
10.3.4 Universal Integration of Medical Insurance System in Xiamen
References
11 The Universal Integration of Employment Security System
11.1 The Operation and Problems of Employment Security System
11.1.1 Operation of Employment Security System
11.1.2 Problems in Employment Security System
11.1.3 Necessity of Universal Integration of Employment Security System
11.2 The Process and Design of the Universal Integration of Employment Insurance System
11.2.1 Goal of Universal Integration
11.2.2 Process Design for Universal Integration of Employment Security System
11.2.3 Institutional Design for Universal Integration of Employment Security System
11.3 The Realization Conditions of the Universal Integration of Employment Insurance System
11.3.1 Financial Support
11.3.2 Legal Support
11.3.3 Technical Support
11.3.4 Social Support
References
12 The Universal Integration of Income Security System
12.1 The Operation of Income Security System
12.1.1 Improve Income Distribution Policies, Narrow Income Gaps
12.1.2 Implement and Raise the Standard of Minimum Wage System
12.1.3 Implement Minimum Living Standard System
12.1.4 Provide Legal Protection for Workers’ Income Distribution
12.2 The Problems of Income Security System
12.2.1 Large Income Gap
12.2.2 Inadequate Adjustment of Income Distribution
12.2.3 Unreasonable Income Guarantee System
12.3 The Design of the Universal Integration of Income Security System
12.3.1 Necessity of Universal Integration
12.3.2 Goal of Universal Integration
12.4 Proposals for Universal Integration
References
13 Universal Integration of Education Security System
13.1 The Analysis of the Universal Integration of Education Security System
13.1.1 Overseas Studies
13.1.2 Domestic Exploration
13.1.3 Learning from Overseas
13.2 The Operation of Education Security System
13.2.1 Implementation of Education Security System
13.2.2 Problems in Education Security System
13.2.3 Necessity of Education Security System Integration
13.3 The Realization of the Universal Integration of Education Security System
13.3.1 Design for Universal Integration
13.3.2 Indicator System
13.3.3 Economic and Social Support
References
14 The Universal Integration of Housing Security System
14.1 The Operation of Housing Security System
14.1.1 Formation of Indemnificatory Rental Housing System
14.1.2 Operation of Indemnificatory Commercial Housing System
14.1.3 Other Housing Benefits for Urban Residents
14.1.4 Operation of Housing Security System in Rural Areas
14.2 The Practical Analysis of Housing Security System
14.2.1 Xiamen’s Practices in Building Indemnificatory Housing
14.2.2 Construction of Housing Security System in Chongqing
14.2.3 Problems in Construction of Housing Security System in China
14.3 The Universal Integration of Housing Security System
14.3.1 Necessity of Universal Integration
14.3.2 Goal of Universal Integration
14.3.3 Institutional Design of Universal Integration
References
15 The Universal Integration of Social Assistance System
15.1 The General Description of China’s Social Assistance System
15.1.1 Definition of Social Assistance
15.1.2 Status Quo of Social Assistance System in China
15.1.3 Main Problems of Social Assistance System in China
15.2 The Idea and Ways of the Universal Integration of Social Assistance System
15.2.1 Ideas of Universal Integration of Social Assistance System
15.2.2 Ways of Universal Integration of Social Assistance System
15.3 The Steps and Countermeasures of the Universal Integration of Social Assistance System
15.3.1 Procedures of Universal Integration
15.3.2 Countermeasures for Universal Integration of Social Assistance System
References
16 The Universal Integration of Social Service System
16.1 Concept and Conditions of Social Service System
16.1.1 Concept
16.1.2 Status Quo of Social Service System
16.1.3 Contents and Modes of Social Services
16.2 The Problems of Social Service System
16.2.1 Insufficient Coverage
16.2.2 Visible Fragmentation
16.2.3 Problems in Social Services as an Industry
16.2.4 Inadequate Support from Social Service Organizations
16.3 The Realization of the Universal Integration of Social Service System
16.3.1 Construction of Universal Integration
16.3.2 Goal of Universal Integration
16.3.3 Channels of Universal Integration
References
Afterword
Bibliography

Citation preview

Understanding China

Tiankui Jing

The Welfare System of Universal Integration in China

Understanding China

The series will provide you with in-depth information on China’s social, cultural and economic aspects. It covers a broad variety of topics, from economics and history to law, philosophy, cultural geography and regional politics, and offers a wealth of materials for researchers, doctoral students, and experienced practitioners.

More information about this series at http://www.springer.com/series/11772

Tiankui Jing

The Welfare System of Universal Integration in China

Tiankui Jing Chinese Academy of Social Sciences Beijing, China Translated by Mei Du Beijing, China

Sponsored by Chinese Fund for the Humanities and Social Sciences ISSN 2196-3134 ISSN 2196-3142 (electronic) Understanding China ISBN 978-981-16-4838-0 ISBN 978-981-16-4839-7 (eBook) https://doi.org/10.1007/978-981-16-4839-7 Jointly published with China Social Sciences Press The print edition is not for sale in China (Mainland). Customers from China (Mainland) please order the print book from: China Social Sciences Press. Translation from the Chinese language edition: 普遍整合的福利体系 by Tiankui Jing, © China Social Sciences Press 2014. Published by China Social Sciences Press. All Rights Reserved. © China Social Sciences Press 2021 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publishers, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publishers nor the authors or the editors give a warranty, express or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publishers remain neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Singapore Pte Ltd. The registered company address is: 152 Beach Road, #21-01/04 Gateway East, Singapore 189721, Singapore

Preface

Objective After the reform and opening-up, China’s original welfare model was outdated and unable to adapt to the requirements of the market economy. It was a general consensus among all sectors of society about establishing a welfare system that is compatible with the market economy. For this reason, in the mid-to-late 1980s, the authority set about reforming the welfare system. Since the beginning of the twenty-first century, the country has successively introduced new social welfare policies to increase social welfare inputs, enrich social welfare programs, expand social welfare coverage, and improve the social welfare level. A social welfare system with multilayers and mechanisms as well as diversified contents for urban and rural residents has taken shape. Nevertheless, the problem of fragmentation also arose at the meantime, mainly manifested in institutional and management separation, urban–rural division and resource decentralization. It has become a major theoretical and practical issue in social development as how to steadily advance the institutional and system integration of the social welfare system on the basis of universal coverage, so as to promote the construction of a more just social welfare system and the more sustainable development of the social welfare undertaking. Starting from the concept of “universal welfare”, or “broad welfare”, the current work clarifies the necessity, feasibility, and basic requirements for the universal integration and construction of China’s social welfare system, based on reflections on the system’s development path and main problems. The book then elaborates on the theoretical and scientific underpinnings of the universally integrated social welfare system and investigates the viewpoints on and requirements for a social welfare system from all social strata with the objective of providing public support for the establishment of a universally integrated social welfare system. With the above-mentioned empirical foundation, scientific research, and public support, this book drafts the overall framework and institutional design for a universally integrated welfare system. It then puts forward suggestions on promoting a more equitable and sustainable development of the social welfare system. v

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Basic Concepts Universal Welfare Social welfare can be viewed in broad, neutral, and narrow senses. Social welfare in a broad sense belongs to “big welfare”, which holds that the extension of the social welfare concept is greater than that of social security and that social welfare includes social security and social services. The neutral view of social welfare belongs to “median welfare”, in which the extension of social welfare is similar to that of social security and the two incorporate same welfare projects. Social welfare in the narrow sense belongs to “small welfare”, which believes that social welfare is an integral part of social security. To conduct research on the universal integration of social welfare, we must first define the connotation and extension of the concept of social welfare in order to consolidate academic consensus. In this volume, we maintain that the issue of the construction and improvement of China’s social welfare system should be explored from the perspective of “big welfare”. This is because social welfare should ultimately cover all members of society and include in-kind and cash benefits as well as social services. Also, subjects and channels of benefits provision should be diversified. These are the inevitable trends in social welfare development. Most developed countries have adopted the concept of universal welfare (big welfare) as well. Universal welfare is the basic concept in this book. It emphasizes meeting allround welfare needs of the people. In addition to employment, old-age, medical care, and social assistance, it also includes income security, education benefits, housing security, social services, and other projects.

Universal Integration Universal integration is an inevitable trend and objective requirement for the social welfare development in China. It is an organic combination of universality and integration. Universality is the foundation and premise of the entire social welfare system. Integration is the core and key of the system. Both serve as the basis for each other and are indispensable to each other. Universality is reflected in the full coverage of welfare receivers, welfare contents and benefits forms, as well as the diversification of welfare providers and supply channels. Integration involves areas like social welfare management bodies, social welfare institutions, social welfare policies, social welfare information system, and social welfare supervision system. Universal integration is conducive to determining the responsibilities of the state, enterprises, and individuals. It can enhance the fairness, adaptive mobility, and sustainability of the social welfare system while ensuring people’s basic livelihood.

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Theoretical Perspectives In recent years, the academic circles in China have proposed the basic integration theory, universal welfare theory, appropriate all-inclusive theory, shared-by-all theory, and baseline equality theory. They provide important theoretical perspectives for this study. In China, there are not only income disparities but also gaps in social security and social welfare benefits between urban and rural areas, as well as among regions and social classes. Therefore, to realize the universal integration of social welfare in the country is highly complicated. If the above-mentioned disparities and gaps are not large, the simple means of unification will do. For example, to unify the programs, standards, methods, and management of social security and social welfare systems is just a way to realize integration. But in reality, it is an extremely tough task especially hard to accomplish in a short term. Fairness in the scientific sense should first eliminate unreasonable differences and at the meanwhile acknowledge those justifiable differences. Integration in this approach is to integrate through establishing linkage and implement adjustment to achieve rationalization. The universal integration aims to achieve equality while recognizing reasonable differences. This is the essence of the baseline equality theory. The baseline equality theory is the main theoretical basis for the current research. Baseline equality in the first place is reflected in the consistency of rights to basic needs, which is the baseline of the government’s responsibility. It is also reflected in differences in rights of non-basic needs, and this is where the market mechanism and other social mechanisms play a role. Baseline equity requires adherence to the principles of “prioritizing the vulnerable”, “the government as the main responsible body”, “social compensation”, and “sustained benefits”. This provides practical ideas and countermeasures for scientifically dividing the responsibilities of welfare supply and demand, reducing the gap between the rich and the poor, and achieving common prosperity. Due to the imbalance in China’s economic and social development, the mind-set of special welfare has long been existing. To correct this, the social welfare system is tasked with expanding universality, improving integration, and eliminating privileges. Choosing a feasible path and formulating pragmatic and stable strategies are of key significance for achieving universal integration and promoting a more just and sustainable development of the country’s social welfare system.

Model Construction It is an inevitable process for China’s social welfare to move from institutional coverage to institutional and system integration, which is the road map for Chin’s social welfare development. Based on the analysis of China’s social welfare system transitions, we found that China’s social welfare construction has been affected by the governing philosophy and the pursuit of special welfare in the past. The role of the market and society was limited. Therefore, it is imperative to expand universality

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and improve integration to build a universally integrated welfare system. This volume expounds the basic characteristics of the universally integrated welfare model. Unlike the residual welfare model and the fragmented welfare model, the present model unifies universality and integration. The book then discusses social welfare systems featuring universal integration as well as their operating mechanisms. The systems include baseline welfare system, non-baseline welfare system, and cross-baseline welfare system. The mechanisms refer to the responsibility mechanism, adjustment mechanism, supply-demand mechanism, and management mechanism. The aim of the universal integration of social welfare is to build a welfare model with moderation, flexibility, and an appropriate level. In this model, the level of welfare is coordinated with economic development, the welfare contents and welfare level fit the changes in the population and social structure, and the welfare rights match welfare responsibilities. In a word, the social welfare development is in line with China’s national conditions, social conditions, and population conditions, and the social welfare system can contribute to the country’s equitable and sustainable development.

Institutional Integration and System Integration This work discusses the institutional integration and system integration in a variety of areas of the social welfare system. For old-age care, it explores problems in the universality and integration of the retirement pension system and clarifies the urgency for universal integration. It proposes the principles and goals of the universal integration of the retirement pension system and specifies approaches and policy arrangements in this regard. We believe that it is necessary to promote the coordinated reform of the pension system for staff of government agencies and employees of urban enterprise. Also, the new rural social endowment insurance and the social pension insurance for urban residents shall be integrated into the a unified social old-age insurance system for rural and non-working urban residents. Regarding the medical insurance system, the work carries out analysis on the problems of narrow coverage; fragmentation of medical care objects, fund-raising standard and compensation ratio, medical care management and services; and inaccurate allocation of medical insurance responsibilities. It proposes to integrate existing medical insurance systems into the “basic medical insurance system for employees” and the “basic medical insurance system for individuals”. The former targets people in employment relationships, including civil servants at all levels; staff from public institutions, party organizations and mass organizations; and employees of stateowned, collective, foreign-invested, and private enterprises as well as enterprises of other types of ownership; and employees of private non-enterprise units, etc. The latter is for people not involved in an employment relationship, such as farmers, urban residents, self-employed people, freelancers, and other flexible employees. Participants are allowed to switch between the two systems according to their employment status.

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In the field of employment and income security, this work reveals existing problems and proposes the goal, process design, and institutional arrangements for universal integration. It calls for perfecting the profit payment mechanism of stateowned enterprises, improving the Individual Income Tax Law and Law on Donations to Public Welfare, and appropriately raising the minimum living standards for urban and rural residents. It suggests the establishment and organic integration of the primary, secondary, and tertiary income distribution to realize the policy goal of a more just income distribution system through regulating excessively high incomes, expanding the proportion of middle-income earners, and increasing the income of low-income earners. In the education field, it is necessary to expand the duration of the compulsory education, by gradually incorporating vocational education, secondary specialized education, and senior high education into the scope of it. All localities should be encouraged to allocate compulsory education funds in accordance with the principle of urban–rural coordination, generally exempt rural students from the cost of board, provide free textbooks to students in underdeveloped areas, and guide key school teachers to teach in ordinary schools by increasing investment in ordinary schools and providing job subsidies, etc. It is necessary to carry out institutional innovation by abolishing the existing dual management system and let all colleges and universities jointly built by ministries and provincial governments. The responsibilities of fiscal investment in higher education between the state and the province as well as between developed and underdeveloped regions shall be clarified. An education-supporting fund system shall be set up for promoting the development of low-performing higher education institutions, weak disciplines, and higher education in less developed regions. As for housing security, the book proposes the goal and system design of the universal integration of the housing security system. On the one hand, it is necessary to ensure that people who cannot afford commercial housing have residence. On the other hand, those who can afford commercial housing should be guided to give up buying or renting affordable housing through institutional arrangements, so as to ensure the rational allocation of housing resources. Moreover, the government should reasonably define per capita housing space and size of various types of indemnificatory housing and stipulate that indemnificatory housing can only be self-occupied by applicants, and prohibited from being rented, sold, or inherited. In terms of social assistance, the government should integrate social assistance subjects, resources, mechanisms, methods, and related management agencies, establish a dynamic adjustment mechanism for assistance standards, and ensure continuous growth of financial inputs. The objective is to form an urban–rural integrated minimum living security system and in turn establish an urban–rural living guarantee system integrating the urban–rural minimum living security system with the rural five guarantee system. It is necessary to speed up the informatization construction of social assistance and promote the integration of the social assistance system with poverty alleviation, employment, and other systems.

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In terms of social services, the government should strengthen the construction of social service teams, actively develop social service organizations, increase investment in social service funds, improve service services in old-age care, medical care, public health, employment, education, housing, and social assistance. It should also integrate social service functions among different government organs as well as within a department, and between the government and social organizations, to form a social service system with sound projects, complete contents, complete structure, improved quality and interconnections.

Theoretical Discussion While it is important for a research project to draw necessary conclusions, open discussions are also of significance, especially for the study of a complex real-world topic. So far, both China and other countries face the same dilemma in welfare development: the choice of special or universal benefits. The former targets special groups, hence hard to achieve fairness, while the latter, though offering universal welfare, is inadequate in efficiency. The latter impairs social vitality and cannot sustain. This dilemma is also faced by this study. First, our plan here is to incorporate the production of social welfare into the social welfare system, rather than regarding is as an external factor. Education and employment are two major factors for creating welfare. They are both items of welfare and the most important intrinsic factor for achieving universal welfare. The so-called transition from special welfare to universal welfare means to improve the universality of welfare receivers. Since all members of society will be covered by the social welfare system, the factors that create welfare shall be taken into the social welfare system. Under the traditional concept of welfare, beneficiaries only obtain benefits without giving back, or enjoying rights without fulfilling responsibilities, then, where does the welfare come from? Welfare is not pie in the sky. In this volume, universal welfare involves the aged care, medical care, employment, income, education, housing, living, and social services. Among them, there are both benefits for all and also areas that can produce benefits. Except for those without ability to work, all the people must first create benefits, fulfill their due responsibilities, and then have the right to enjoy benefits. Second, the subjects and channels of welfare supply must be diversified. Welfare suppliers include the government, the market, and society (social organizations, families, and individuals). The responsibility of each subject must be clear, and a reasonable responsibility structure must be established, with the government playing a leading role. As far as the supply channel is concerned, there are cash and in-kind transfers and social services. These arrangements are in line with China’s national conditions, conform to the orientation of socialism with Chinese characteristics, and reflect the uniqueness of the welfare system with Chinese characteristics.

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Third, regarding the institutional framework of a universally integrated social welfare system, we believe it includes three basic types of institutions. The first is the baseline welfare system that reflects the consistency of social welfare rights and meets the basic needs of the people. Its responsibility mainly lies with the government. It includes the minimum living security system, public health service system, compulsory education system, and so forth. The second is the non-baseline welfare system that meets the non-basic needs of the members of society. It stresses efficiency and allows participants to make a selection. It mainly refers to the personal account system, supplementary insurance system, and commercial insurance system. It has important practical significance for the realization of differential social equity. The third is the cross-baseline welfare system which takes into account both the baseline and non-baseline demands. It reflects the unity and also the differences of social rights in the same social welfare system and mainly includes the system of integrating social pooling with individual accounts, social service system, and social mutual assistance system. Based on the above three systems, the methods of universal integration for different welfare areas are different. For example, in the integration of the pension insurance system, the basic pension part tends to be unified while the personal account part is integrated on the basis of coordination. Fourth, how to design the operation mechanism for the universal integration of the social welfare system? Every social welfare system is backed up by certain responsibility relationships and responsibility structure. The responsibility mechanism can differentiate one social welfare model from another. The universally integrated social welfare system has responsibility division and responsibility sharing mechanisms. In a sense, the universal integration of the social welfare system is to re-divide the original social welfare supply subjects, supply targets, contents, etc., and to readjust the original social welfare structure, so that the social welfare supply and demand can be flexibly adjusted in rigid growth. Therefore, the adjustment mechanism includes rigid adjustment mechanism, flexible adjustment mechanism, and an intermediate between the two. In China’s social welfare system, the rigid adjustment mechanism has been deeply rooted in some social welfare projects, while the other two especially the intermediate adjustment mechanism are generally absent. This requires us to integrate the rigid and flexible adjustment mechanisms and give play to the intermediate mechanism to promote the coordinated development of the social welfare system. In addition, the supply and demand of social welfare are naturally in a relationship of contradiction. Different conclusions will come out with our standpoints set on supply and demand respectively. The supply and demand mechanism is used to coordinate the relationship between social welfare supply and demand and seek a balance between the two as well as prevent economic and social problems resulted from imbalance between them. Therefore, this kind of mechanism includes three mechanisms: supply-led, demand-led, and balancing supply–demand mechanisms. The universally integrated welfare system is to establish a balancing supply–demand mechanism based on the coordination of the other two mechanisms to achieve a state of balance in social welfare supply and demand. The last is regarding the moderation and appropriateness of the social welfare model. After summarizing the experience of social welfare in developed Western

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countries and East Asian countries and regions, we realize that the core of a social welfare model is not the issue of high welfare or low welfare, but the use of the baseline to determine the appropriateness and adaptation of the model. The moderation of the welfare model means the welfare level is compatible with the level and status of economic development. That is, social welfare can be supported and maintained by the economy, and the growth of welfare will not exceed economic capacity. It must be a driving force for economic growth rather than an unbearable burden. The adaptability of the welfare model is to adapt to the changes in social structure and employment brought about by marketization and to the large-scale population movement and changes in personal identities resulted from the urbanization. The appropriateness of the welfare model calls for the unity of welfare rights and welfare responsibilities. It integrates the residual and inclusive types of benefits, rigid and flexible adjustment mechanisms, mandatory and voluntary participation, government and market roles, difference and consistency in benefits, as well as the overall coordination and multiple-party sharing of responsibilities. The comprehensive, universal, diversified, and coordinated welfare model thus formed not only is in line with the Chinese traditional mentality of inclusiveness, but also conforms to China’s national and social conditions. In short, this book first proposes the concepts of welfare system universal integration and a universally integrated welfare model. In light of the prominent fragmentation of social welfare and with the goal of enhancing the fairness, adaptability, adaptive mobility, and sustainability of social security and social welfare systems, the book systematically discusses the theoretical basis, basic characteristics, institutional composition, and operating mechanisms of the universally integrated welfare model. It provides countermeasures and suggestions for promoting the universal integration of various social welfare systems in China. While elaborating on the theoretical foundation of the universal integration of social welfare, our research team lay emphasis on analyzing the theory of neoliberalism and point out that neoliberalism is first and foremost an ideology. If it is adopted in China, the country’s social welfare construction will inevitably fall into trouble. Therefore, we should strive to build a social welfare theory that fits China’s national conditions. Nonetheless, we are fully aware of the complexity and arduousness of the problems faced by this undertaking, and the research we have done is just a preliminary attempt from our own perspective.

Layout of the Book This book consists of two parts: Model Construction and System Construction. The model construction part discusses the theoretical basis, basic characteristics, institutional structure, and operation mechanisms of the universally integrated welfare system. The system building part explores the institutional design, conditions, paths, and steps of realizing the universal integration of various welfare projects. At present, China’s social welfare system has entered a new stage. This book focuses on the urgency, necessity, and importance of the universal integration and

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construction of the social welfare system, reveals the basic proportional relationship and balanced structure that constitute the scientific basis of the social welfare realization process, and clarifies the construction goals of the universal integration of the social welfare system. The basic requirements for universal integration of the social welfare system, the three-level indicator system, the conditions for realization, and the ways to achieve it have also been described. However, the “universally integrated welfare system” proposed and constructed in this book is only an exploratory study, which welcomes you all to give criticism. I hope that it can play a role in attracting bricks and stones, and I believe that better research results will come out in the future. Of course, what I hope the most is that in practice we can successfully solve the “fragmentation” of social security and social welfare, and build a lively welfare system that is shared by the whole people and suitable for China’s national conditions. If so, it will be the blessing of the entire Chinese people. The establishment of such a welfare system will also be able to realize the “Datong ideal” that lasts for thousands of year and make up for the shortcomings of the Western welfare system that lacks vitality, thus will benefit the world. Beijing, China November 2013

Tiankui Jing

Contents

Part I 1

Model Construction

The Development Path of Social Welfare—From System Cover to System Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1 System Cover: A Monument as Well as a Starting Point . . . . . . . . 1.1.1 A Turnaround Landmark Event . . . . . . . . . . . . . . . . . . . . . 1.1.2 Innovative Measures to Open Up New Situation . . . . . . . 1.1.3 A New Starting Point for the Better . . . . . . . . . . . . . . . . . . 1.2 Institutional Integration: An Emphasis as Well as a Key Point . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.1 Fragmentation: An Unreasonable Result from a Reasonable Process . . . . . . . . . . . . . . . . . . . . . . . . . 1.2.2 Institutional Integration: Key to Making the System More Equitable and Sustainable and Ensuring the Smooth Transfer of Social Security Accounts Between Localities . . . . . . . . . . . . . . . 1.2.3 Institutional Integration Requires Both Basic Conditions and Active Efforts . . . . . . . . . . . . . . . . . . . . . . 1.2.4 Feasible Plan for Institutional Integration—Baseline Equality . . . . . . . . . . . . . . . . . . . . . 1.3 System Integration: An Idea as Well as a Policy . . . . . . . . . . . . . . . 1.3.1 Integration of Financial Guarantee with Service Guarantee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.2 Integration of Labor with Welfare . . . . . . . . . . . . . . . . . . . 1.3.3 Integration of Education with Welfare . . . . . . . . . . . . . . . 1.3.4 Integration of Government Transformation with Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3.5 Integration of Neighborhood Communities with Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4 Summary: Integration of Social Welfare System is the Base of Modern State System Integration . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3 3 4 5 6 6 6

7 8 11 14 15 16 17 18 19 20 20 xv

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2

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The Analysis of Social Welfare Model in Contemporary China . . . . 2.1 Social Transformation and Welfare System Transformation . . . . . 2.1.1 Social Welfare in the Planned Economy Stage . . . . . . . . 2.1.2 Social Welfare in the Market Economy Stage . . . . . . . . . 2.2 Social Welfare During Social Development Stage . . . . . . . . . . . . . 2.3 The Features of Social Welfare in Contemporary China . . . . . . . . 2.3.1 Governing Philosophy Affects Social Welfare Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.3.2 Challenges from All Facets of Society . . . . . . . . . . . . . . . 2.3.3 Mindset of Special Welfare Prevails . . . . . . . . . . . . . . . . . 2.3.4 Government Role Shifts at Different Stages . . . . . . . . . . . 2.3.5 Prominent Role of Families, and Limited Role of Market and Social Mechanisms . . . . . . . . . . . . . . . . . . . 2.4 The Responsibility of the Development of China’s Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.1 Expand Universality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4.2 Improve Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

21 21 22 24 26 30

38 39 40 42

3

The Theoretical Basis of Universally Integrated Welfare Model . . . . 3.1 The Universal Welfare Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1.1 Introduction of Universal Welfare Theory . . . . . . . . . . . . 3.1.2 Content of Universal Welfare Theory . . . . . . . . . . . . . . . . 3.1.3 Importance of Universal Welfare Theory . . . . . . . . . . . . . 3.2 The Basic Integration Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2.1 Introduction of Basic Integration Theory . . . . . . . . . . . . . 3.2.2 Content of Basic Integration Theory . . . . . . . . . . . . . . . . . 3.2.3 Importance of Basic Integration Theory . . . . . . . . . . . . . . 3.3 The Baseline Equality Theory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Introduction of Baseline Equality Theory . . . . . . . . . . . . . 3.3.2 Content of Baseline Equality Theory . . . . . . . . . . . . . . . . 3.3.3 Importance of Baseline Equality Theory . . . . . . . . . . . . . 3.4 The Appropriate All-Inclusive Idea and Shared-by-All Idea . . . . 3.4.1 Appropriate All-Inclusive Thinking . . . . . . . . . . . . . . . . . 3.4.2 Shared-by-All Idea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 43 43 46 49 50 50 51 54 55 55 56 61 62 63 64 66

4

The Basic Features of Universally Integrated Welfare Model . . . . . . 4.1 The Universality of Social Welfare System . . . . . . . . . . . . . . . . . . . 4.1.1 Universality of Social Welfare Objects . . . . . . . . . . . . . . . 4.1.2 Comprehensiveness of Social Welfare Contents . . . . . . . 4.1.3 Comprehensiveness of Social Welfare Forms . . . . . . . . . 4.1.4 Diversification of Social Welfare Subjects . . . . . . . . . . . . 4.1.5 Diversification of Welfare Supply Modes . . . . . . . . . . . . . 4.2 The Integration of Social Welfare System . . . . . . . . . . . . . . . . . . . . 4.2.1 Integration of Management Bodies . . . . . . . . . . . . . . . . . .

67 67 67 68 70 71 72 73 73

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4.2.2 Integration of Social Welfare Systems . . . . . . . . . . . . . . . 4.2.3 Integration of Social Welfare Policies . . . . . . . . . . . . . . . . 4.2.4 Integration of Social Welfare Information System . . . . . 4.2.5 Integration of Social Welfare Monitoring System . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

76 78 79 80 82

5

The Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . 83 5.1 The Baseline Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 5.1.1 Features of Baseline Welfare System . . . . . . . . . . . . . . . . 83 5.1.2 Baseline Welfare System Programs . . . . . . . . . . . . . . . . . . 85 5.2 The Non-baseline Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . 90 5.2.1 Features of Non-baseline Welfare System . . . . . . . . . . . . 90 5.2.2 Forms of Non-baseline Welfare System . . . . . . . . . . . . . . 92 5.3 The Cross-Baseline Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . 96 5.3.1 Features of Cross-Baseline Welfare System . . . . . . . . . . . 96 5.3.2 Forms of Cross-Baseline Welfare System . . . . . . . . . . . . . 97 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

6

The Mechanisms of the Universally Integrated Social Welfare . . . . . 6.1 The Responsibility Mechanism of the Universally Integrated Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.1 Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.1.2 Responsibility Division Mechanism . . . . . . . . . . . . . . . . . 6.1.3 Responsibility Sharing Mechanism . . . . . . . . . . . . . . . . . . 6.2 The Adjustment Mechanism of the Universally Integrated Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.2.1 Overview of Adjustment Mechanism . . . . . . . . . . . . . . . . 6.2.2 State of Social Welfare Adjustment Mechanism . . . . . . . 6.2.3 Design of Adjustment Mechanism for Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3 The Supply-Demand Mechanism of the Universally Integrated Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.1 Supply-Oriented Mechanism . . . . . . . . . . . . . . . . . . . . . . . 6.3.2 Demand-Oriented Mechanism of Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.3.3 Supply–Demand Balancing Mechanism . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II 7

103 103 103 106 110 113 113 115 118 121 122 125 129 133

System Construction

The Scientific Basis of Welfare Realization Process . . . . . . . . . . . . . . . 7.1 The Meaning of the Scientific Basis of Welfare Realization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2 The Basic Proportional Relationship of the Scientific Basis of Welfare Realization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.1 Proportion of Welfare Expenditure in GDP . . . . . . . . . . .

137 137 138 138

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7.2.2

The Proportion of Welfare Expenditure in Fiscal Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2.3 Relationship of Social Welfare Responsibility . . . . . . . . . 7.3 Construct a Balanced Structure of the Scientific Basis of Welfare Realization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.1 Balance Between Demand and Supply . . . . . . . . . . . . . . . 7.3.2 Principles and Channels of Social Benefits Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.3.3 Adjustment Mechanism and Efficiency Evaluation of Social Welfare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4 Scientific Attitude Towards the Scientific Basis of Welfare Realization Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.1 Avoid Politicization in Social Security and Social Welfare Endeavor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.2 Avoid Empiricism in Social Security and Social Welfare Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.4.3 Avoid “Emergency Response” Approach to Social Security and Social Welfare Policies . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

9

The Construction Goals of the Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1 The Demand of the Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.1.1 Expand Universality of Social Welfare System . . . . . . . . 8.1.2 Enhance the Integration of Social Welfare System . . . . . 8.2 The Index of the Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.1 Indicator Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2.2 Indicator Composition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3 The Realization of the Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.1 Construction Goal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3.2 Conditions for Realizing Goal of Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . . . . 8.3.3 Ways to Achieve Goal of Universally Integrated Social Welfare System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Universal Integration of Retirement Pension System . . . . . . . . . . 9.1 The Problems of the Retirement Pension System . . . . . . . . . . . . . . 9.1.1 Problems of Universality . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.1.2 Problems of System Integration . . . . . . . . . . . . . . . . . . . . . 9.1.3 Necessity of Universal Integration . . . . . . . . . . . . . . . . . . . 9.2 The Principles and Goals of the Universal Integration of Retirement Pension System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

140 142 143 144 145 147 150 150 151 153 154 155 155 157 160 166 166 169 176 176 180 182 184 187 187 188 190 192 195

Contents

9.2.1 Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2.2 Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 The Ways of the Universal Integration of Retirement Pension System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.1 Retirement System Reform for Staff of Government Organs and Public Institutions . . . . . . . . 9.3.2 Reform of Basic Old-Age Insurance System for Enterprise Employees . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.3 Universal Integration of Social Old-Age Insurance System for Rural and Non-working Urban Residents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.4 Approaches for Universal Integration of Old-Age Service System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3.5 Conditions for Universal Integration of Retirement Pension System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 The Universal Integration of Medical Insurance System . . . . . . . . . . 10.1 The Operation and Problems of Medical Insurance System . . . . . 10.1.1 Operation of Medical Insurance System . . . . . . . . . . . . . . 10.1.2 Main Problems in Medical Insurance System . . . . . . . . . 10.1.3 Urgency of Universal Integration of Medical Insurance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2 The Design and Validation of the Universal Integration of Medical Insurance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.1 System Design for Medical Insurance System Universal Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2.2 Validation of Medical Insurance System Universal Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3 The Practical Exploration of of the Universal Integration of Medical Insurance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.1 Medical Insurance System Universal Integration in Hangzhou . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.2 Universal Integration of Medical Insurance System in Suzhou . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.3 Universal Integration of Community Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3.4 Universal Integration of Medical Insurance System in Xiamen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 The Universal Integration of Employment Security System . . . . . . . . 11.1 The Operation and Problems of Employment Security System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.1.1 Operation of Employment Security System . . . . . . . . . . . 11.1.2 Problems in Employment Security System . . . . . . . . . . . .

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195 197 199 200 202

204 207 208 209 211 211 211 217 221 223 223 225 231 233 235 237 239 242 243 243 243 247

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11.1.3 Necessity of Universal Integration of Employment Security System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2 The Process and Design of the Universal Integration of Employment Insurance System . . . . . . . . . . . . . . . . . . . . . . . . . . 11.2.1 Goal of Universal Integration . . . . . . . . . . . . . . . . . . . . . . . 11.2.2 Process Design for Universal Integration of Employment Security System . . . . . . . . . . . . . . . . . . . . 11.2.3 Institutional Design for Universal Integration of Employment Security System . . . . . . . . . . . . . . . . . . . . 11.3 The Realization Conditions of the Universal Integration of Employment Insurance System . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.1 Financial Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.2 Legal Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.3 Technical Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.3.4 Social Support . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 The Universal Integration of Income Security System . . . . . . . . . . . . . 12.1 The Operation of Income Security System . . . . . . . . . . . . . . . . . . . 12.1.1 Improve Income Distribution Policies, Narrow Income Gaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1.2 Implement and Raise the Standard of Minimum Wage System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.1.3 Implement Minimum Living Standard System . . . . . . . . 12.1.4 Provide Legal Protection for Workers’ Income Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2 The Problems of Income Security System . . . . . . . . . . . . . . . . . . . . 12.2.1 Large Income Gap . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.2.2 Inadequate Adjustment of Income Distribution . . . . . . . . 12.2.3 Unreasonable Income Guarantee System . . . . . . . . . . . . . 12.3 The Design of the Universal Integration of Income Security System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.3.1 Necessity of Universal Integration . . . . . . . . . . . . . . . . . . . 12.3.2 Goal of Universal Integration . . . . . . . . . . . . . . . . . . . . . . . 12.4 Proposals for Universal Integration . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Universal Integration of Education Security System . . . . . . . . . . . . . . 13.1 The Analysis of the Universal Integration of Education Security System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.1 Overseas Studies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.2 Domestic Exploration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.1.3 Learning from Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.2 The Operation of Education Security System . . . . . . . . . . . . . . . . . 13.2.1 Implementation of Education Security System . . . . . . . . 13.2.2 Problems in Education Security System . . . . . . . . . . . . . .

252 254 255 257 261 264 265 266 268 269 270 271 271 272 275 275 277 280 280 283 285 287 287 288 289 292 295 295 295 298 301 303 303 305

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13.2.3 Necessity of Education Security System Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3 The Realization of the Universal Integration of Education Security System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.1 Design for Universal Integration . . . . . . . . . . . . . . . . . . . . 13.3.2 Indicator System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13.3.3 Economic and Social Support . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 The Universal Integration of Housing Security System . . . . . . . . . . . . 14.1 The Operation of Housing Security System . . . . . . . . . . . . . . . . . . 14.1.1 Formation of Indemnificatory Rental Housing System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.2 Operation of Indemnificatory Commercial Housing System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.1.3 Other Housing Benefits for Urban Residents . . . . . . . . . . 14.1.4 Operation of Housing Security System in Rural Areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2 The Practical Analysis of Housing Security System . . . . . . . . . . . 14.2.1 Xiamen’s Practices in Building Indemnificatory Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.2 Construction of Housing Security System in Chongqing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.2.3 Problems in Construction of Housing Security System in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14.3 The Universal Integration of Housing Security System . . . . . . . . . 14.3.1 Necessity of Universal Integration . . . . . . . . . . . . . . . . . . . 14.3.2 Goal of Universal Integration . . . . . . . . . . . . . . . . . . . . . . . 14.3.3 Institutional Design of Universal Integration . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 The Universal Integration of Social Assistance System . . . . . . . . . . . . 15.1 The General Description of China’s Social Assistance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.1.1 Definition of Social Assistance . . . . . . . . . . . . . . . . . . . . . 15.1.2 Status Quo of Social Assistance System in China . . . . . . 15.1.3 Main Problems of Social Assistance System in China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2 The Idea and Ways of the Universal Integration of Social Assistance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.1 Ideas of Universal Integration of Social Assistance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.2.2 Ways of Universal Integration of Social Assistance System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15.3 The Steps and Countermeasures of the Universal Integration of Social Assistance System . . . . . . . . . . . . . . . . . . . . .

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15.3.1 Procedures of Universal Integration . . . . . . . . . . . . . . . . . 367 15.3.2 Countermeasures for Universal Integration of Social Assistance System . . . . . . . . . . . . . . . . . . . . . . . . 374 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 380 16 The Universal Integration of Social Service System . . . . . . . . . . . . . . . 16.1 Concept and Conditions of Social Service System . . . . . . . . . . . . . 16.1.1 Concept . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.1.2 Status Quo of Social Service System . . . . . . . . . . . . . . . . 16.1.3 Contents and Modes of Social Services . . . . . . . . . . . . . . 16.2 The Problems of Social Service System . . . . . . . . . . . . . . . . . . . . . 16.2.1 Insufficient Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2.2 Visible Fragmentation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.2.3 Problems in Social Services as an Industry . . . . . . . . . . . 16.2.4 Inadequate Support from Social Service Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3 The Realization of the Universal Integration of Social Service System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16.3.1 Construction of Universal Integration . . . . . . . . . . . . . . . . 16.3.2 Goal of Universal Integration . . . . . . . . . . . . . . . . . . . . . . . 16.3.3 Channels of Universal Integration . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

381 381 381 386 391 394 394 395 396 397 398 398 399 401 403

Afterword . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 405 Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 409

Part I

Model Construction

Chapter 1

The Development Path of Social Welfare—From System Cover to System Integration

After 40 years of arduous exploration and institutional reforms, China’s social security and social welfare system have achieved universal coverage. However, as mentioned in the Report to the 18th National Congress of the Communist Party of China (CPC), it still needs to lay emphasis on “making the social security system more equitable and sustainable and ensuring the smooth transfer of social security accounts between localities”. It is a more arduous task, with an aim to not only create a better economic situation, but also make a more scientific top-level design, formulate a more reasonable scheme for improving the system and outline a more feasible roadmap for policy implementation.

1.1 System Cover: A Monument as Well as a Starting Point 2012 marked a significant juncture in the history of China’s social security and social welfare, realizing full coverage for both urban and rural residents. Once upon a time, the Chinese people suffered from the problems of “finding it hard to get medical care and too expensive to get medical care” as well as “high tuition and difficulty in going to school”. Faced with the bad situation, the government and society expressed strong anxiety. No one ever thought that this kind of anxiety would fundamentally disappear in just a few years and the sense of social stability would commonly be enhanced across the society. Full coverage indicates that China has established overall social security, assistance and welfare systems that provide all people with universal access; and the Chinese people have the direct institutional guarantee for improving their lives. From then on, the tragic scene of “people living in hunger and cold” never appeared in China, and realizing full coverage is a milestone in the history of the Chinese nation.

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_1

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1.1.1 A Turnaround Landmark Event The beginning of full coverage should go back to trails of the new rural cooperative medical scheme in 2002 and real implementation from 2003 onward. The new scheme is relative to the traditional one launched in the 1970s, which relied mainly on the rural collective economy and was a form of mutual aid between farmers rather than subsidized by the government. However, the scheme almost disappeared in the 1980s with the collapse of the collective economy in rural areas. Since then, rural areas had been short of medical services and medicines. It was not until the early twenty-first century that the social security system was still quite imperfect, only covered urban employees and excluded farmers, which was so-called “expanding coverage”. The great significance of the new scheme is initially narrowing the gap between the city and the countryside in the context of serious urban–rural separation and makes vast farmers access health services. How to narrow the urban–rural gap? It is in relation to the most essential issue of the new scheme, namely the subjects of benefits provision changing from farmers to the government and farmers. And why is the new rural cooperative medical scheme new? It mainly lies in government investment. Since the adopting of the scheme, the government has always taken the lead role in raising funds, accounting for three quarters to four fifths of total funds. The scheme fundamentally changed the situation that the social security system only covered urban workers for all these years. Certainly, it does not mean that there was no social security for rural areas at all in the past and some povertyand disaster-stricken rural residents could attain social assistance as well, including Five Guarantee Households (provide older people, widows, orphans and disabled people with food, clothes, shelter, medical care, education and funeral services) and families encountering financial difficulties. However, this kind of social security was only available for some farmers and specific measures were temporary rather than systematic. Unlike rural population, urban employees have always been enrolled in the social security system, enjoying pension, medical, unemployment, work injury and child-birth insurance services. At the end of 1980s, some pilot projects for oldage security—with low premium and pooling levels—once conducted in some rural regions but were immediately cancelled. The new rural cooperative medical scheme was designed for rural areas in particular, providing farmers with improved medical and health care. It broke the urban–rural dual system, making a big stride forward on the road of full coverage. It therefore has a symbolic significance due to the fact that only by narrowing the urban–rural gap can universal access be achieved nationwide. In the past, no more than 10 million urban employees and migrant workers were enrolled in the social security system per year, but, since 2003 the number stood at above one hundred million per year. According to statistics, there are seven or eight hundred million farmers across the country at that time and nearly all of them were covered by the new rural cooperative medical scheme, moving toward “appropriate universe”.

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1.1.2 Innovative Measures to Open Up New Situation Following the new rural cooperative medical scheme, in 2007 the minimum living allowance program—completely funded by financial departments at all levels—was set up in all of China’s rural areas. Accompanied by the same program for urban residents, it aims at realizing full coverage of basic living guarantee. Two years later, the Chinese government took initiatives to establish the new old-age insurance scheme for farmers in rural areas, taking the same payment policy as the new rural cooperative medical one, namely funded by both the government and farmers. In 2010 the Social Insurance Law of the People’s Republic of China was introduced, signifying the establishment of the social security system benefiting all people. It was regarded as the most significant achievement in the development course of the nation over the past years. If summarizing the characteristics of China’s social security system in this stage, the prominent one is full coverage, while in the past the goal of building the social security system is to realize elastic “broad coverage”. However, it should be noted that full coverage refers to various schemes covering urban and rural areas rather than each person. In fact, even in future it is impossible to ensure all people enrolled in the system due to all kinds of specific situations. Up until now, the social assistance system with guaranteeing a basic standard of living at the core has covered both urban and rural areas and the medical insurance system has benefited more than 95% of the whole population. The basic old-age insurance system with full coverage will be established in 2012, thus fulfilling the vision of providing benefits for all urban and rural residents. One of the biggest transitions in the process is eliminating identity discrimination and overcoming social exclusion. There were originally few people who could enjoy various social insurance services while the remaining people needed to assume all risks by themselves or their families. Once realizing universal coverage, the function of the social security system for resisting risks can be largely given full play, and the society will make great stride in social integration. Realizing the full coverage of the social security system depends mainly on several innovative measures. Social security was a guarantee by the state under the planned economy. Along with the development of the socialist market economy, it underwent profound transitions in tandem with economic situations, i.e. the subjects of the system. The new system was eventually set up, sharing responsibilities between the country, enterprises, society, families and individuals. In this system, how to combine government and market mechanisms together is the most important issue worth exploring in recent ten years, and China have attained both experience and lessons as well as made some innovations. We regard the development of China’s social security and welfare as “from the small welfare to the great welfare”.1 The small welfare refers to the ones meeting the demands of special groups, i.e. the disabled, senior citizens, children and Five Guarantee Households. These benefits were generally provided only by the government. 1

Jing and Bi [1].

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The great welfare contrarily refers to the ones benefiting all people across the nation. In addition, the content of benefits have been enriched as well, from helping people out of hardships to satisfying various requirements such as education, medical care, housing and even improvement of ecological environment. It is determined by all of these changes that there should be diverse suppliers rather than the sole government. Certainly, “universal welfare” should be appropriately all-inclusive, adapting to the current economic development level. In a word, the construction and reform of China’s social security and welfare systems are consistent with the transition from the planned economy to the one where market forces largely determine distribution, innovate the combination form of government and market mechanisms, change the small welfare to great welfare, and open up a new era of “moderate universe”.

1.1.3 A New Starting Point for the Better Full coverage is a milestone as well as a new starting point for “moderate universe”. It requires further developed, consolidated and improved, as pointed out in the Report to the 18th National Congress of the CPC, namely “making the system more equitable and sustainable and ensuring the smooth transfer of social security accounts between localities.”2 The system should be not only more scientific but also more reasonable. In detail, it is necessary to make a more scientific top level design, formulate a more rational scheme for institutional improvement and outline a more feasible roadmap for policy implementation. For this end, it is no longer enough to solely enhance social benefits level, as is generally recognized, but rather institutional integration. So to speak, full coverage ushers in the new process of institutional integration.

1.2 Institutional Integration: An Emphasis as Well as a Key Point 1.2.1 Fragmentation: An Unreasonable Result from a Reasonable Process To meet the demands of different interest groups, China’s national security system has been established step by step for a long time, leading to the problem of severe fragmentation. Taking medical care as an example, it incorporates several schemes respectively covering urban employees, rural and urban residents, among which the new rural cooperative medical scheme is built upon county-level administrations with

2

Hu [2].

1.2 Institutional Integration: An Emphasis as Well as a Key Point

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different standards; it meanwhile embraces a variety of medical assistances and subsidies, all of which have different financing sources and implementation measures. The tendency of fragmentation is obviously manifested in the old-age insurance system. There are distinguished schemes covering different groups of workers, including ones working for government departments and public institutions, enterprise employees, farmers, urban citizens and military servicemen. In addition, in the same system each person is treated differently in accordance with whether emeritus or retired from the work unit as well as the retirement age. It seems to cause differences in benefits level even within a single city. For example, two army cadres were transferred to civilian work units, one to a government department and the other to an enterprise. Once they are eligible for retirement, their pensions will vary considerably. It inevitably results in inequality due to the segmentation of the system. Institutional disparities caused by segmentation also limit the transfer and re-registration of social security accounts, so as to hardly satisfy the basic requirements of floating population and pose challenges to the sustainable development of the social security system. However, we must admit one fundamental fact, that is, fragmentation is difficult to avoid in the process of establishing the social security system. It is not caused by the subjective fault of any person or department. Due to complicated national conditions and large population, the country’s economic and social systems have undergone dramatically profound transformation. In other words, every fragmented scheme was formed on a reasonable and necessary basis. It is hard to imagine that in such complicated reform process someone can devise a universal scheme and implement it from beginning to end. Although it is rational in partial, the whole is unreasonable; although the process makes sense, the result is disappointing. It can be concluded in a sense that fragmentation provides the foundation for further development of social security and welfare. It should also be noted that the deficiencies of social security and welfare systems may be obviously manifested due to fragmentation, namely, these deficiencies have direct relations with fragmentation. For example, urban and rural population enjoy unequal pension, medical care and minimum living guarantee services, which results in widening rather than narrowing income gap. It will not only directly influence the equality and efficiency of the social security system but also damage economic development and social stability and even lead to social conflict. It is therefore necessary to raise the issue of institutional integration to address the aforementioned problems.

1.2.2 Institutional Integration: Key to Making the System More Equitable and Sustainable and Ensuring the Smooth Transfer of Social Security Accounts Between Localities As for “making the system more equitable” mentioned in the Report to the 18th National Congress of the CPC, what kind of social security benefits is equitable? In

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terms of social security and welfare, it at least incorporates three prominent elements. The first one is equality, which refers to universal coverage instead of benefiting a few people. The second is unification, ensuring the transfer and renewal of social security accounts. Hindering the importability of social security benefits easily leads to inequality. The last one is sustainability. As far as individuals to be concerned, personal contributions should be requisitioned 15 or 20 years later; as for different generations, the obligations and rights of beneficiaries should be balanced; and in view of financial support capability there will be no huge deficits or debts in future. Equality here refers to both horizontal and vertical. Whether making the system more equitable and sustainable or ensuring the smooth transfer of social security accounts, it lies to a large extent in institutional integration. If it can not be achieved, social contradictions and even social conflicts will emerge. In recent years, a series of mass events concerned occurred, i.e. rural land expropriation, medical disputes, the treatment of retired personnel and public institution unit reform. In addition, there are more than 200 million floating population and it is impossible for them to transfer their social security accounts if there’s no institutional integration, not to mention renewal. Consequently, institutional integration is a key component of perfecting the social security and welfare systems.

1.2.3 Institutional Integration Requires Both Basic Conditions and Active Efforts To realize institutional integration it requires taking various conditions into account. The first one is urbanization level. Given the rural population taking up a big percentage, most cities possess insufficient capability to coordinate the social security system for benefiting these vulnerable people. The second one is that urban fiscal revenue is inadequate to fill the huge gap of per capita income between urban and rural residents. Taking the new rural cooperative medical scheme for instance, the minimum contribution per person was RMB 30 Yuan in 2003 and quickly increased to more than RMB 200 Yuan in few years, but equivalent to less than 10% of that of urban employees. This is particularly true of the old-age security schemes for various participants. Rural residents and urban unemployed only receive several hundreds Yuan per year, while urban employees receive one or two thousand Yuan per month or even more. The gap caused an imposing hurdle for institutional integration. The third one is in relation to connected pooling. The new rural cooperative medical scheme is currently operated at county level and it will become hard to operate if at the prefecture level, coupled with such factor as non-standard provision from developed and less-developed counties within a city. Unquestionably, it depends largely on the financial capability of the city. For example, the goal presented above can be realized in the southern part of Jiangsu Province due to good economic situations, but it will come to nothing in the northern part of the province. It therefore can be concluded that the economic development level is the major factor restricting

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institutional integration. There are certainly other factors influencing institutional operation, including the improper distribution of medical services. If all conditions are in place, the best way of addressing the aforementioned problems facing the social security system is institutional integration. Dongguan, a prefecture-level city in Guangdong Province, took lead in institutional integration. The city unified medical security schemes for the urban employed and unemployed as well as rural population, which is in tandem with its level of industrialization and urbanization. In Dongguan, rural residents account for a small percentage in the whole population and the income gap between urban employees and rural workers is relatively small. The successful example of the city demonstrates in detail that institutional integration requires basic conditions. However, given the divides between regions, between urban and rural areas, between different occupational statuses as well as between employed and unemployed, are still very large, how to indeed realize integration? There are two options for the above question, passive and active. The passive one refers to waiting for the conditions to be ripe like Dongguan, including relatively high level of industrialization and urbanization, narrow urban–rural income gap and strong payment and fund-raising capabilities. However, it takes a considerably long time and the equality, mobility and sustainability of the social security system make no sense at all even if getting the expected result. More importantly, it also takes risk for waiting in light of fragmentation stated above. The active one refers to vigorously narrowing the income gap by innovating social security and welfare systems, coping with problems emerging from industrialization and urbanization such as the basic needs of floating population, so as to provide basic conditions for institutional integration. The proactive one likewise incorporates two options, involving operational and institutional integration. The former one refers to realizing the transfer and renewal of social security benefits at the operational level in an operational approach, i.e. the measures of payment and calculation. Taking old-age insurance as an example, under premise of unchangeable situations, urban employees with the contribution period of 15 years should be eligible for transferring their previous contributions to the schemes for urban or rural residents to the current accounts; on the contrary, if urban employees pay premiums less than 15 years their contributions are able to transfer to the schemes for urban or rural residents. The transfer between the schemes for urban and rural residents can be achieved, that is, transferring personal payments and accumulating contribution years. However,3 in fact, the gap of payments between the schemes for urban and rural residents and for urban workers is relatively huge and it is possible to transfer personal contributions rather than social pooling, not to mention the conversion of contribution years. It is therefore called as operational integration instead of the institutional one. If participants transfer from the scheme for urban employees to the ones for urban and rural residents, they will suffer great losses due to the inflexibility of social pooling; and if participants transfer to the scheme for urban workers, they will also lose a lot because of the failure to convert payment years. Thus it can be seen that the approach is not a fundamental one to 3

Wang and Wang [3].

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resolve problems, but conducive to resolve the problem of some floating population being repeatedly enrolled in the schemes for rural and urban residents. According to some survey conducted in 2010, the situation of repeatedly applying for benefits was considerably severe, accounting for nearly 10% of the total insured in some places, which led to the fiscal loss of RMB 10 billion Yuan. If the problem can be addressed through operational integration and unified management, it is virtually an amendment to the current system. Unlike the operational one, institutional integration aims at integrating parallel schemes, neither ignoring objective conditions nor passively waiting for the narrowing of income gap. The more reasonable way is narrowing income gap by gradually conducting institutional integration and in turn promoting further integration through smaller gap, ultimately realizing social fairness and guaranteeing the sustainability of social security and welfare systems. In current circumstances, we should do everything that we can. For old-age insurance, it requires comprehensively pooling the basic insurance scheme for urban employees at the provincial level, realizing national basic pensions and improving management of the new rural cooperative funds. In terms of medical care, the first issue is to integrate the medical insurance schemes for urban and rural population, with the aim of making benefits more equitable and sharing management resources. The conditions of integration mentioned above are relatively ripe due to such factors as these schemes are mainly subsidized by government investment rather than paid by individuals. Lifting the pooling level of social security signifies more fairness under the pooling jurisdiction, something which requires comparable fiscal subsidies making up deficits. In eastern China, particularly on the outskirts of some large cities, the pooling level of both old-age and medical insurance is five or six times higher than that of the middle and western part, as seems to be hardly narrowed regardless of relaying on the transfer payment of the central finance or internal adjustment across the region. Even in one region, due to severe segmentation, it is impossible to immediately deal with the problem of different pooling levels for the new rural cooperative medical scheme that is built on county level, despite subsided by central and local finance. Obviously, under the premise of making no adjustment and improvement to the current schemes, the degree of institutional integration is relatively limited, which is merely based on the principle of giving priority to the nearest. It can be therefore concluded that integration will be a long process. What is worse is that the gap within various schemes may increasingly widen due to such factors as practical requirements and economic changes, thus increasing the difficulty of realizing institutional integration. Several years ago, when popularizing the new rural cooperative medical program, localities once devised alternative solutions, that is, unifying the system while setting up differentiated contribution levels. Participants can independently choose the affordable level, and they will enjoy different benefits accordingly. It once played an active role in attracting more people to be enrolled and also provided references for institutional integration.

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It is unlikely that the huge divides between urban and rural population, even between urban employed and unemployed, will be eliminated in a short period. If we do not change the current situations, institutional integration may be unable to be fulfilled, at least in the foreseeable future. As mentioned in the Report to the 18th National Congress of the CPC, we face the urgent task of “making the system more equitable and sustainable and ensuring the smooth of social security accounts between localities”, but if we follow the current principle, it seems incapable of completing the task. It is quite clear that we should explore the suitable scheme for institutional integration, which is more equitable and sustainable and transfers the social security accounts between localities. This suitable scheme is baseline equality.

1.2.4 Feasible Plan for Institutional Integration—Baseline Equality There are multiple plans for institutional integration, among which baseline equality may be most feasible. It is necessary to take full account into the huge disparities between urban and rural areas, between regions as well as incomes, for fundamentally realizing integration. Therefore, if we neither proactively eliminate the abovedescribed disparities nor passively wait for the conditions to be ripe, what can we do at present? The current social security and welfare systems should be adjusted and improved, which includes further specifying the part that stands at the baseline secured by all-level governments (the employed are guaranteed by their work places) and the part that goes beyond the line secured by the society (employing units and social organizations), families and individuals. Baseline security is absolutely mandatory and undifferentiated, delivering the minimum living guarantee for all citizens; the part exceeding the line is more flexible and reflects differentiation, handled by market, mutual assistance and charity mechanisms, as well as families and individuals who can make choice in accordance with their circumstances. Once the baseline is agreed upon, it becomes easier to enhance the pooling level step by step up to realize national co-ordination, thereby offering solutions to the transfer and renewal of social security accounts. In addition, it is also no longer a problem for the part above the line to transfer and continue the accounts by virtue of differentiation and flexibility. The most prominent issue here is to define the proportion of the parts standing at or above the baseline, namely, specifying the role of the government and market as well as the responsibilities of the government, society, families and individuals, so as to avoid payment crisis and maintain institutional sustainability. It is also worth emphasizing once again that the baseline is not equivalent to the lowest level of social security that changes as the economic development. What is the meaning of the baseline? It should be a line in relation to the responsibilities of all providers and the role of systems and mechanisms. The basic needs, i.e. compulsory education, minimum living guarantee, public services, basic pensions and medical

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insurance, should be provided by the government and the others can be secured by the market, families and individuals. On account of benefiting all citizens it must reflect differentiation and avoid some unnecessary contradictions, thus smoothing the transfer and renewal of social security accounts. More specifically, first of all, in terms of welfare demands, the most fundamental issue is how to distinguish the parts placed at and above the baseline in accordance with basic and additional needs, as well as of the balance between demand and supply. We will not focus on how to distinguish what is mentioned above,4 but practices have proven that it is extremely important. Only by distinguishing the two parts can the responsibilities of all subjects be determined and the sphere of action of rigid and flexible mechanisms. If all needs are satisfied through government investment, the social security system will be unsustainable. As for the balance between demand and supply, it requires to scientifically calculate the proportion of expenditure on social security and welfare to GDP as well as to fiscal expenditure, thus avoiding financial deficits. Therefore, the essential issue is to promote economic development and increase income per capita, then strike a balance between demand and supply. Moreover, it is necessary to handle affairs in a scientific and rational approach, on the basis of the supply–demand imbalance, so as to sustain the vitality of the system. Second, in terms of welfare provisions, the most significant issue is to define the roles of the government and market. As the relationship between the government and market is handled under the socialist market economy, it is vital for constructing a benign social welfare system to properly treat the relationship. For instance, the housing system made a tremendous transition during the period from the planned economy to the 1990s and early twenty-first century, resulting in the social hot topic of housing turmoil. The result showcases that it is very important but difficult to handle the relationship between the government and market in proper. Distinguishing welfare at or above the baseline in accordance with baseline equality provides the prerequisite for specifying the roles of the government and market. The welfare at the baseline refers to the basic needs of all citizens with the rigid feature, firstly secured by the government (not necessarily by public finance); the welfare exceeding the line is differentiated and flexible, allowing residents to make a selection, which should be secured by market and mutual assistance mechanism. Taking social and commercial insurance as an example, not every old-age benefits should be incorporated into the social security scheme and some special requirements can be involved in the commercial one; the same situation goes for medical benefits. Social and commercial insurance should play their respective role on the basis of nature, principle and mechanism. Third, in terms of welfare responsibilities, it requires scientifically defining the relationship between the government and society, between society and individuals, while stressing the responsibilities of the government and society as well as the role of social organizations, families and individuals. For the relationship between the government and society, to be undertaken by only the government firstly needs to be rejected and there is absolutely a need for exploring 4

Jing [4].

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a reasonable way in which the government and society should not shirk but assume responsibilities. For instance, welfare service is generally not “administrative”, and it should learn the international experience of government’s purchasing services, that is, the government and social organizations respectively play the roles of guidance and supervision as well as handling. And then social organizations need to provide services in accordance with regulations and laws, moving toward standardization and specialization, especially services for the vulnerable group including the elderly, infants and children as well as the disabled. The government has responsibility in supervising and managing the whole process of service provision. In regard to the relationship between society and individuals, it requires opposing blindness but advocating so-called “socialization”. In face of aging population and changeable demographic structure, “socialization” was once excessively advocated due to the factor as weakening family function. In fact, what is society? It virtually consists of families and individuals. Various social surveys in recent years reveal that the unitary “social provision for the aged” neither meets the needs of elderly population nor conducive to their offspring practicing filial piety. It is a mistake in total to regard the filial piety culture and family values as a feudal and backward awareness and totally repudiate them. The most important is how to explore a pension mode suitable for the traditional Chinese culture and emerging social conditions. By introducing the personal account, the basic pension system combining social pooling and personal contributions, which is unique all over the world, has been constructed, as a great institutional innovation. To be simply put, it is necessary to give full play to the role of all subjects, i.e. the government, market, enterprises, society, families and individuals, to establish multisubject social security and welfare systems with various approaches, rich content and reasonable structure. The theory of baseline equality essentially aims to find a scientific, rational and feasible solution suitable for China’s current situations, and meanwhile achieve the intended purpose. Covered by social security and welfare systems, all people are living comfortably irrespective of financial conditions, geographies, ethnic identities and occupations, thus sense of equality and security have gradually intensify; each person that has the potential is able to acquire a fair opportunity to make progress and every labor is willing to work hard to create fortune, thus social vitality and cohesion are correspondingly enhanced. In accordance with the baseline equality, the only thing needs to do is further specifying the boundary between parts standing at and above the line. On the one hand, for the part standing at the line, it requires realizing pooling at the provincial level (such as basic medical insurance) or at the national level (such as basic pension insurance), leaving occupations, identities, financial situations and geographies out of consideration. On the other hand, for the part going beyond the line, multiple subjects should be involved such as market, social organization, families and individuals, and appropriate differentiation should be acknowledged. Once the part at the baseline is unified, the disparity between systems can naturally disappear, then addressing the problem of transfer and renewal of social security accounts. It is also easier to take away the part above the baseline as you go, which is similar to the personal account, due to its flexibility. There is no need or possibility to integrate personal contributions

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due to different payments, and integrating basic pension signifies the integration of the entire old-age insurance system. In this context, the principle of giving priority to the nearest does not make sense. Similarly, the social assistance system can realize unification between urban and rural areas as well as between regions as soon as possible, based on provision of the minimum living standard; and as for the medical security system, it can firstly unify the benefits for urban residents and farmers and then involve the one for urban employees and meanwhile develops from disease treatment to health guarantee, thus fulfilling the ideal goal of “every one enjoy good health”. If so, we can realize the narrowing gap between urban and rural areas, between regions as well as of income through institutional integration built upon baseline equality, rather than passively waiting. Institutional integration refers to making every system unified, with reasonable differentiation and the combination of parts at and above the baseline. In this kind of system, it can strike a balance between rigid and flexible demands and mechanisms. Neither soften the rigid part, nor do rigidify the flexible part. Sustainability will accordingly increase in the case of making systems more adjustable and flexible.

1.3 System Integration: An Idea as Well as a Policy Institutional integration mainly refers to the internal integration within an institution, for example, the integration of various old-age insurance schemes targeted for different social groups and the integration of different medical insurance systems. System integration, however, involves the integration of different institutions as well as institutions with non-institutional factors. Both the content and areas for system integration are broad and hard to be exhausted by any single volume. The plan for system integration we are proposing now is an extension of the baseline equality. It includes both principles and policies. In terms of the content, there are the complementation and coordination of the parts standing at and above the baseline, the integration and coordination between institutions, as well as the coordination between institutions and non-institutional factors. As regards the types of system integration, we can identify three. The first type is the integration of the part providing basic social security. There should be no big disparities in this part, but due to historical reasons or man-made causes, huge disparities do exist. Hence, the integration is mainly to eliminate disparities. The second is the integration of the part where disparities are reasonable, but they are too big. However, there is still room for reduction. Hence, this type is for reducing disparities. The last integration is for the part where there should be disparities and those disparities should or need to remain, but they require coordinating. Hence, this integration is to coordinate disparities. This classification can also be said to distinguish three degrees, or three modes of integration: the unification mode, making a single unit; the combination type, disparities being reduced but not eliminated; and the harmonious type, coordinating existence of disparities within a unit.

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Based on people’s needs and realities, the current focal points for system integration lie in five areas: integration of financial guarantee with service guarantee, labor with welfare system, education with welfare system, government transformation with welfare construction, and community construction with welfare construction. The aforementioned content and types of system integration are all highlighted in these areas. Therefore, the following discussion is dedicated to these five areas.

1.3.1 Integration of Financial Guarantee with Service Guarantee It is an intrinsic requirement for a synergistic welfare system to integrate financial guarantee with service guarantee. When people talk about social security, they usually point to financial security including fund raising and distribution as well as actuarial calculations. Now, or before long, when basically all senior citizens have subscribed to the basic pension system covering their primary needs of food and clothing, daily care, public service, spiritual consolation and other services will value increasingly more on improving their physical and mental well-being. Not that financial guarantee does not matter then, rather, many things are beyond money can buy. For instance, to dispel individual loneliness and indifference, as well as enhance the warm atmosphere of the society cannot rely sole on money. A multidimensional and multi-level old-age service system is necessary for supplementing the lacking functions of financial guarantee. Some places are already doing things in this respect. They organize social workers and volunteers to provide various services for the elderly. While some services are charged, many high-quality services from volunteers are free. Other places seek ways for the aged to offer mutual assistance. Meanwhile, teenagers and children are offered opportunities to visit nursing homes for chitchat with seniors. They both find happiness in this way. In the future, when people’s living conditions are greatly enhanced with all basic needs fulfilled, social security will rely more and more on the overall social development especially the social service system than on capital. In a sense, we may say that it is just because of the laggard development of public services as well as supporting facilities and personnel, individuals and families have to buy services. In other words, if a fullfledged social service platform is built and social services are adequate, many things can do without money. Social services can also serve to connect and integrate various social security schemes. Daily care and medical care services for the elderly should be coordinated between nursing institutions and residential communities. Some private nursing homes are only capable of providing daily care services lacking conditions for medical care, while some grassroots hospitals and health institutions only offer health services and are reluctant to offer nursing services. The result is that while the business in these institutions languishes, people’s service needs are not satisfied. One thing to note is that we are talking about the general integration, not only of services

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for the aged, but also for the silk, the disabled, and every one of us. And services are also varied, for example, to curb traffic congestion is also a service. A huge variety of services are necessary for making our lives more comfortable. Our goal is to build a service-oriented society where everyone provides service and everyone receives service. In addition to producer services, we should stress the development of consumer services, and this is the way out of China’s aging crisis. Actually, China has conditions to achieve this goal. For one thing, the urbanization process involves hundreds of millions of rural population moving to urban areas, and a relatively large portion of labor force among them can be transferred to the consumer service industry. For another, despite the overcapacity in manufacturing, the development of the country’s service sector is lagging behind. The service industry especially the consumer service industry is estimated to be capable of absorbing more production capacity. At last, China has the tradition of neighborhood assistance worth of carrying forward and being further developed. Therefore, though China’s aging crisis is the most severe around the world, we could pioneer a path for successfully resolving this crisis through building a service-oriented society, like we what we did in taking the lead out of the international financial crisis.

1.3.2 Integration of Labor with Welfare To integrate labor and employment with welfare institutions is the essential requirement of a positive welfare system. Whether in a planned economy or the market economy system, China closely relates the labor and employment work with the welfare system, and the labor management sector and social security sector are usually under the same administrative department. Since the reform and opening up, we initiated and have implemented the strategy of giving top priority to employment. In the 1990s, two measures were taken to solve the problem of lay-off workers. For one thing, we implemented the system of “three guarantees”—guarantee of basic cost of living allowances for workers laid off from state-owned enterprises, guarantee of unemployment insurance benefits and guarantee of subsistence allowances for urban residents. And for another, we endeavored to promote employment by all means, managing to be out of the dilemma without creating huge fiscal burdens. Entering the twenty-first century, while the minimum standard of living for residents has been raised by a big margin and various subsistence allowances for both urban and rural residents have increased continually, the government never slackened the efforts to encourage employment in order to prevent welfare dependency in the society. In recent years, with the expanded college enrollment, six or seven million graduates need employment each year. We introduced policies and measures to encourage entrepreneurship and spur job growth for this reason. Thanks to the strategy of prioritizing employment, though the country’s social security and welfare benefits increased dramatically in the past decade, we didn’t suffer from abnormally high unemployment rate as in some European countries.

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Even so, we still face a series of rigorous problems as how to integrate employment with welfare schemes. For example, with urbanization accelerating and entering its peak, urban employment pressure will increase more than ever before. At the same time, the new generations of migrant workers are having different career choices from that of their parents and demanding better working as well as living environment. Also, the trend for them is towards permanent migration to the cities, setting higher requirements for medical care, education, housing, and other social security and welfare services. Moreover, the so-called fuerdai, which means the “rich second generation, and kenlaozu, or the NEET group, in cities also have varied desires for employment and living. All these changes call for new models and policies for integrating employment and welfare institutions. However, there is one thing remaining constant among all these changes—we have a population as large as 1.4 billion people and human resources are the country’s biggest and most reliable resource. To prevent the biggest resource becoming the biggest burden, the key is to integrate employment with the welfare system. Chinese President Xi Jinping once said in a press conference, “Every bit of happiness in the world is created by hard work.”5 His remarks shed light on the significance of this integration.

1.3.3 Integration of Education with Welfare To integrate educational development with welfare schemes is the fundamental requirement for a developmental and endogenous welfare system. Besides increasing people’s knowledge and improving their skills as well as bringing about economic returns, education can produce huge social welfare effects. People usually equivalent the integration of education with the welfare system with voluntary teaching and assistance programs for poverty-stricken students only. But studies show that education is fundamental to improve people’s well-being. It influences every aspect of social welfare directly or indirectly, but in either case, its influence must not be overlooked. First off, educational resources should be integrated with employment and entrepreneurship training as well as with the income distribution system, and subjects and curriculum should be adjusted accordingly to fulfill practical needs. Also, schools should invite professionals to give lectures or guidance on working practices, and students should be encouraged to take internships as early as they can. At the same time, there should be a balance between the proportion of research universities and those production-oriented ones, as well as between teaching areas they focus on. In a word, education should become an engine for driving industrial upgrading as well as for supporting economic and social development. Furthermore, we should encourage the youth to be more proactive and diligent through the reform of the income distribution system.

5

Xi [5].

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In addition, educational development should be integrated with hukou (or the household registration) system, the social security system and the housing system as much as possible. Comparative studies of different nationalities found that countries that can provide broad space for development of the new generation of migrants, new entrants in the job market and various technical talents, possess more development vitality while maintaining a stable social order. Also, countries that spend more or the most on education are not only leading in national innovation and rich in welfare resources, but also strong and tenacious in face of economic and social crises. The integration of educational development with the welfare system is the most reliable guarantee for sustainable social protection.

1.3.4 Integration of Government Transformation with Welfare The integration of government transformation with welfare construction is a guarantee for the welfare system integration. One prerequisite for this integration is that the government places improving people’s well-being at the center of its work. In the context of reforming the economic system, the major content for transforming government functions are to reduce interference as well as streamline administration and delegate more power to lower levels. Welfare construction also requires the government to improve efficiency and transform the pattern of government work, but in essence, it asks for clarifying the objective for governing. President Xi Jinping elaborated on this objective: “Our people have an ardent love for life. They wish to have better education, more stable jobs, more income, greater social security, better medical and health care, improved housing conditions and a better environment. They want their children to have sound growth, have good jobs and lead a more enjoyable life. To meet their desire for a happy life is our mission.”6 The direct aim for government transformation in the context of building the market economy is economic growth, or creating GDP, while welfare construction sets higher requirements for government transformation, namely the ultimate goal of increasing people’s living standards. Specifically, these requirements are in the following aspects. Firstly, the government should spend more in areas that are important to improving people’s standards of living and increasing their income by a wide margin, while reducing government expenditure through building a clean government. Secondly, it should put forth efforts to become service oriented and conduct social management through services. Thirdly, it should strengthen the construction of societal organizations especially those for public benefits, and make them play a major role in providing public services and welfare. The government and these organizations should be in benign interactions and their respective responsibilities and functions should be clarified, that is, the government buys services as well as formulates norms and offers guidance and 6

Xi [5].

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supervision. Lastly, we should strengthen the ranks of social service and social work professionals, and at the same time leveraging the role of government officials in social welfare work.

1.3.5 Integration of Neighborhood Communities with Welfare To integrate community construction with welfare construction lays foundation for the welfare system integration. People live in residential compounds, where their welfare demands especially those of the old, disabled and other vulnerable groups, reside as well. Hence, improving people’s livelihood should be built upon this foundation and public services should be concentrated in communities. For this end, both public and private financial resources as well as talents should be drawn to communities. To implement the welfare construction in a down-to-earth manner, the first necessary step is to ensure the community-level self-governance rather than render residents committees and community workstations as agencies of the local government. Specialized community workers should exert their time and enthusiasm on serving community residents, instead of completing tasks assigned by local government. Also, more input should be onto improving infrastructure, organizing activities and attracting talents in communities. Currently, generally speaking, community work in cities and other relatively developed areas in China are comparably satisfactory. For example, in Guangdong Province, urban community workers and volunteers are organized to support communities in rural areas, and the practice was well received in the society. Furthermore, residents should be mobilized to participate in community affairs and develop the sense of responsibility for their localities. Hence, based on the basic unit of neighborhood communities, the “stranger society” can be transferred to the “acquaintance society”, and this is a great stride in social development. In summary, the social security and social welfare is a big system, requiring both internal institutional integration as well as coordination with external factors. The integration and coordination are rich in content and present a variety of forms. The above-mentioned five aspects are key ones among the many. But they are enough to comprehensively show the several basic relations need balancing, namely, integration and coordination within one system, between different systems, between the government and society, as well as between various players in the society. Properly handle these basic relations, and we can march forward toward a welfare society with Chinese characteristics.

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1.4 Summary: Integration of Social Welfare System is the Base of Modern State System Integration As discussed above, institutional and system integration is undoubtedly crucial to the social security and social welfare system. However, we must further stress that for a rising China, it is also the foundation for national construction, vital to national reunification and social stability. Embracing a vast area and large population, China is characterized by great internal differences as well as complicated external environment. Since ancient times, the country has valued internal integration for achieving prosperity. Now, we are doing our modernization endeavors, the institutional and system integration of the social security and welfare system is critical for improving people’s livelihood, and for progressing social development and national construction. Through integration, we can make different regions dependent on each other, and areas with advanced technology and those abundant in resources complementary to each other. We can also make all ethnic groups live and develop in harmony and work together in weal and woe. Meanwhile, the process can help forge national unity to cope with external shocks. The institution and system integration of the social welfare undertaking is indispensible to everyone. Relying on this social development, we can form a community with shared future and maintain national independence and unity. Advancing from institutional coverage and integration to system integration, China’s social security and social welfare system can ultimately become a fundamental facet of national construction. This is an ideal vision and a feasible road map as well.

References 1. Jing,T., Bi, T.: From the small Welfare to the Great welfare: a New stage of the Welfare System with Chinese Characteristics. Theory Front. (11) (2009) 2. Hu, J.: Firmly march on the path of socialism with Chinese characteristics and strive to complete the building a moderately prosperous society in all respective—report to the Eighteenth National Congress of the Communist Party of China. In: Collection of Documents of the Eighteenth National Congress of the Communist Party of China. People’s Publishing House (2012) 3. Wang, T., Wang, Y.: Transition of pension insurance system for urban and rural residents conducive to free movement of population. Reference News, November 29, 2012 4. Jing, T.: Baseline Equality: The Foundation of a Harmonious Society. Beijing Normal University Publishing Group (2009) 5. Xi, J.: Always be of the same mind with the people and share the same destiny with them. People’s Daily Online, November 15, 2012

Chapter 2

The Analysis of Social Welfare Model in Contemporary China

Over 70 years of modernization since the founding of the People’s Republic of China, the Chinese society went through three phases, the planned economy, the market economy and social development. The social welfare system in each phase was with distinctive Chinese characteristics. We cannot mechanically apply western framework to analyze China’s social welfare. Currently, the welfare system in China still has problems, and for future development, we should expand the coverage of social welfare programs and increase the integration of welfare systems to build a generally integrated social welfare system. This has become an objective requirement and basic task of China’s welfare system development.

2.1 Social Transformation and Welfare System Transformation A country’s welfare system is deeply influenced by its national ideology, economic conditions, cultural tradition and social structure. It is also directly related to social transition or transformation. In China, the welfare system changes along with the social transition. Under the planned economy, social welfare was at a low level and was mainly provided by the government, due to the strategy of forging ahead and the mentality of increasing accumulation and decreasing consumption at that time. Under the market economy, the country took economic development as the central task, giving priority to efficiency with due consideration to fairness. This led to an apparent tendency of valuing efficiency while compromising on fairness in the welfare system. Entering the stage of social development, great strides were made in the welfare system. Under the guidance of the scientific outlook on development, the welfare system which focuses on ensuring the well-being of the people was in full swing.

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_2

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2.1.1 Social Welfare in the Planned Economy Stage In the planned economy, the major characteristic was planning. In production, the central authority made the plans which were then implemented by local governments and production units, while both raw materials and final products were allocated by that authority in a unified manner. In the area of people’s living, especially in urban areas, residents had to buy daily necessities with ration coupons, which minimized the quantities they could buy. This characteristic had a great impact on social welfare system construction, and social welfare at that time was the responsibility of the government totally. Welfare benefits were delivered by work units and characterized by equalitarianism as well as urban and rural segmentation. First, the state took all the responsibility to provide social welfare. Throughout that era, the state allocated jobs to all people capable of physical labor. In cities, people were allocated to the Party and government organs, state-owned enterprises and institutions as well as collective enterprises, while in rural areas, people were allocated to production teams. In this way, the so-called full employment was seemingly achieved and people could earn their basic living. This should be an ideal policy, the basis and the ultimate goal for all social welfare systems. However, later practice proved that, this policy could not sustain due to the sacrifice of efficiency. Influenced by the strategy of forging ahead, the guiding ideology for economic construction then was to prioritize accumulation while ignoring consumption. Wages were generally low, and people could only afford daily necessities. Advanced requirements of education, healthcare, housing and old-age care, which were also people’s rigid demands and essential for labor force reproduction, were hard to satisfy through a family’s income. Therefore, the state had to shoulder the responsibility of social welfare provision to ensure regular production and secure people’s living. The state took almost all the responsibility to provide social welfare, especially for urban employees of state-owned work units. Staff of state-owned work units could enjoy retirement pension, medical care reimbursement, low-cost or free nursery, kindergarten, low-price rental housing, as well as various subsidies for heating in winter, home leaves, transportation, cultural and recreational facilities, and even nursing homes. That is, they could obtain all-round welfare covering care from the cradle to the grave. Meanwhile, special social groups such as the old, young, sick, and disabled also had special benefits including welfare home, nursing home and orphanages. In order to keep people’s basic living standard, the government also guaranteed that every family in the city could obtain certain life necessities through low price, subsidies, and rationing.1 Although rural residents did not enjoy such comprehensive social benefits as urban residents, they were still provided with basic living, health care and education. Second, in practice, people’s work units were the major provider of social benefits. Meanwhile, households played a very important role in providing services of daily care and so forth. As mentioned before, though the state bore the major responsibility for social welfare supply, work units were actual providers. In cities and 1

China Development Research Foundations [1, p. 13].

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towns, work units mainly include the Party and government organs, public institutions and enterprises, while in rural areas, they were collective units in villages, such as a commune, a production brigade or a production team. In particular, in 1969, the Ministry of Finance issued a regulation stipulating that state-owned enterprises stopped collecting labor insurance from workers, meaning that enterprises began to pay the total amount of labour insurance for employees, thus sharing heavier burden in welfare supply. To be specific, enterprises mainly provided four types of social welfare: welfare housing, old-age security, free medical care and social services. Furthermore guided by the idea of all-inclusiveness, enterprises, big or small, in addition to basic living security, had to provide basic social service facilities of all kinds, including schools, hospitals, nurseries, kindergartens, canteens, cultural centers, libraries and cinemas. In other words, they had to provide all the needs related to living, old age, illness and death. In short, before the reform and openingup, the work unit, as a subsidiary to the government, was the most important social welfare provider in urban areas of China. Most needs of employees, such as education, entertainment, medical care, housing and childcare, were all solved within a work unit.2 While people’s work units became the main social welfare provider, families played an important role in providing daily care and other services. People’s work units mainly provided three aspects of social welfare benefits: income security, including pension, relief fund and daily living subsidies; in-kind benefits such as housing; and basic public services such as education, medical care and recreation facilities. Whereas, daily care for the elderly, the young, the sick and the disabled were mainly provided by families. For one thing, there were a lack of social organizations which could meet the needs of such services, and for another, in Chinese traditional culture, it is naturally for people to provide daily care for family members. Families, to some extent, filled in the gap of benefits provision where work units could not function. Work units and households together took the responsibility of providing social welfare. Third, in terms of results, two characteristics were apparent of the social welfare under the planned economy. This first is egalitarianism. Egalitarianism was the basic principle of social welfare distribution under a planned economy. At then, people had equal rights to social welfare, though the level of benefits varied in urban and rural areas, among different scales of work units, and also in terms of people’s occupation, position, length of service and other aspects. Especially, people within a work unit could enjoy similar social welfare benefits. The biggest problem with egalitarianism in social welfare was the lack of necessary incentives, which gave rise to welfare dependence. In fact, equal distribution of benefits does not necessarily mean fairness. For example, urban residents enjoyed far more better social welfare than rural residents. Also, there was unfairness between state-owned enterprises and collective enterprises as well as among enterprises of different sizes. This was essentially social injustice.

2

Huang [2, pp. 217–218].

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The second is low level. Though both urban and rural residents could enjoy social welfare benefits, the overall benefit level was low. Urban residents could enjoy more and better social benefits than rural residents. But, despite the guarantee of basic living, some life necessities still must to be purchased by coupons. There were also difficulties in getting medical services, housing and schooling. Though cooperative medical services reached a broad coverage, it could only deal with “small diseases” not “big illnesses” due to serious lack of medical staff and medicine. Some rural areas were even difficult to guarantee basic living. Rural areas also suffered from serious lack of school buildings and teachers Moreover, people’s spiritual life was in general tedious. The ultimate reason for the low level of social welfare under a planned economy is the low-level productivity. With insufficient social output, there was no more social surplus for welfare. Also, under the strategy of forging ahead and the idea of more accumulation, less consumption, the focus was on industrial production, especially heavy industries. In the consumption area, which social welfare belongs to, people’s needs other than urgent ones could all make sacrifices for production. Fourth, the urban–rural division and differences were institutionalized. In the city, people enjoyed more social welfare, such as free education, medical care, housing, old-age care, as well as various cash subsidies for transportation, heating, home leaves, etc. Moreover, there were all kinds of facilities, including stadiums and gymnasiums, libraries, cultural centers, cinemas, nursing homes, etc. In rural areas, in addition to disaster and difficult relief provided by the state, other social benefits were limited only to basic education and medical care as well as five guarantees. Housing security, old-age security and recreation facilities was scarce. The urban– rural difference was also reflected in the social welfare input mechanism. In cities, all social welfare inputs came from the state and were included in the government’s financial arrangements and corporate costs. In rural areas, only disaster relief and difficulty relief were invested by the state. Basic education, cooperative medical care, five-guarantee support and infrastructure construction all came from the rural collective economy, while pension and housing were borne by farmers. It was precisely the disparity in welfare input that led to more obvious urban–rural differences in social welfare.

2.1.2 Social Welfare in the Market Economy Stage The reform and opening-up which began in 1978 marked the beginning of China’s shift from a planned economy to a market economy. This is a significant social transformation. Since then, China’s economic development has made remarkable achievements. The market economy highlights the role of the market in resource allocation, and efficiency is the main goal it pursues. Taking economic development as the central task is the guideline for all work. Giving priority to efficiency with due consideration to fairness is the basic principle. These guideline and principle also apply to reforms in the field of social welfare. “Under the conceptual framework of a market economy, many social welfare contents, such as education, social service,

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medical care, housing, social insurance, etc., are regarded as personal consumption and valuable goods.”3 The social welfare model under the market economy has three prominent features. Firstly, during the market-oriented social welfare reform, the responsibility of the sate was reduced. During the transition from a planned economy to a market economy, there had been an obvious marketization tendency in the field of social welfare with efficiency as the goal. The first manifestation was that the social welfare reform especially the social security system reform had to serve the reform of state-owned enterprises. The enshrinement of the unemployment insurance system in the 1980s, the reform of the basic old-age insurance system for urban enterprise employees in the 1990s, the reform of the basic medical insurance system for urban employees, and the establishment of a minimum living security system for urban residents, were all centered on the state-owned enterprise reform. One goal was to reduce the burden on state-owned enterprises so as to promote them to become real market players. This goal also involved other aspects of employee welfare than social security. Under the slogan of breaking the big pot system (or extreme equalitarianism) and depriving social functions from enterprises, employment risks began to be borne by individuals. Schools, kindergartens, hospitals, etc., formerly run by enterprises began to be detached from enterprises. Through these reforming measures, enterprises were relieved from some social functions but welfare benefits of employees declined. Unfortunately, the government did not shoulder due responsibility in this process and the cost of reform could only be borne by individual workers and their families. Also, the market-orientated reform of social welfare had severe consequence on people’s livelihood. In education and medical care, the marketization tendency was manifested in continuous increase of charges. For example, higher education began to charge tuition fees, and tuition fees had been rising all the way. Also, medical expenses became too high to be beyond the affordability of ordinary people. Another consequence was that housing changed from a type of welfare to a commodity. All houses must be obtained through the market. Moreover, the marketization trend was reflected in the government’s attempt to lessen its role in traditional social welfare, for example by decreasing various subsidies and encouraging or at least acquiescing in the establishment of social service agencies for profit such as private elderly-care institutions, private educational institutions, private medical care institutions, and so forth, to make up for deficient government expenditure on social welfare.4 Secondly, more types of insurance began to enter the urban social security system and personal contribution increased thereupon. Before the reform, urban employees could enjoy retirement and medical care benefits without paying fees. Now, in the newly established old-age insurance, medical insurance and also the unemployment insurance, they had to pay a certain premium. At the end of 2012, a social insurance system for urban employees consisting of basic old-age insurance, basic medical insurance, unemployment insurance, workplace injury insurance and maternity insurance was basically established. In this system, for basic old-age insurance, 3 4

Huang [2, p. 223]. Ibid.

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the contribution rate of employees was 8%; for basic medical insurance, it was 2%,5 and for the unemployment insurance, it was 1%. That is, altogether, 11% of an individual’s basic salary would be used to pay social insurance premiums. This shows that in the process of restructuring the social security system by bringing in more social insurance, an indisputable fact is that the burden on individuals has increased. In addition to premiums, individuals and their families must also bear certain social welfare service costs. For instance, among medical insurance costs, social insurance institutions could only pay a certain percentage of reimbursement and a maximum control line was set up, and the rest must be born by individuals and their families. Thirdly, rural families basically shouldered all the social security responsibility. In the countryside, the rural family contract responsibility system of production did indeed release tremendous vitality. The productivity in rural areas had been enhanced rapidly and the living standards of farmers greatly improved, but an unexpected result was the decline of the rural collective economy. The rural social welfare system underpinned by the collective economy suffered a huge shock consequently: the coverage of cooperative medical care declined sharply, and it has basically disintegrated in most areas. As a result, farmers’ medical treatment was basically self-burdened. Some farmers were impoverished by illness or fell back to poverty due to illness. The five-guarantee system was hard to sustain due to insufficient funds. Basic education and infrastructure construction had to be maintained by collecting taxes from farmers. At that time, the state’s financial investment in rural social welfare was extremely low. In short, the market-orientated reform with efficiency as the goal has impacted China’s social welfare system immensely. The social welfare system under the planned economy has disintegrated, but the new one has not been formed yet. During the transition period, the responsibility structure in welfare provision has undergone a major change. The government’s responsibility kept declining, while the burden on individuals and families became increasingly larger. The overall social welfare efficiency was reduced, and people became more and more dissatisfied.

2.2 Social Welfare During Social Development Stage The market-oriented reform stimulated rapid economic growth and the Chinese economy rapidly leapt to the top of the world. Seen from this perspective, China’s reform and opening-up was a success. This is exactly the Chinese experience or Chinese model that domestic and foreign scholars acknowledged. Meanwhile, it is undeniable that thanks to reform and opening-up, Chinese people’s living standards dramatically improved. China was proceeding from being barely fed and clad towards 5

Urban residents’ basic medical insurance is not included, because urban residents’ basic medical insurance and urban employees’ basic medical insurance are paid in different ways, that is, urban employees’ basic medical insurance is paid on a relative basis and a certain percentage of the individual’s basic salary is paid as premiums, while urban residents’ basic medical insurance is paid in absolute number, that is, each person pays a certain amount of insurance premiums a year.

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a well-off society. Under the principle of taking economic development as the central task and giving priority to efficiency with due consideration to fairness, social development was underrated. Hence, social development was far lagging behind economic progress, resulting in many problems: increasing income gap, employment difficulties (especially for college graduates), inadequate old-age security, expensive and difficult medical treatment, difficulty in school-entry (especially for children of rural migrant workers), rising housing prices, etc. These problems show that the fruits of economic development were not truly benefiting the majority, and the social welfare level of the general public had not enhanced with economic growth. Against this backdrop, the Central Committee of the Communist Party of China (CPC) put forward the scientific outlook on development and building of a harmonious socialist society, which promoted the universality and fairness in the social welfare system in the short term. In October 2003, the 3rd Plenary Session of the 16th CPC Central Committee adopted the Decision on Some Major Issues Concerning Comprehensively Deepening the Reform, in which the scientific outlook on development was initiated, which advocating putting people first and aiming at comprehensive, coordinated and sustainable development. The socialist market economy shall be improved based on the requirement of promoting a balanced growth between urban and rural areas, different regions, economic and social undertakings, man and nature as well as domestic progress and opening-up to the world. To put people first is the core of this strategic line of thought. Its goal is to realize an overall development of the people. It means to take people’s interests as the starting point and foothold of all works, make continuous efforts to meet material and spiritual needs of the people, and ensure the economic, political and cultural rights and interests of the masses to be met, so as to allow the fruits of development to benefit all the people.6 In October 2006, the 6th Plenary Session of the 16th CPC Central Committee adopted the Decision on Major Issues Regarding the Building of a Harmonious Socialist Society, which proposed that democracy and the rule of law, equity and justice, honesty and fraternity, vigor and vitality, stability and order, and harmony between man and nature are the principle of all the people building and sharing a harmonious socialist society. In October 2007, the report of the 17th CPC National Congress again highlighted the significance of the scientific outlook on development for the future development of China, and further clarified the goal of “social development with the focus on improving people’s livelihood”. “Social development is closely related to the people’s well-being. More importance must therefore be attached to social development on the basis of economic growth to ensure and improve people’s livelihood, carry out social restructuring, expand public services, improve social management and promote social equity and justice. We must do our best to ensure that all our people enjoy their rights to education, employment, medical and oldage care, and housing, so as to build a harmonious society”. Under the guidance of the scientific outlook on development, we have made great progress in improving people’s livelihood which manifests in the following fields of social welfare.

6

Huang [2, p. 229].

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In disaster relief, a system including emergency response, material reserve and post-disaster reconstruction has been built. It has been proved effective in the relief work of the 2008 Wenchuan earthquake, the 2010 Yushu earthquake and the 2010 Zhouqu landslide. At the same time, the degree of specialization in rescue, medical care and relief services has been enhanced. Social donations and voluntary services have also been developed to a greater extent and are playing an increasingly important role in disaster relief. In living assistance, the minimum living security system for urban residents is becoming more and more complete. All entitled residents are now receiving subsistence allowances. The standards have been rising, and a dynamic adjustment mechanism has been built to allow subsistence allowance to be adjusted with commodity prices. Also, different subsistence allowance standards have been set up for different social groups. Temporary assistance measures are adopted to benefit people who run into difficulties for a period of time. Various special aids have been established, for example, for residents whose income is slightly higher than the subsistence allowance standard. The rural minimum living security system has also been established, and the five-guarantee program has been included into public finance to ensure its source of funding. In old-age care, the coverage of basic old-age insurance for urban employees has been continuously expanded, measures for transfer and continuation of old-age insurance have been formulated, and the measure for implementing the provincial pooling of old-age insurance is being drafted. The pension standards for employees have been raised since 2005. Pilot reform in the endowment insurance for employees of public institutions were conducted in five provinces and municipalities. The new rural social endowment insurance pilot program was launched in 2009. Its coverage rate reached 40% at the end of 2011 and the full coverage was realized at the end of 2012. The pilot program of social endowment insurance for urban residents was launched in July 2011, which reached full coverage at the end of 2012. The problem of population aging is paid high attention. Some places introduced government subsidy measures for constructing old-age care institutions to encourage and support private capital to enter the field of old-age services. With support of the lottery public welfare funds, the government also invested in building venues and facilities for the elderly. In medical care, the coverage of the basic medical insurance for urban employees has been continuously expanded, and the reimbursement ratio and the maximum limit of reimbursement have been raised. The new rural cooperative medical scheme and the basic medical insurance system for urban residents have been established. Of each system, the number of participants has been increasing, the level of financing has been raised, and the reimbursement ratio and maximum reimbursement limit have been increased year by year. In the first half of 2009, the CPC Central Committee and the State Council promulgated the Opinions on Deepening the Reform of the Health Care System and set the overall goal for deepening the reform of the medical and health system as follows: “We shall establish and improve a basic medical and health care system that covers both urban and rural residents, and provide them with safe, effective, convenient and affordable medical and health services. By 2011, the basic medical security system shall universally cover urban and rural residents, and

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we shall preliminarily establish a basic drug system, further improve the system of primary-level medical and health services in urban and rural areas, popularize the public health services, make a breakthrough in the pilot reform of public hospitals to remarkably improve the accessibility of basic medical and health services, effectively reduce the burden of medical expenses on residents, and alleviate the problem that it is hard and expensive for people to get medical care. We shall generally establish a relatively complete public health service system and medical service system, a relatively sound medical security system, a relatively standardized drug supply and security system, and a relatively scientific management system and operating mechanism for medical and health institutions to form diversified modes of running hospitals. In this way, everyone can enjoy basic medical and health services, and people’s multi-level demands for medical care can be satisfied, with their health being further improved.” At the same time, the government will establish a four-inone basic medical and health system covering both urban and rural residents which integrates the public health service system, the medical service system, the medical security system and the drug supply security system. In education, the newly revised Law of Compulsory Education further clarifies the nature of compulsory education: it is public, unified and compulsory. And for the first time it specifies that compulsory education is free of tuition and fees, which legally guarantees the fund input in compulsory education, promotes the balanced development of compulsory education and quality-oriented education. Both the penetration rate and retention rate of compulsory education remain at a high level. In areas where conditions permit, local governments are trying to incorporate preschool education and senior high school education into compulsory education to expand the length of compulsory education from 9 to 15 years. The education of the children of migrant workers has been attached great importance to and has been taken into the responsibility of local governments. The trend of education industrialization has been corrected, the blind expansion of higher education has been controlled, and the excessive growth of tuition in higher education has been curbed. Vocational education has been given full attention, with government input increasing year by year. The national scholarship system has been established, and the student loan system and work-study system have been further improved to ensure that college students with financial difficulties can complete their studies. The Outline of China’s National Plan for Medium and Long-term Education Reform and Development (2010–2020) was issued to define the the overall strategy, development tasks, institutional reform and safeguard measures for education reform and development in the next 10 years. In terms of housing, the government has been enhancing macro regulation of real estate market and curbing excessive increase in housing prices. Meanwhile, the government has strengthened the construction of government subsidized housing, including the low-rent housing, affordable housing, and price-capped housing, so as to solve the housing problem of low- and middle-income groups. Regarding employment, the government has been constantly exploring the potential for new employment. It attaches great importance to re-employment of laid-off workers and those with difficulty in finding jobs for various reasons. Vocational training and employment guidance for migrant workers have been enhanced. The

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government also pays attention to employment of college graduates, providing guidance and training for them to start businesses and encouraging them to take advantage of financial, tax and other preferential policies. The registered urban unemployment rate has been kept lower than 4.5%. In terms of legislation, the government successively promulgated and implemented laws such as the Law on the Promotion of Non-public Schools of the People’s Republic of China, the Labor Contract Law of the People’s Republic of China, the Employment Promotion Law of the People’s Republic of China, and the Social Insurance Law and revised Compulsory Education Law, Industrial Injury Insurance Regulations and other laws. These laws and regulations have laid the legal foundation for the social welfare development. In summary, since the proposal of the scientific outlook on development and the implementation of social development focusing on improving people’s livelihood, China’s social welfare has undergone tremendous changes. The government’s public functions have been weighted toward the social welfare field, and the financial input in welfare has been increasing year by year. The country’s social welfare system has been improved, and the universality and level of social welfare have been enhanced remarkably.

2.3 The Features of Social Welfare in Contemporary China To analyze the evolution of social welfare in contemporary China from the perspective of welfare model, the Western analytical framework is not applicable. The social welfare development in China has distinct periodical characteristics, and it has not formed a mature and fixed model yet. Neither Richard Titmuss’s “threemodel approach” nor Espin Anderson’s “three-world theory” can effectively capture welfare changes in contemporary China. Though each approach has its emphasis and content, they include three basics: ideology, social problems and sharing of welfare responsibilities. Therefore, the effective approach to conduct model analysis of social welfare in contemporary China is to summarize the basic characteristics in ideology, social problems and responsibility sharing.

2.3.1 Governing Philosophy Affects Social Welfare Development The social welfare system of a country is deeply influenced by its mainstream ideology, while the values in mainstream ideology are deeply embedded in the social welfare system. “There is a strong link between ideology and its impact on welfare

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policies. This is because social welfare policies are often a reflection of social problems and social development, and they are often dominated by the values in mainstream ideology.”7 The transition of welfare systems in contemporary China, to some extent, are the outcome of changes in mainstream ideology in different periods. Contemporary China is a socialist country under the leadership of the CPC. When it was founded, the original ideal was to realize communism through socialist construction. In essence, socialism was tried out during wartime. In the revolutionary bases, the planned economy was implemented. Be it necessities for life, or education and medical care, welfare benefits were planned and arranged in a unified manner, which was the so-called wartime socialism. After the founding of the People’s Republic of China, both production and living must undergo socialist transformation to achieve the final ideal goal of communism. Conceptually, the implementation of comprehensive social welfare should be regarded as one of the main manifestations of the superiority of socialism. The construction of the social welfare system at the initial stage of the PRC, especially the construction of the urban social welfare system, was designed in accordance with this concept. However, it was regrettable that the level of productivity at that time was relatively low and material conditions were not good enough to provide comprehensive welfare benefits. If the low level of productivity had been the only cause of this situation, the level of social welfare would have been affected rather than the comprehensiveness of social welfare. In other words, under the low-level productivity, a low-level but comprehensive social welfare could have been implemented. As mentioned above, the social welfare under the planned economy was not only low in level, but also lacked comprehensiveness (such as poor benefits for farmers). In fact, the strategy of forging ahead was the main reason that led to this. To achieve the goal set by the strategy, the people must work hard and push forward by their own efforts. They must prioritize production over living and accumulation over consumption. In this case, even if the social welfare had been available, it would have been of a low level. People made sacrifices in their daily life to follow the strategy. What’s more, the pursuit of social welfare was seen as a greedy desire for enjoyment and class struggle were conducted to wipe out this tendency. A plain and hardworking life style was advocated, and once people showed their longing for social welfare, they would be thought to inherit the evil legacy of the bourgeoisie, and would be criticized and remoulded. A unique social welfare system under the planned economy came into being under the influence of the idea of decapitalization and catch-up strategy. Without comprehensive social welfare of a proper level, people’s life would not go much better, which was well manifested in the fact that 250 million people in absolute poverty appeared in rural areas in the late 1970s. Deng Xiaoping put forward the idea that poverty was not socialism, which triggered people’s reflection on socialist construction in the past 30 years:“‘Poverty’ and ‘backwardness’ are not the characteristics of socialism. To uphold socialism we must eliminate poverty and backwardness. People under socialism should be

7

Li and Song [3].

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rich, and should lead a better life.” So, how could we eliminate poverty and backwardness? After many years of exploration, a development strategy centered on economic construction was finally established: We should give full play to the positive role of the market in resource allocation, and encourage some people and some regions to get rich first to achieve rapid economic growth. The concept of giving priority to efficiency with due consideration to fairness was the embodiment of the strategy that centered on economic construction. In light of this concept, all the work should serve economic construction, and any factor that prevented or interrupted economic construction should be eliminated. The social burden of enterprises should be reduced, so reform was carried out. Social welfare should be socialized, so education, medical care and housing began to be industrialized and commercialized. Then, how to meet people’s needs for welfare? It was still necessary to take the road of marketization: seize the market opportunities, get rich first, and then buy the social welfare we need through the market. It could be clearly seen from the process that government’s responsibility for social welfare became smaller than ever. Taking the road of marketization had been proved to be right in practice during China’s social transformation in the late 1970s, but in this process, the government’s social welfare responsibility should not have been reduced, but should have been appropriately strengthened. Through the market-oriented reform, the living standards of all the people had improved, and the problem of food and clothing had been basically solved. We were moving towards a well-off society. Some people and some areas got rich first, but it was an indisputable fact that the income gap had widened, and people of low-ormiddle income had encountered certain difficulties in aspects such as provision for the aged, medical care, education and housing. From a macro perspective, there was an imbalance between economic and social development. The economic construction grew fast, but the social construction was lagging behind a lot. If this phenomenon continued for a long time, it would inevitably threaten social stability and the CPC’s governing status. It was the emergence of such problems that made the governing philosophy of the CPC changed. It summarized the past reform experience and switched over to a new concept, that is, the scientific outlook on development. In the process of implementing the scientific outlook on development, the social construction focusing on improving people’s livelihood had achieved relatively significant accomplishments. The government begun to shoulder more social welfare responsibilities, and the imbalance between society and economy had been reduced to a certain extent. However, there are still many problems and is a long way to go before the coordinated development of economy and society could be realized. To sum up, although socialism in essence requires the government to provide all the people with comprehensive and appropriate level of social welfare, the governing concept of the CPC in different periods determines the connotation of social welfare at the time and the path to provide social welfare. For example, under the planned economy, the catch-up strategy was certain to emphasize production over living and accumulation over consumption, and the lifestyle of plain life and hardworking must be advocated. People couldn’t show their longing for social welfare, or they would be thought to inherit the evil legacy of the bourgeoisie, and would be criticized through

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class struggle. Under the market economy, the strategy of all work centering on economic construction was certain to emphasize economy over society and efficiency over fairness, and it was certain that some people and some regions were encouraged to get rich first. At this time, people could enjoy the welfare not through the provision of government but through their own hard work. They got rich and then could satisfy their needs through the market. In short, whether under the planned economy or the market economy, people were afraid to talk about welfare or talk less about welfare. “Before the reform and opening-up, people generally avoided talking about welfare. They could only focus on production, as if welfare was a kind of enjoyment. Enjoyment was a taboo at that time. After the reform and opening-up, development was stressed. People still seldom talked about welfare, as if it would have a bad effect on economic development.”8 But in the period of social development, according to the scientific outlook on development, “we should change our attitude and gain new insight into the welfare, and see welfare as a right, a responsibility, a requirement and a goal of development”.9 To provide all the people with comprehensive social welfare of an appropriate level is the essential requirement of socialism and one of the main manifestations of the superiority of socialism. But whether in the periods of planned economy or market economy, due to the influence of the governing concept at the time, the social welfare construction was far from meeting the requirements. In the period of social development, the CPC has laid the ideological foundation for the ultimate realization of socialism. There are ideas such as “the CPC representing the fundamental interests of most people” “the CPC working for the public and assuming power for the people” “people-oriented outlook of scientific development” “social construction focusing on improving people’s livelihood”, and “the realization of coordinated development of economy and society”. All these goals require the government to fulfil its responsibility to “provide comprehensive social welfare of an appropriate level for all people”. Therefore, the governing concept in the period of social development well reflects the essentia requirements of socialism, and a social welfare system that is shared by all people and that is compatible with the economic level has been thus established and improved.

2.3.2 Challenges from All Facets of Society Unlike some developed Western countries, especially so-called welfare states, the social problems contemporary China faces and needs to solve in terms of social welfare construction are extremely complicated. The first is how to handle the relationship between social welfare and economic development. In this relationship, economic development is the means, not the end. The ultimate goal is to achieve all-round and free development of the people 8 9

Jing [4, p. 1]. Ibid.

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by providing comprehensive social welfare at an appropriate level. Nevertheless, economy is the foundation for welfare, and hence the level of social welfare cannot be raised to be beyond the capacity of the economy. Therefore, the government, on the one hand, should ensure comprehensive social welfare for all people, and on the other hand, should make sure that the social welfare level is consistent with the level of economic development. Whether under the planned economy or the market economy, the interrelationships between social welfare and economic development were not properly dealt with. In general, the level of social welfare has been lagging behind economic progress, especially during the market economy period. Till 2011, China has achieved remarkable results in economic development through market-oriented reform, with an average annual economic growth rate reaching more than 10%, becoming the world’s secondlargest economy. According to data released by the National Bureau of Statistics, the GDP in 2011 was 47.156.4 trillion yuan, and the per capita GDP exceeded $5,400. Data released by the Ministry of Finance showed that the national fiscal revenue in 2011 was 10.374 trillion yuan, an increase of 2.0639 trillion yuan or 24.8% over 2010. The tax revenue was 8,972 billion yuan, increased by 22.6% over the previous year, and the non-tax revenue was 1,402 billion yuan, increased by 41.7%. These data proves that China has the economic strength to provide all people with comprehensive social welfare of an appropriate level. Meanwhile, we should also see that China is still a developing country in the primary stage of socialism and needs to maintain rapid and stable economic growth. A high level of social welfare does not fit its national situation. Therefore, we must explore a social welfare system that is suitable for China’s practical situation. The second is the population issue and it is the most important factor influencing China’s social welfare model. It is predicted that China’s population may peak at 1.5 billion or more, which poses a great challenge as what to provide as and how to deliver welfare benefits. Also, as the population is aging rapidly, the demand for old-age and medical care will further increase. The third is the increasing income disparities since reform and opening-up. A figure for assessing income disparities, the Gini coefficient in China has long above the international warning line of 0.4. Practice has demonstrated that social welfare, especially social welfare provided by the state, is an effective way to reduce the income gap. Authorities can raise funds by collecting personal income tax, interest tax, inheritance tax, estate tax, social insurance tax (fee), etc., and then redistribute them through the social welfare system, so as to reduce the income gap. The fourth is the urban–rural dual structure. During both the planned economy and market economy periods, differentiated social welfare policies were implemented in urban and rural areas. Social welfare benefits for urban residents were mainly provided by the public finance while for rural residents were by the collective economy. As a result, a dual structure of urban and rural welfare emerged: urban residents enjoyed more and higher-level welfare benefits than rural residents. In the social development period with a focus on improving people’s livelihood, one major task is to reduce urban–rural gap, and social welfare is one critical area. For this purpose, the government proposed to establish a unified system that integrates

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urban and rural welfare systems. Then, what standards should be adopted and what impacts on current social welfare might be produced in this process? Answers to these questions should be solved. The fifth is the vast territory with great regional differences in the country. Regional differences in economic strength, culture and other aspects raise obstacles to the establishment of a unified social welfare system across the country. There are questions as how to build a unified system, how to divide responsibilities of the central government and local governments, and how to mobile the motivation of local governments. The sixth is diversified values. Diversification of values is a new phenomenon in Chinese society after the inception of reform and opening-up. Diversification in values has its positive impact but poses channels to social integration. People with different occupations and strata hold different views towards social welfare. People in a disadvantaged position may expect comprehensive and high-level social welfare, while people with status and social influence may be inclined to residual welfare a low level. In particular, vested interests may even oppose to social welfare reform. Therefore, the diversification of values has generated considerable difficulties to social welfare reform. In short, the problems encountered by China in establishing a new type of social welfare system are extremely complex and are not found in any other country. This determines both the difficulty in building a new welfare system and the uniqueness of the system in the country.

2.3.3 Mindset of Special Welfare Prevails Theoretically, a socialist social welfare system should pursue universal welfare. But whether in the planned economy or the market economy, China mainly practised special welfare. Under the planned economy, the seemingly universal social welfare in urban areas was in fact a type of special welfare, and not all the people could enjoy the same benefits. It highly depended on the capacity of work. In general, with the government as the single responsible party, the social welfare was unequal, inadequate and low in level. During the market economy, with the government’s welfare responsibility being weakened and influence of the market-oriented reforms, the social welfare was further confined to work unit welfare. When it came to the social development period, guided by the scientific outlook on development with a focus on improving people’s livelihood, it is an inevitable trend to realize the transition from special welfare to universal welfare. The report of the 17th National Congress of the CPC explicitly put forward the mission of “accelerating social development with the focus on improving people’s livelihood” and specified that “social development is closely related to the people’s well-being. More importance must therefore be attached to social development on the basis of economic growth to ensure and improve people’s livelihood, carry out social restructuring, expand public services, improve social management and promote social equity and

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justice. We must do our best to ensure that all our people enjoy their rights to education, employment, medical and old-age care, and housing, so as to build a harmonious society.” To this end, we need to maintain rapid and stable economic growth, set up and improve the public financial system, income distribution system and other systems, and build a social welfare system for the benefit of the people which covers education, income, medical care, old-age care, housing and other areas. Why is the establishment of a social welfare system that benefits the entire people regarded as an important aspect of this strategic goal? The rights to education, employment, medical and old-age care, and housing are not only the universal welfare needs of the people, but also one major responsibility of the government. They are the common aspiration of a society after the problem of food and clothing is solved. Besides economic guarantee for meeting these needs, a corresponding social welfare system is necessary to coordinate with public finance, income distribution and other systems to make joint efforts to achieve the goal. The mindset of special welfare is apparently outdated, and the universal welfare is the requirement of the new era.

2.3.4 Government Role Shifts at Different Stages Though the government responsibility differs in various welfare modes, its role is irreplaceable. In addition to being a major provider of basic social welfare benefits, it also assumes the responsibility of mobilizing other participants in social welfare provision. The Chinese government as well plays an extremely important role in the country’s social welfare supply, but its functions vary at different stages. During the planned economy period, the government aspired to shoulder all the responsibilities for social welfare so as to demonstrate the superiority of socialism. Under the catch-up mentality, the government managed to supply all-round yet low-level welfare benefits for urban residents through the work-unit system. While in rural areas, its role was absent and welfare responsibilities all fell on farmers themselves, especially the oldage security and medical care responsibilities. In the period of the market economy, while rural welfare still being unattended, urban social welfare was impacted by market-oriented reforms, and the government’s responsibility became increasingly weaker. When it comes to the social development period, the government began to assume more social welfare responsibilities both in rural and rural areas. Remaining true to the faith in socialism and communism, the CPC constantly made theoretical innovation based on changing national conditions to determine the focus of work in different periods. While the central government formulates national policies for social welfare, local governments are the key to implement them. However, though some local government might consciously reform the social welfare system based on welfare needs, more often than not, the motivation comes from the pressure of evaluation by higher-level authorities. When the evaluation focuses on economy, local governments will try every means to attract investment and make economic achievements, and when the emphasis of evaluation is on people’s

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livelihood, local governments will pay more attention to people’s livelihood. But economic development is always the focus, because economic strength is highly related to the interests of local governments and staff in government bodies. In the process of implementing the scientific outlook on development, governments at all levels started to assume more social welfare functions, greatly improving the country’s social welfare cause. However, it was still vague as what the role the government should play. In this volume, we propose that the government has two main functions in social welfare. The first is to provide basic social welfare, characterized by full coverage (covering all residents and all welfare needs), equalization (everyone enjoying the same opportunity) and appropriate level (in line with the level of economic development). For example, in education, the current responsibility of the government is to ensure all urban and rural residents have the opportunity to nine-year compulsory education, while for the elderly care, its basic function is to guarantee urban and rural residents to enjoy basic old-age insurance. The second is to formulate policies to encourage other subjects to actively participate in social welfare provision, such as families, communities, commercial insurance institutions and charities.

2.3.5 Prominent Role of Families, and Limited Role of Market and Social Mechanisms From the perspective of universal welfare, welfare suppliers should be diversified, including both governmental and non-governmental entities, such as individuals, families, communities, enterprises, charities and commercial insurance. For instance, the government must provide the nine-year compulsory education, while pre-school education, senior high school education and higher education are jointly supported by government and non-governmental entities. The government and non-governmental entities are supplementary to each other in providing welfare benefits and they are of equal significance. In reality, families play a larger role than other non-governmental entities, such as market mechanisms like commercial insurance and social mechanisms like charities. The reason is the government’ failure to effectively perform its responsibility of providing basic welfare. For example, in rural areas, except for the five-guarantee households, the government and the collective economy do not provide any oldage welfare benefits. Both living expenses and daily care for the aged solely rely on families. For another example, in the mid-1990s, a large number of people lost their jobs due to the state-owned enterprises reform. Nevertheless, social unrest didn’t occur, and one important reason was that families shouldered the responsibility of ensuring basic living of the unemployed. Although families’ structure and size have changed tremendously in China due to the sharp decline in fertility rate, their significance in social welfare provision should not be ignored.

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Under the planned system, both state-owned enterprises and collective enterprises passively undertook heavy welfare responsibilities and no longer had initiative to provide any supplementary benefits to their employees. And commercial insurance hardly played a part in welfare provision at all. Under the market system, enterprises became the main body of the market, but they did not fulfill due social responsibility and only provided very little supplementary welfare. Although commercial insurance developed, people rarely chose to purchase commercial insurance to enhance the ability to resist risks due to low income and low awareness. Under the planned economy, there were no charities at all. Under the market economy, charities developed rapidly and played a role in major disaster relief. But in general, the role was limited, especially in comparison with countries with developed philanthropy. In short, in the formation and shift of contemporary China’s social welfare system, the family’s role as a non-governmental supplier is more prominent, than market mechanisms such as enterprises and commercial insurance as well as social mechanisms like charities. According to the above analysis, the main characteristics of the contemporary Chinese social welfare model can be roughly summarized into the following four aspects. First, in terms of ideology, the ideal goal of communism and socialism essentially requires the state and government to provide comprehensive welfare at a appropriate level for all people, but the consciousness of the CPC in different periods, the judgment of the situation it faces and its strategic arrangements have a direct impact on social welfare. Second, social problems that China has to solve are extremely complicated and are not found in other countries, which determines the uniqueness of the social welfare model in contemporary China. Third, contemporary China generally adheres to the concept of special welfare. Finally, in terms of social welfare provision, the social welfare construction and reform in social welfare system in contemporary China is a top-down process Where the government has an absolutely dominant position. The family’s role in social welfare provision is prominent but more passive. However, the roles of enterprises and charities are even more limited.

2.4 The Responsibility of the Development of China’s Social Welfare After more than 60 years’ development, China’s social welfare is still undergoing continuous reform and improvement, not yet finalized as a model. Summarizing experience and lessons and considering current problems confronted by the country, the social welfare system construction with Chinese characteristics are tasked with the following missions.

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2.4.1 Expand Universality China’s social welfare should achieve full coverage as soon as possible. It is the intrinsic requirement not only for a socialist society but also for the Party’s ruling philosophy in the new era. It is also the general needs of the people and is determined by China’s economic status. Full coverage has three meanings: social welfare must benefit all people, meet all welfare needs, and be provided in both in-kind and service forms. The full coverage of all residents is still to be further improved, especially the coverage of social insurance. In terms of medical insurance, we have established the basic medical insurance for urban employees, new rural cooperative medical care and basic medical insurance for urban residents, and realized institutional coverage, but the population covered still needs to be expanded especially to include more urban employees. As of the end of 2011, among 359.14 million on-the-job or retired employees in cities, 252.27 million had participated in the basic medical insurance for urban employees, of which 189.48 million were on-the-job employees and 62.79 million were retired employees.The actual coverage was only about 70%, and nearly one third of urban employees didn’t get basic medical insurance. The actual coverage of the new rural cooperative medical care and urban residents’ medical insurance was higher but still yet to achieve full coverage. Compared with medical insurance, the coverage of pension insurance was even lower. As of the end of 2011, only 283.91 million on-the-job or retired urban employees had participated in the basic endowment insurance for urban employees, among whom 215.65 million were on the job and 68.26 million were retired. If excluding 40 million staff working in or retired from government organs or public institutions whose pensions were maintained by the public finance, nearly 100 million people in urban areas did not participate in any endowment insurance or enjoy any pension. In rural areas, the new rural social endowment insurance has been piloted in more than 40% counties in China, but it is still far from reaching the goal of full coverage. Although the pilot scheme of social endowment insurance for urban residents has been initiated, the vast majority of urban residents have not participated in any endowment insurance. The actual coverage of unemployment insurance, workplace injury insurance and child-birth insurance for urban employees is not satisfactory either. At the end of 2011, the number of people participating in the three insurances nationwide was 143.17 million, 176.96 million and 138.92 million respectively, accounting for 40%, 49% and 39% of urban employees. In terms of full coverage of welfare needs, systems for guaranteeing basic living, pension, medical care, housing, education and employment needs are basically in place, yet not satisfactory. For instance, although the authority has increased the construction of indemnificatory housing such as the low-rent housing, affordable housing and limited-price housing in recent years, it is still not enough to meet the needs of all low- and middle-income families. More importantly, schemes for indemnificatory housing are mainly in large and medium cities, while in small cities and towns they are generally lacking. Regarding education, the popularization rate and

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retention rate of the nine-year compulsory education are up to standard, but the enrollment rates of preschool education, senior high school education and higher education still need to be further improved. With regard to medical and health services, the construction of urban community health service centers and township-level hospitals in some areas have been strengthened, but the construction of village-level medical and health service institutions has not received due attention. The public security, especially environmental protection, food safety and social order, are still not adequate in rural areas. In terms of employment, vocational training for migrant workers and farmers needs to be strengthened. Moreover, current welfare system in China pays more attention to providing cash and in-kind transfers as well as facility construction, but overall there’s still a lack of social services, especially for groups such as the elderly, the disabled and the unemployed.

2.4.2 Improve Integration Over the past 60 years, the fragmentation degree in China’s social welfare system has become even higher. Increasing the integration of the social welfare system is the only way out of the predicament. Firstly, we should recognize the following two manifestations of the fragmentation trend. First, more than one welfare programs are implemented to meet the same welfare needs of different groups of people. For example, there are five programs for pensions: the retirement system applicable to employees of government agencies and institutions, the basic pension insurance for urban enterprise employees (including flexible employed and individual business people), the five-guarantee support system for the elderly in rural areas, the new rural social endowment insurance applicable to rural residents and the social endowment insurance for urban unemployed people. Moreover, some regions provide social endowment insurance for migrant workers and landless farmers. The above-mentioned five main types of old-age security system are different in terms of fund raising, management and pension calculation method. Another example is the coexistence of three medical insurance systems: the basic medical insurance for urban employees, the new rural cooperative medical treatment for rural residents and the basic medical insurance for urban non-employed people. These three systems are different in terms of fund raising, management and reimbursement ratios. Second, there are obvious differences in the same welfare enjoyed by different groups. For one thing, there are differences between urban and rural residents. Urban residents enjoy more social benefits than rural residents. For another, there are regional differences. Due to different economic conditions, there are large regional disparities in the coverage and also level of social welfare. Generally speaking, social welfare in the eastern region is better than that in the western and central areas. There are also occupational differences. Employed and unemployed people enjoy different

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social benefits, and also some occupations, such as civil servants, are entitled to better welfare than others. The objective reason for the fragmentation of social welfare in contemporary China is the complex social structure. China has a relatively complex urban–rural structure, regional structure, employment structure, population structure and social stratum structure. Complexity in these structures divides the population into groups, and one system is not possible to meet their different needs. Take the medical insurance for instance. The Bismarck model featuring joint payment by the employer and employee is not applicable to rural residents and urban non-employed residents. Innovation is a necessity, and that’s why the new rural cooperative medical care and the basic medical insurance for urban residents came into being. The subjective reason for the fragmentation of social welfare in contemporary China is the lack of a universal welfare mentality and a top-level design. As mentioned earlier, during the social welfare reform, the concept of special welfare has always been adhered to, and there was no top-level design or long-term planning. Most welfare systems adopt a piecemeal approach and only make belated efforts to cope with a foreseen situation. The result is the increasingly higher fragmentation. For example, since urban employees can enjoy the same medical insurance system, why can’t they enjoy the same pension insurance system? And why can’t schools, medical institutions and public service facilities adopt the same standard for construction in urban and rural areas? Why should there be an urban and rural difference? The increasing fragmentation in social welfare brings at least three adverse effects. Firstly, it will bring on more social inequity. For example, the inequity resulted from existing urban–rural gap in education and health care will impact future social development. Also, the fact that employees of government organizations and institutions who do not need to pay endowment insurance premiums enjoy three or four times pension benefits of employees in urban enterprise. Secondly, it will hinder social mobility. Rational social mobility is necessary for a market economy and it is an important mechanism for promoting social harmony and stability. Fragmented social welfare divides people into different groups. Disparities in social benefits among different groups will greatly hinder rational social mobility thus further solidifying the existing social structure. One major reason for more and more people taking civil servants examinations is that civil servants enjoy good social welfare benefits. The reason for university graduates reluctant to go to companies, especially small and medium-sized enterprises is also because employees in these enterprises enjoy much less welfare benefits than civil servants and staff in public institutions. Thirdly, it will increase the cost of system integration. The establishment of a relatively unified social welfare system is an inevitable trend of social development. The fragmentation of social welfare in China, in the positive sense, is conducive to improving the welfare coverage in a short term, but in the long run, it will increase the difficulty of system integration. In other words, the higher the degree of fragmentation, the higher the cost of institutional integration, including not only economic costs, but also social and political costs. Therefore, in order to avoid more social injustice that may be brought about by social welfare fragmentation, make social welfare play the positive role of promoting rational social mobility, and reduce the cost of social

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welfare system integration, it is necessary to promote the top-level planning of social welfare reform based on basic integration and guided by the goal of full coverage.

References 1. China Development Research Foundation: Constructing a Social Welfare System for All in China. China Development Press (2009) 2. Huang, C.: Social Welfare. Truth & Wisdom Press, Shanghai People’s Publishing House (2009) 3. Li, X.: The impact of the change of ideology from Mao Zedong to Deng Xiaoping on social welfare. Mod. Philos 5 (2010) 4. Jing, T.: Sociology of Welfare. Foreword: The Rise of Welfare Sociology. Beijing Normal University Press (2010).

Chapter 3

The Theoretical Basis of Universally Integrated Welfare Model

The choice of a social welfare model is the outcome of conscious social action, rather than blind spontaneous reverie. Only if we understand the theoretical basis on which the welfare model is based can we build a scientific, rational and appropriate welfare model. Therefore, a welfare model with Chinese characteristics needs to be supported by a welfare theory with Chinese characteristics. The theoretical basis of the universally integrated welfare model includes the universal welfare theory, the basic integration theory, the baseline equality theory, the appropriate all-inclusive idea and shared-by-all idea.

3.1 The Universal Welfare Theory The universal welfare theory was proposed based on the reflection on limitations of the special welfare concept as well as on the observation of rapid development of social welfare endeavor taking place in China. It is the theoretical foundation for building a universally integrated social welfare system.

3.1.1 Introduction of Universal Welfare Theory The representative result of the universal welfare theory is the book From Narrow Welfare to Great Welfare: A New Stage of Welfare System with Chinese Characteristics.1 The theory was proposed against two backdrops. On the one hand, it is a breakthrough of the limitations of the narrow welfare. In China, there are different understandings of the notion of social welfare as well as its utilization both in theory and practice, and the dominant one is the concept of narrow welfare. The essence of 1

Jing and Bi [1].

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_3

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narrow welfare is to define social welfare from a narrow perspective, which mainly includes the following three meanings. First, it refers to the welfare provided for vulnerable groups, that is, special welfare. This view defines social welfare from the angle of receivers. It believes that the object of social welfare is not all members of the society, but some special members, that is, socially disadvantaged groups. It regards social welfare as the income and service guarantee provided for vulnerable groups, mainly the elderly, children and disabled, by the country and society. Social welfare in this sense is similar to the selective welfare or remedial welfare as called by Western scholars. Second, it refers to welfare provided by the government’s civil affairs department, that is, civil welfare. This kind of view defines social welfare form the perspective of the welfare provider. It considers social welfare as income and service guarantee provided by civil affairs departments on behalf of the country to vulnerable groups, such as the elderly, disabled, orphans and special care recipients.2 This view of social welfare emphasizes the country’s (government’s) responsibilities on the delivery of social welfare benefits, regarding the country (government) as the most important and even the only responsibility body for social welfare, equating social welfare with state welfare or government welfare. This is the most commonly used definition for social welfare in practice and also the most familiar concept of welfare for Chinese. This concept of welfare is the logical starting point for us to understand the welfare socialization reform initiated by the civil department and the essential meaning of welfare socialization. Three, it refers to welfare that situates at the highest level of social security system. It defines social welfare from the perspective of social welfare goals. It deems social security system encompasses three levels: social assistance, social insurance and social welfare. Social welfare is at the highest level of the social security system.3 The goal of social assistance is to guarantee the minimum standard of living of members of the society, the goal of social insurance is to maintain the basic standard of living, and the goal of social welfare is to improve the living standards and life quality. Social welfare in this sense, namely being regarded as a sub-concept of social security and also an integral part of the social security system, is commonly used in academic studies of social security in China. The above-mentioned three meanings of narrow welfare can actually be summarized into two viewpoints towards welfare. The first can be called the remedial view. The first and second meanings differ in terms of angles of theoretical definitions, but there is no essential difference between them in practice. They both take remedial action intended to correct existing social problems, insist on welfare benefits for selective members of a society and stress the country (government) bearing main responsibilities to offer welfare. This is the assistance provided in people’s times of trouble. The second can be called the developmental view. The third meaning of narrow welfare emphasizes the role of social welfare in improving the life quality 2 3

Zhou [2, p. 3]. Sun and Dong [3, pp. 26–33].

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of members of the society. It is icing on the cake. It is true that this type of welfare constitutes a relatively small proportion in the country’s social security system. In general, there are four limitations of narrow welfare. The first is limitations in welfare receivers. Welfare is only enjoyed by a defined population, that is, the vulnerable groups. Social welfare, which should be social by nature, seems to become the privilege of socially advantaged groups. The true social welfare should ultimately cover all members of a society. The second is limitations in welfare content. The narrow welfare determines the content of social welfare according to needs of different social groups, which is not convincing. This work believes that welfare content should be based on the common and basic welfare needs of members of a society. The third is limitations in social benefit providers. In narrow welfare, the country or the government is the only or main provider of social welfare, so social welfare is basically equivalent to national welfare or government welfare. Welfare suppliers, in practice, should be diversified. The fourth is limitations in supply model. In narrow welfare, “free of charge” is considered as the precondition for social welfare, which excludes the role of social assistance and social insurance in contributing to supplying social welfare. This understanding tends to encourage people to take welfare as a free lunch. In short, the limitations of narrow welfare derive from its narrow perspective in definition, and it is bound to exclude most members of society from receiving social welfare benefits. According to narrow welfare, those who have only received social assistance and social insurance cannot be said to have enjoyed social welfare. Over time, the feeling of relative deprivation will develop in a considerable number of people. In addition, the universal welfare theory is the theoretical summary of China’s rapid development of social welfare system. Since the beginning of the 21st century, China has increased its input in social welfare and introduced a series of social welfare policies successively. The first one is the new rural cooperative medical scheme. In July 2003, the pilot program of the scheme was launched; at the end of 2008, the scheme basically covered all rural areas across the country. The second is the urbanrural medical assistance system. In November 2003, the Ministry of Civil Affairs, the Ministry of Health and the Ministry of Finance jointly issued the “Opinions on Implementation of Rural Medical Assistance”, and the construction of the rural medical assistance system was carried out around the country. In 2005, the General Office of the State Council forwarded the “Opinions on Pilot Program of Establishing Urban Medical Assistance System” formulated by the Ministry of Civil Affairs, the Ministry of Health and other departments, requesting to establish the urban medical assistance system in five years around the country. The third is the free compulsory education system. In 2006, the revised Compulsory Education Law came into effect, which provided legal protection for compulsory education. In 2007, some 150 million rural students of compulsory education were exempt from tuition and miscellaneous fees and were provided with free textbooks, and among them 7.8 million boarders from

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poor families were provided with living allowances. In 2008, students of compulsory education in urban areas were exempt from tuition and miscellaneous fees.4 The fourth is the rural minimum living security program (dibao). In July 2007, the State Council issued the “Notice on Establishing Rural Minimum Living Security System”, marking the beginning of full implementation of the program which have developed rapidly since then in the country. The fifth is the basic medical insurance system for urban residents. In July 2007, the State Council issued the “Guiding Opinions on Pilot Work of Basic Medical Insurance for Urban Residents”, requesting that “pilot cities in 2009 reach more than 80% and the system cover the whole country in 2010”. The sixth is the public health service system. After the SARS crisis in 2003, the country’s public health service system was strengthened. In July 2009, the Ministry of Health, the Ministry of Finance and then National Population and Family Planning Commission jointly promulgated the “Opinions on Promoting the Gradual Equalization of Basic Public Health Services”, and launched nine national basic public health projects and six major public health service projects. The seventh is the new rural social endowment insurance system. In September 2009, the State Council issued the “Guiding Opinions on Launching Pilot Program for New Rural Social Endowment Insurance”, proposing that the pilot program covers 10% counties around the country. The eighth is improving the housing security system. A series of housing security policies have been issued, improving the low-income housing system, urban affordable housing system and the housing provident fund system. In 2007, the policy of price-fixed housing was introduced, and the 2009 Government Report proposed to “vigorously develop public rental housing”. As social welfare schemes increasing, a social welfare system that covers all urban and rural residents has taken initial shape in China. The rapid development of social welfare calls for innovation in social welfare theories. The concept of narrow welfare no long can expound the practice in China’s social welfare, and the introduction of the universal welfare theory responds to and reflects the practical needs of China’s social welfare development.

3.1.2 Content of Universal Welfare Theory 3.1.2.1

Meaning of Universal Welfare5

First, universal welfare is for all members of a society. On the one hand, all social members have the right to enjoy social welfare. On the other hand, all social members will be included into social welfare schemes and enjoy social welfare benefits. Certainly, this does not mean that all social members enjoy the same social benefits; rather, all members of society can at least benefit from a certain welfare program. For 4

Zhang Li, Achievements and Prospects of Educational Development over Past 30 Years since Reform and Opening-up, http://www.sociology.cass.cn/shxw/zxwz/t20081008_18851.htm. 5 Jing and Bi [1].

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example, the medical insurance system being built in China, including basic medical insurance system for urban employees, basic medical insurance system for urban residents and the new rural cooperative medical system, have basically achieved full coverage of all social groups, meeting the health and welfare needs of the people. Second, universal welfare is based on social welfare needs. These needs mainly incorporate living guarantee, education, employment, health, old-age care, housing and security needs. The content of welfare schemes correspondingly should respond to these needs, that is, they must cover all areas of people’s livelihood. Therefore, universal welfare is people-centered social welfare. Third, universal welfare suppliers are multiple entities. They are mainly comprised of three parts in a modern society, namely the government, market organizations and social organizations (such as civil organizations). The government plays the most important role, followed by people’s working units, households and non-profit organizations (such as charitable organizations). Fourth, universal welfare includes social assistance, social insurance, public welfare and social mutual assistance. Therefore, people get welfare benefits through different modes. For example, participants pay premiums to enjoy social insurance, while social assistance and public welfare benefits are free; social insurance is mandatory whereas mutual assistance is voluntary.

3.1.2.2

Conditions for Universal Welfare6

The universal welfare theory believes that China has basically the conditions for moving from narrow welfare to universal welfare. The first is economic conditions. After more than 30 years of rapid development since the beginning of the reform and opening-up, China’s overall economic strength has been continuously enhanced, creating a solid economic foundation for the welfare reform. According to the 2008 Statistical Bulletin of National Economic and Social Development released by the National Bureau of Statistics, China’s GDP in 2008 reached 30,067 billion yuan, or $4,327.4 billion according to the average exchange rate of 6.948:1 in that year. The per capita GDP reached $3,258.5 in light of the population of 1,328.2 million at the end of 2008. International experience shows that a country’s economic development enters a new stage once its per capita GDP exceeds $3,000, which in turn signifies its strengthened ability to provide better social welfare. In addition, China’s fiscal revenue also significantly increased with growing GDP. In 2008, the national fiscal revenue was 6.13 trillion yuan, up 19.5% over 2007. In a modern society, the government is the dominant force in providing social welfare benefits. The more public financial resources the government possesses, the stronger its ability to protect and improve people’s livelihood.

6

Jing and Bi [1].

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The second is the ideological foundation. The universal welfare theory holds that the Communist Party of China is a political party seeking benefits for the people. Chinese leaders successively put forward important thoughts in this regard, for example Mao Zedong’s “serving the people wholeheartedly”, Deng Xiaoping’s “thought of common prosperity”, and Jiang Zemin’s “important thought of Three Represents”, and these thoughts formed the ideological and theoretical basis for innovation in welfare system. In particular, the Scientific Outlook on Development pronounced by Hu Jintao provides a direct guiding ideology for the change from narrow welfare to universal welfare. The essence and core of the Scientific Outlook on Development is to put people first, that is, to pursue and promote development for the fundamental interests of the people, to continuously meet basic welfare needs of the people on the basis of economic development, and to improve the material and spiritual life of the people. In Hu Jintao’s systematic exposition of the theory of social development in the Report of the 17th National Congress of the CPC, he put forward comprehensive and specific requirements for the welfare system development. The report states that by the year 2020, China will establish a basic system of social security which cover both urban and rural residents so that everyone is assured of basic living standards. For this end, the Party “must do our best to ensure that all people enjoy their rights to education, employment, medical and old-age care, and housing”. These goals directly correspond to the basic welfare needs of the overwhelming majority of the people. They are the basic content not only for people’s well-being but also for the universal welfare theory. Therefore, the process of realizing these goals overlaps with the process of implementing universal welfare. The third is the practical foundation. According to the universal welfare theory, the transition from narrow welfare to universal welfare is not a sudden whim. It is based on review of practice and will serve to enhance the social security system in China. Indeed, China’s social welfare system has been constantly enriched and improved after more than 60 years of development since the founding of the People’s Republic of China. A security system that covers basic welfare needs of the people has been set up. The first is the employment security system, including the unemployment insurance system, the workplace injury insurance system, the urban laid-off worker reemployment service system, the employment protection system for migrant workers and the employment promotion system for college graduates. The second is the living security system, including the minimum living security system for urban residents, the minimum living security system for rural residents, the rural five-guarantee households support system, the living security for homeless people and disaster relief system for victims. The third is the pension welfare system, including the urban basic old-age insurance system, the rural social endowment insurance system and the elderly welfare service system. The fourth is the health security system, including urban and rural public health service system, the basic medical insurance system for urban workers, the basic medical insurance system for urban residents, the new rural cooperative medical care system and the medical assistance system for urban and rural residents for major illnesses. The fifth is the educational welfare system, including the free compulsory education system, the vocational education subsidy system, the education system for children of migrant workers and special

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education system. The sixth is the housing welfare system, including systems for affordable housing, low-rent housing, housing provident fund and housing subsidy. Measured by universality, China has initially formed the basic framework of the universal welfare system. Recalling the development process of China’s social security since the reform and opening-up, it is a process of continuous welfare expansion and system enhancement. The essence of this process is moving from narrow welfare to universal welfare.

3.1.3 Importance of Universal Welfare Theory The universal welfare theory is a welfare theory with Chinese characteristics. It provides the following insights for social welfare system construction. For one thing, the theory serves as theoretical support for building a universal social welfare system. The core of the universal welfare theory is to increase the coverage of social welfare and enable more people to enjoy social welfare benefits. China is a socialist country. To give full play to the superiority of the socialist system intrinsically asks for devotion to people’s livelihood by expanding social welfare coverage and upgrade social welfare level. In current China, welfare supply is insufficient rather than excess. For example, the new rural social endowment insurance system has not been fully established, the basic old-age insurance system for urban residents is still lacking, the housing security coverage of the disadvantaged groups is low, and the supply capacity of security service is seriously inadequate. The universal welfare theory provides theoretical basis for China’s establishment and improvement of a universal social welfare system. It represent both the trend and the direction for the country’s social welfare development. Second, the universal welfare theory provides the basic thinking for promoting social welfare integration. With social welfare schemes growing in number, both the coverage and universality of social welfare have been expanded. But at the same time, a series of problems like separation of management and programs, decentralization of resources, and the urban-rural division emerged. One reason for these problems is the absence of an integrated and systematic universal welfare vision. The universal welfare theory advocates a social welfare system centered on basic welfare needs of the people. It aims to promote and realize the internal integration and coordination of the management, mechanisms, schemes, types, providers, levels, resources and supervision of social welfare, and enhance the organic, coordinated, cohesive and unified development of the social welfare system. The final objective is to save the operating costs of the welfare system and maximize the benefits.

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3.2 The Basic Integration Theory The basic integration theory is put forward based on research and reflecting on China’s social security system reform. It is of great significance for guiding the integration of the country’s social welfare system.

3.2.1 Introduction of Basic Integration Theory In November 2000, the research group of “China’s Social Security System Research” from the Chinese Academy of Social Sciences published the article “China’s Social Security System Reform: Reflection and Reconstruction”, which proposed the concept of the basically integrated social security system.7 The research group then comprehensively elaborated upon the theory in the volume of Basically Integrated Social Security System published in 2001. From the mid-1980s to the end of the 20th century, China has built an urban social security framework mainly composed of pension, unemployment and medical insurance systems as well as the minimum living security system. However, the framework was not up to expectations since it has both inherent defects and inadequateness in practice. In this book, we hold that the root cause of problems in China’s social security system is the basic idea and institutional design rather than actual operation. There are three main problems in China’s social security system. The first is the design of the pension insurance. The model of integrating social pooling with individual account in the pension insurance results in three drawbacks. For one thing, more regulations are for collecting rather than spending of funds, resulting in ballooning social welfare expenditure. For another, the model of integrating social pooling with individual account leads to the mode of pay-as-you-go, further resulting in empty individual accounts. In addition, the government-pledged pensions are far too large.8 The second problem is in the unemployment insurance system design. Placing undue emphasis on catching up with international standards, China’s unemployment insurance system did not take into consideration the problems of structural unemployment and laid-off workers emerged during China’s economic transition. The resulting outcome is low efficiency with large investment of the unemployment insurance system.9 The third problem is in the medical insurance system design. There are two flaws in the medical insurance system for urban employees which are characterized by integrating social pooling with individual account. For one thing, it does not conform to the basic law of insurance. For example, the prevention against 7

Research team of “China Social Security System”, China’s Social Security System Reform: Reflection and Reconstruction, Sociological Studies, No. 6, 2000. 8 Jing [4, pp. 5–8]. 9 Ibid., pp. 9–10.

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illness should not rely on individual account. For another, it excludes minors and the aged with no job or income.10 The book further points out that the problems of particular schemes are often derived from flaws in the overall thinking. Therefore, it is necessary to look at the basic ideas of China’s social security system construction. The current research team identify four aspects of shortcomings in basic ideas.11 Firstly, the social security system has not gained an independent status. Social security should be a relatively independent system. But in China, it is simply regarded as a supporting system for and also an integral part of the market economy. Secondly, too many functions are imposed on the social security system. In China, the system is viewed as a cure for various problems. In addition to supporting the market economy, it is also expected to promote the reform of state-owned enterprises, cope with challenges brought about by population aging, and ease the burden on the state, businesses and individuals, and so on. Thirdly, the degree of coupling and integration of the social security system is low. Social security fundamentally should be an organic whole in which funding guarantee and service guarantee complement each other and various schemes are interlocked. However in China, social security schemes are often separated from each other without mutual exchanges and correlation both in design and in practice. Fourthly, the government is the single supplier of welfare benefits. Most countries are striving to diversify social welfare suppliers through administrative means and market means and let non-governmental parties such as individuals, households, working units and neighborhood communities sharing the welfare responsibility with the government. But in China, the responsibility is mainly placed on the government while the role of other parties is yet to demonstrate. Based on the above observation, we conclude that “the most suitable social security system for China is the basically integrated social security system”.

3.2.2 Content of Basic Integration Theory 3.2.2.1

Meaning of Basic Integration

In the book Basically Integrated Social Security System published in 2001, the concept of basic integration has three basic meanings.12 In terms of security forms, it rests on social assistance, and incorporates limited welfare, moderate insurance and guaranteed mutual assistance. As for the welfare supplier, it relies on neighborhood communities to integrate old-age care, medical and health services, employment services, poverty relief and other social welfare services. Lastly, the security 10

Ibid., pp. 11–12. Ibid., pp. 15–18. 12 Jing [4, pp. 253–257]. 11

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suppliers, channels of financing and welfare content are diversified and integrated. In the article “The Theoretical Foundation of China’s Social Security” published in 2003, six basic meanings of “basic integration” was further clarified13 : to integrate multiple welfare services with the minimum living security as the baseline; to integrate different needs with the medical and health needs as the foundation; to integrate guarantee of funds, facilities, institutions and systems with the service guarantee as the basis; to integrate various resources with the employment resource as the basis; to integrate the roles of the government and the market with the role of community as the basis; and to integrate urban and rural social security systems based on institutional innovation.

3.2.2.2

Features of Basic Integration

The theory of basic integration believes that the essence of social security is to protect the basic living of the people, and this is the starting point for designing a social security system and the criteria for its evaluation. A basically integrated social security system aims to guarantee the basic needs of people’s livelihood, with social assistance as the base and community services as the backbone. It raises funds through multiple channels, includes multiple levels of security content, and diversifies its security methods. It is a people-centered social security system with three basic characteristics.14 The first is “basic”. People have two levels of living needs: basic needs and developmental needs. The basically integrated social security system gives priority to basic ones, without which people will find it hard to realize self-development or to engage in social life. To guarantee people’s basic living needs is the government’s commitment to the public and cannot be compromised. Social security at this level shall be available and equal to all people. It shall be maintained no matter how many social, political and economic changes and risks take place in a country. The second is “integration”. It firstly integrates fund security with service security. Some living needs can be met by financial means and others are better to be fulfilled through services. In a social security system, the two should be integrated and coordinated. Sometimes, services can replace financial means in order to increase the efficiency of social security resources. Secondly, it also integrates security programs for particular groups. Various security schemes targeted at the same group can be organically integrated to be mutually supportive and increase the resource efficiency. For example, for the elderly, there are programs for basic needs: basic pension and community-based general practitioner, health service, welfare service, etc., and there are also ones for meeting developmental needs: pension saving, occupational pension annuity, mutual pension insurance, inpatient medial service, commercial insurance 13 14

Jing [5]. Jing [4, pp. 19–21].

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and community-based comprehensive services. In the basically integrated social security system, all these programs can be integrated into the retirement pension system. The third is “diversification”. Social security can be divided into two levels: basic security and developmental security. Accordingly, a diversified social security system consists of two parts: the basic social security provided and ensured by the government and a social cooperation system in which security is provided by multiple parties and people have freedom to choose which security programs to participate in. Multiple players have respective advantages in the field of social insurance. A diversified social security system encourages and organizes social communities, nonprofit organizations, community organizations, the market and other social forces to cater for people’s well-being, while the basic social security is mainly provided by the government.

3.2.2.3

Framework of Basic Integration

The framework of a basically integrated social security system includes four types of system integration15 : The first is the integration of subsystems within a social welfare program, for example, the integration of the basic pensions, enterprise pensions, mutual insurance pensions, old-age insurance by personal savings, and the commercial life insurance within the old-age security program. The second is the resource integration among different programs based on needs of specific groups of people, for example, the integration of resources of unemployment protection, social assistance and social services constitute to fulfill the needs of the unemployed. The third is the integration of basic level guarantee and development level guarantee. The basic level guarantee is mainly the responsibility of the government and is the main body of the social security system, while the development level guarantee requires diverse social entities to play a supporting, complementary and enriching role. The fourth is the integration of vehicles of social security programs. For example, the community is a geographical vehicle that can provide services like old-age care, medical care, employment, and minimum living security. The mechanisms of the above-mentioned four system integrations are shown in Fig. 3.1. The basically integrated social security system has four advantages: First, it is conducive to deciding the responsibilities of the state, enterprises and individuals, resolving the contradiction of unlimited social security demand and limited state financial resources, contributing to the country’s social security system reform and construction. Second, it strengthens the social support function of the security system by enabling it to benefit a larger population while guaranteeing people’s basic livelihood. Third, it can mobilize various resources including cultural and historical resources to reshape the social structure, hence to enhance the self-sustainability of the society. Fourth, it strengthens the sustainability of the social security system and

15

Ibid., pp. 22–23.

54

3 The Theoretical Basis of Universally Integrated Welfare Model Medical security

Endowment insurance 1. Basic pensions

1. Community

2. Enterprise pensions

universal 2. General practitioner

3. Mutual insurance pensions 4.Old-age

insurance

health

care

health

3. Inpatient medical service service

by

4. commercial insurance

personal savings 5. Commercial insurance Comprehensive institutions 1. Minimum living security 2. Community welfare service 3. Community service

Unemployment security

Social assistance

1.Unemployment compensation

1. Minimum living security

2. Employment guidance

2. Low-income housing

3. Community service

3. Charity aid

Fig. 3.1 System integration of China’s social security system (Jing [4, p. 22])

prevents the transformation from state welfare to a welfare state as economic grows and political democracy develops.16

3.2.3 Importance of Basic Integration Theory The basic integration theory gives four insights into improving China’s social security system. Firstly, it is necessary to distinguish different levels of needs and make social security system better-directed. The theory pledges to be based on people’s living needs. Nevertheless, a social security system cannot and should not be targeted at all levels of needs, including survival, food and clothing, development and entertainment. Rather, it should prioritize basic living needs, namely survival needs as well as food and clothing. This mentality is critical to sustaining China’s social security system. Secondly, the responsibilities of the government and social forces in the field of social security should be differentiated. It is still a hard nut to crack as how to determine the role of the government in the development of social security. History has proven that for a modern social security system, the government can neither 16

Jing [5].

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55

be a night watchman (whose responsibilities are so minimal that they cannot be reduced much further without becoming a form of anarchy) nor a big nanny. That is, the government either takes a hands-off stance or assumes all responsibilities. The basic integration theory proposes that in China’s social security system, the government must protect its people’s basic needs, while other needs are provided by multiple entities. In this way, social security responsibilities are clear between the government and social forces. Thirdly, we must improve the integration of the social security system. With limited social security resources, to improve the social security integration is a basic and most efficient means of saving the cost of social security operations and maximizing the benefits of social security. Recognizing the necessity and importance of system integration, the theory introduces the framework of “six integrations”, reducing the risks of fragmentation in the social security system. Considering the situation of simultaneous growing of universality and fragmentation trends in social security in China since the 21st century, the idea of system integration is revealing its significance. Fourth, we must recognize the role of service security in social security. The basic integration theory emphasizes the importance of service guarantee, calling for the coordination between financial guarantee and service guarantee. This point of view is a correction to the concept that money can perform all social security functions. The reality shows that with the rapid development of China’s economy and the increase of income, people’s demand for social services presents explosively increase. In sharp contrast, the country’s social security is experiencing enormous pressure due to inadequate service supply capacity.

3.3 The Baseline Equality Theory The baseline equality theory is not only a social justice theory, but also a social welfare theory, or a theory of social mechanisms. It has multiple implications for the construction of China’s social welfare system.

3.3.1 Introduction of Baseline Equality Theory The theory was first introduced in the article “On Baseline Equality” published in August 2004,17 and was then systematically expounded in the volume Baseline Equality: Foundation of a Harmonious Society released in 2009. The theory was motivated mainly by two sources: the first one is to reflect on the limitations of the abstract equality theory and provide a concrete conceptual basis for the modern social security system. The relationship between fairness and 17

Jing [6].

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efficiency has always been a heated debate in the field of social security. Since social welfare belongs to secondary distribution, people naturally think social equity is the theoretical basis for the social security system. However, individuals have different understandings of fairness, so they will inevitably form different views of fairness; even if the majority reaches a consensus through democratic principles, the result may lead to tyranny of the majority. Therefore, it is not enough to talk about social equality in a general way. The specific meaning must be clarified.18 In abstract social equality theory, average distribution exists regardless of actual conditions, hence the assumption is that social differences can be ignored. However, in China, there are large income gaps, urban-rural gaps and regional disparities. If we apply abstract fairness in China and ignore these gaps and disparities, the results may be just the opposite, namely increasing social unfairness. China’s social security system must base on concrete social equality. Observing these social gaps, the baseline equality theory stresses that the social security system should be primarily targeted at the vulnerable group and meet the most realistic, direct and urgent needs of the people, to gain large profits with small cost and in turn increase social equity.19 The second is to explore new mechanisms to solve the stiff problem of the social security system. All countries with a social security system will encounter a same problem: there is increasing demands for wider coverage, more programs and higher levels of social security. The inevitable result of this trend is that the high welfare gradually reaches the level beyond the capacity of the state finance, and then social development slows down due to lack of incentives. At this time, any effort to reduce welfare will cause dissatisfaction and instability in the society. The social security system reform in western countries has proved that it is difficult and costly to embed a flexible mechanism into a rigid system that has taken shape. China is now building its social security system and should learn lessons from the West. We must explore a flexible social security mechanism, so as to realize the sustainable development of the social security system.

3.3.2 Content of Baseline Equality Theory The baseline equality theory contains rich content, and the most important are the following ones.

3.3.2.1

Meanings

Firstly, it is equality on the social level, rather than the individual level.20 A social policy may benefit only some people. The beneficiaries may think the policy is 18

Jing [7]. Jing 4, pp. 157–158]. 20 Jing [6]. 19

3.3 The Baseline Equality Theory

57

fair while others may regard it as unfair; even among the beneficiaries, those who benefit more may feel a stronger sense of fairness. Although the baseline equality theory is ultimately for the actual interests of everyone, in practice it deals with the relationship between rights and responsibilities among the government, the society and individuals. In this sense, the gains and losses of individual interests are translated into the relationship between rights and responsibilities, that is, the interests one loses are his or her due social responsibilities while the gains are out of his or her due social rights. Therefore, only by understanding the baseline equality in the social sense rather than the individual sense can we accurately grasp its accurate meaning. Secondly, baseline equality embodies the consistency of rights. The so-called baseline identifies the basic needs of social members, including food and clothing (survival needs), basic education (development needs) and public health and medical assistance (health needs). These needs are indispensible to everyone, and have been recognized by the society as the baseline, a line between common rights and differential rights. Below the baseline, there are people’s basic and common needs as well as people’s essential rights. All citizens have equal rights in front of this line and this is the baseline equality, or undifferentiated social equality. Thirdly, according to baseline equality, the government assumes major responsibility. The baseline marks the responsibility boundary between the government and non-government forces in meeting the basic needs of citizens. Below the baseline, it is the government, or public finance, to play a role. When the economic level is relatively low, the government must hold this line to secure every citizen’s basic living needs, while as economic grows, the line is to prevent the social security level from rising rigidly.21 Fourthly, baseline equality is a qualitative notion in nature, though both baseline and baseline equality do have quantitative connotations. The baseline is a boundary which cannot be vague, a responsibility cannot be shirked; it is a line to be held and adhered to. The baseline equality does not necessarily mean low level of equality, and the welfare associated with it is not low-level welfare. The baseline equality deems that some of the social security institutions and programs are basic and indispensable, and they must be ensured. But, this level of welfare is not necessarily of low level.22

3.3.2.2

Principles

The baseline theory observes four principles.23 The first is to prioritize the vulnerable. This principle mainly deals with the relationship between the rich and the poor, or between the advantaged and the disadvantaged. The vulnerable groups are at the lower level of the social stratification system with weak self-protection ability. Priority is given to them can best demonstrate the concept of baseline equality. “Giving priority to the vulnerable can maximize social benefits of welfare. An amount 21

Jing [8]. Jing [9] p. 133]. 23 Ibid., pp. 203–204. 22

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of money can realize more social benefits to be spent on the poor and the weak to meet their basic needs, than on the rich and the advantaged to meet their non-basic needs.” According to this principle, when allocating or redistributing resources, the government should give preference to social groups that are in a disadvantaged position in the market competition. Especially in the context of expanding income gaps, disadvantaged and low-income families should be given more preferential policies in redistribution. The second is its identification of the government’s major responsibility. The principle mainly deals with the relationship between the government and the society as well as between the government and the market. According to this principle, the government’s primary and unshirkable social welfare responsibility is to meet citizens’ baseline welfare needs, such as survival, health and development needs. Of course, this does not mean that the government takes all social welfare responsibilities; enterprises, non-government organizations, families and individuals also bear important responsibilities in meeting the non-baseline welfare needs of the society. The third is the principle of social compensation. This principle mainly deals with the relationship between individuals and society. In any country, social resources are limited; for various reasons, some people enjoy more social resources, while others enjoy less. Social compensation refers to compensation given by the former to the latter. Social compensation is the embodiment of social justice. It requires the establishment of a contractual relationship between society and individuals in which the society must assume responsibility for each social member, while individuals must also have responsibility for the society. The fourth principle is the lasting benefits. This principle deals with the relationship between economic and social benefits as well as between near-term and long-term interests. The social welfare system mainly pursues long-term rather than short-term benefits. The baseline equality theory firstly emphasizes the sustainability of the social welfare system itself, focusing on meeting the basic welfare needs and maintain a moderate level of welfare: “Currently it is to expand social security and promote social equity, and in the future it is to prevent excessive equality and welfare”.24 The baseline equality also pays special attention to the role of the social welfare system to the sustainable economic and social development, stressing people’s survival, health and educational rights. These are the fundamentals for the sustainable development of individuals and also a source for a country’s sustainable development.

3.3.2.3

Systems

The baseline equality theory mainly embodies three systems. The first one is the minimum living security system. The system satisfies people’s survival needs and therefore guarantees their rights of existence. It is fundamental to the realization of the baseline equality. The right of existence is people’s basic right in a society and also a prerequisite to enjoy other social rights. In this sense, the minimum living security system is the “baseline for the baseline equality theory”, best manifesting 24

Jing [9, p. 147].

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59

the value and significance of the theory. Practice has proved that the minimum living security system is the welfare system to realize the largest gains with the least money, and it plays the most important role in reducing social unfairness. The second is the public health and medical assistance system. Health and medical care are elements that can provide direct protection for life. Health care can benefit people with the least cost. Public health, which is protection oriented, can reduce or eliminate infectious diseases, epidemics, endemic diseases and more. Chinese tradition shows that as long as people have a positive attitude towards life, healthy lifestyle and good eating habits, many diseases can be avoided, which can cut down the social cost of protecting lives. Medical care is the secondary means to protect life after public health. As the modern medical technology develops and medical expenses increase, people can choose different medical insurance systems according to their financial capacities. The third is the public elementary education, or the compulsory education system. Educational equality is the prerequisite for realizing equality in other social areas. First off, “fairness is indispensable for the development of education”. For education, fairness is efficiency.25 Next, “abstract fairness is meaningless for the development of education”. We can talk about fairness in abstract terms when there are no obvious social gaps; but in current China, social gaps are clear, so fairness in education in abstract terms equals to inequality and is unacceptable.26 Finally, “educational equality is a continuum”. Educational equality presents differences at different stages of educational progress. Equality in elementary education is indiscriminate in nature, which reflects the universality, equality and consistency of education. The compulsory education system in China is a baseline equality system.27

3.3.2.4

Mechanisms

The baseline equality theory states that baseline equality is a social mechanism which is reflected in four aspects. First of all, the concept clarifies responsibility holders of social welfare: for social security demands on or below the baseline, the government shoulders major responsibilities while other social entities play complementary roles; and for social security demands above or beyond the baseline, enterprises, individuals, families and non-governmental organizations bear respective responsibilities while the the government is mainly for supervision. Secondly, it is an adjustment mechanism for social security. The welfare needs on or below the baseline are under rigid regulation to ensure that the citizen’s basic welfare needs are met; and welfare needs above or beyond the baseline follow the flexible regulation, where market forces and voluntary forces are given full play to meet the multi-level welfare needs of citizens. Thirdly, it is a mechanism for seeking consistency among social groups. Baseline equality lay emphasis on three basic rights of the citizen, namely the rights to existence, education and health. These rights are the easiest to be agreed upon as 25

Ibid., pp. 254–255. Jing [9, pp. 255–256]. 27 Ibid., pp. 257–258. 26

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equal rights among all groups.28 Fourthly, it is a mechanism for seeking a balance between economic development and social security. China’s social welfare development must not only solve the problem of insufficient investment, but also be wary of welfare rigidity. “Baseline equality is a mechanism that enables economic development and welfare development to be coordinated. On the one hand, the welfare level is improved as economy grows, and on the other hand, the rising welfare level should not be a burden on economic development, but a driving force for economic progress”.29

3.3.2.5

Functions

The baseline equality theory maintains that baseline equality is the foundation for building a harmonious society. Fairness and justice are one of the characteristics of a socialist harmonious society, and baseline equality is the foundation for building a socialist harmonious society.30 First of all, the interest structure can be better adjusted based on baseline equality. When there are diversified interests and the relationship between stakeholders is hard to be adjusted, the principle of baseline equality is more effective than equality in general. As said before, all social strata and interest groups in the society can easily agree upon people’s basic rights. Also as it helps solve the most urgent problems in the society, it is conducive to building a service-oriented government. Moreover, the baseline equality concept can promote coordinated development. Coordinated development is the basic requirement and fundamental method for realizing scientific development. Baseline equality can help to find the focal point and the point of breakthrough for understanding and solving problems. From the perspective of baseline equality, urban-rural relationship, the relationship between economic and social development, and the issue of educational equity are major issues for realizing coordinated development. Also, the concept of baseline equality can practically increase social welfare. To improve people’s livelihood and increase social welfare is the fundamental aim for the government. Facing existing problems in these issues, such as the difficulty of expanding welfare coverage, social welfare programs must be more targeted. The basic needs of laid-off and unemployed workers, urban and rural disadvantaged groups, the elderly, children, the sick, the disabled and out-of-school youth must be given special attention. This is the baseline of responsibility and morality, and only when these basic needs of targeted groups are met can we realize general fairness. Lastly, the baseline equality theory can promote social development. For a long time, social development has been regarded as less important than economic development and as a result both social undertakings and social management are lagging behind. To implement the baseline equality theory and spend more on basic needs of vulnerable groups should be a starting point for solving this problem. To build a 28

Ibid., p. 165. Ibid., p. 158. 30 Jing [10]. 29

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harmonious society also needs baseline equality. To prioritize needs of the vulnerable is conducive to easing conflicts and increasing consensus, so as to gradually reduce social tensions and build a harmonious society.

3.3.3 Importance of Baseline Equality Theory For one thing, the baseline equality theory provides a scientific basis for balancing economic development and social welfare. There are two extreme opinions about the relationship between economic development and social welfare: one puts one-sided emphasis on economic growth and the other believes welfare should come first. Both of these claims neglect the dialectical relationship between the two. The essence of handling this relationship is to achieve a balance between efficiency and fairness. The baseline equality theory sets the goal of social welfare as moderate welfare, rather than minimized welfare or maximized welfare, and this is just a means of achieving the unity between efficiency and fairness hence to realize a balance between economic development and social welfare. For another, the baseline equality theory offers new insights into handling the relationship between welfare supplies and needs. How to deal with this relationship has always been a persistent and also a real conundrum in the field of social welfare. The philosophy of social democracy tends to believe in demand determinism while liberalism and conservatism advocate supply determinism.31 According to history of social security development, the supply-demand relationship is not a simple one in which one always determines the other. Historical experience shows that social security demands become even stronger during economic downturn and weakening supply capacity, and on the contrary security demands may slow down if the economy is prosperous and the supply is expanding.32 Therefore, the supply-demand relationship changes with conditions. The baseline equality theory provides a new way of thinking: “It allows the two assumptions of determinism to coexist at different levels of the same system and complement each other, that is, below the baseline, demand determines supply and above the baseline, under normal circumstances, supply can be allowed to determine demand”.33 Moreover, the baseline equality theory gives countermeasures for narrowing the gap between the rich and the poor and achieving common prosperity. As early as in March 1985, the Chief Designer of China’s reform and opening-up Deng Xiaoping said: “The aim of socialism is to make all our people prosperous, not to create polarization. If our policies led to polarization, it would mean that we had failed”34 ; 31

Jing [9, pp. 143–144]. Ibid., p. 143. 33 Jing [9, p. 144]. 34 Selected Works of Deng Xiaoping, Vol. 3, People’s Publishing House [11, pp. 110–111]. 32

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Nevertheless, looking back on more than 40 years reform and opening-up, though we have made brilliant achievements in liberating and developing the productive forces, we have been lagging behind in narrowing the gap between the rich and the poor and achieving common prosperity. Studies show that the national Gini coefficient was around 0.3 in 1978, rose to around 0.45 in 2002 and then reached 0.48 in 2007.35 The baseline equality theory is of special significance in changing the situation. From the perspective of wealth distribution, to narrow the gap between the rich and the poor and achieve common prosperity can be achieved in two ways: to increase the income of the poor, and to regulate and control the income of the rich. According to the baseline equality theory, the two means can be combined: in primary distribution, increase the proportion of labor compensation to ensure the baseline income of the poor, and impose personal income tax on the rich to narrow the gap; while in the realm of redistribution, the government must increase transfer payments to the poor to meet their welfare needs, and in the meanwhile encourage or even compel the rich to bear more responsibilities of poverty alleviation. This is the only feasible measure to narrow the gap. Finally, it helps to form the sense of social identity among all classes and social groups. In the process of social differentiation, including horizontal differentiation and vertical differentiation, interest groups and social classes formed different opinions of value. Diversified values are a double-edged sword for building a socialist harmonious society. It on the one hand can improve the democracy of society, and on the other hand may weaken the psychological basis of social integration and solidarity. To build a socialist harmonious society requires basic consensus among society. The baseline equality theory offers a platform and foundation in this regard: its emphasis on people’s three basic rights, the rights to survival, health and education is the most advantageous to expand social commonality. Facing with these basic needs, “various interest groups—government, businesses, social institutions (schools, hospitals, etc.), civil organizations, families and individuals, and different social classes and groups—the rich, the poor and the middle-class, are most likely to reach consensus and find common grounds.”36

3.4 The Appropriate All-Inclusive Idea and Shared-by-All Idea In the process of developing China’s social welfare undertakings, domestic researchers have also proposed the concepts of appropriate all-inclusive welfare and shared-by-all welfare, further enriching the theoretical argumentation of the generally integrated social welfare system.

35 36

China Development Research Foundation [12, p. 11]. Jing [9, p. 158].

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3.4.1 Appropriate All-Inclusive Thinking Appropriate all-inclusive welfare is an idea, put forward in the process of reflecting on the development trend of Chinese traditional civil welfare. There are two understandings of this concept: one is in the narrow sense. Defined by the Ministry of Civil Affairs welfare should “promote the transformation of Chinese social welfare from residual welfare to Appropriate all-inclusive welfare,” to make all elderly, disabled and children in difficulties, have universal access to welfare benefits.37 The second is to define a moderate universal benefit from the broad sense of social welfare. At the Third National Symposium on Social Welfare Theory and Policy held in October 2008, Han Yumin elaborated a moderate universal welfare model based on the concept of general social welfare. He divided the concept of social welfare into three levels: macro social welfare, intermediate social welfare and micro social welfare (civil welfare). He believed that the moderately-covered welfare model was between the “residual model” and “universal model”. The formation of the moderately-covered social welfare system needs to go through three stages: primary, intermediate and high-level moderate coverage.38 In 2009, Wang Sibin systematically expounded the concept of a appropriate allinclusive social welfare system from the perspective of reality and policy development.39 Wang proposed that “The appropriate all-inclusive social welfare is a social welfare provided by the government and society to all citizens (residents) based on national (or local) economic and social conditions, covering the main aspects of basic life. It is aimed at all citizens (or residents of a relatively large area) and is therefore universal to some extent. This characteristic is related to the regional characteristics of China’s social policy, and on a deeper level, it is related to regional economic and social development as well as regional financial situation. It covers the most important aspects of the basic life of citizens (or local residents) through unemployment insurance, poverty relief, medical insurance, housing security and services for the elderly, disabled, and other welfare measures. These measure are to meet their basic rather than high-level needs”.40 Wang identified three basic elements of a appropriate all-inclusive type of welfare.41 The first is the construction of the concept of social rights. On the one hand, the government, as a social welfare provider, must not view itself as an almsgiver; it should establish the awareness of serving the people, fair distribution of social welfare resources and effective social management. On the other hand, people should regard social welfare as a right and feel justified to ask the government for welfare. Furthermore, citizens must change their excessive expectations of social welfare, realizing that they cannot enjoy welfare benefits without bearing social responsibility. The second is the formulation and implementation of 37

Dou [13]. Han Yumin, Exploration of Moderate Inclusive Welfare Model, http://shfl.mca.gov.cn/article/lyj/ sdphts/200812/20,081,200,024,641.shtml?3. 39 Wang [14]. 40 Ibid. 41 Ibid. 38

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appropriate social policies. The appropriate all-inclusive social welfare requires both a policy idea advancing with the times and a scientific policy arrangement, and the latter includes actual policies as well as the top-level policy design. Appropriate allinclusive social welfare is both pragmatic and adjustable with economic and social development. The third is the appropriate all-inclusive social welfare system and the responsibilities of enterprises, society and families. Building a appropriate allinclusive social welfare system requires the participation of governments, enterprises, society, families and individuals. The government must assume the main responsibility, and enterprises, social forces, communities and families also play important roles. Wang Sibin pointed out that there are five basic requirements for constructing an appropriate all-inclusive social welfare system.42 The first is government’s primary responsibility. The government must assume responsibility for formulating policies and guiding the formation of corresponding welfare concepts. It should also design welfare systems, provide social welfare resources, and mobilize all parties to promote the sustainable development of appropriate all-inclusive social welfare systems. The second is the orderly institutional construction. The appropriate all-inclusive social welfare system includes many aspects related to the basic living of the people. The construction of relevant institutions must have a order of priority, for example, the most urgent needs should be met first. The third is the commitment of enterprises. If an enterprise can assume its own welfare obligations to its employees, the latter will be spared to some extent from poverty. The fourth is the activation of families’ responsibilities. The appropriate all-inclusive social welfare is based on family welfare and requires the protection and activation of family welfare obligations. The fifth is the cultivation and development of social welfare institutions. It is impossible for any government to solve all welfare problems, and it is difficult for it to deliver too detailed social welfare services. Adopting people-oriented service concept and with professional skills, social welfare institutions can effectively provide high-quality services to the people to make up for the lack of public welfare.

3.4.2 Shared-by-All Idea In March 2009, the China Development Research Foundation proposed the idea of “shared-by-all” in its annual development report Constructing a Developmental Social Welfare System for All, and introduced a new concept of social welfare system for China. The book holds that the idea of “shared-by-all” is one of the most significant manifestations of equality of the social welfare system envisioned for China in the future. Its most prominent feature is the full coverage, which means that the new social welfare system benefit 1.4 billion Chinese people, in particular the vast number of rural residents. This means three things: first, to formulate new rules and regulations for social groups that are not yet covered by any social security system

42

Wang [14].

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65

(e.g. a pension insurance system for farmers and rural migrant workers, and the oldage security and basic medical services for urban seniors with no income); second, to expand the coverage of existing systems so that the social groups, such as urban and rural employees of SMEs, the flexible employed and self-employed, can benefit from social welfare. On the one hand, it is necessary to eliminate various obstacles to allow these populations to be covered by the social security system, and on the other hand, the contribution rate should be lowered to adapt to their financial capacity; and third, to gradually uplift the standard of social welfare and improve its equity, so that all citizens can maintain a normal life and enjoy adequate public services. At the same time, it will be necessary to establish a mechanism that will allow the adjustment of the social welfare level according to changes of the price index, people’s income and the government revenue, and that would ensure all the people across the country share the benefits of social and economic development.43 The report advocates four basic principles underlying the developmental social welfare policy. First, it should integrate fairness and efficiency with fairness as the first priority. The primary goal of social welfare system construction is to ensure that all citizens enjoy social welfare in order to contribute to social equity and stability. In this process, polarization should be reduced especially during industrialization. Second, it should adapt social welfare standards to the level of economic development and to the country’s financing capacity to make sure that the social welfare development is sustainable. Since China’s social welfare system is still in its initial stage, and related institutions and mechanisms are not mature, it is important to take into account urbanization and population aging in the country so as to achieve a long-term balance between social security expenses and financing. Third, it should give priority to development. Employment is a feasible way of preventing poverty and eliminating individuals’ dependency on government, thus it should be given priority in social welfare policy. Fourth, it should be government-led and should be complemented by the private sector and civil society.44 The report proposes that the development-oriented social welfare shared by all mainly includes seven aspects of security: education, employment, basic living, old-age, health, housing and other guarantees, covering dozens of projects and sub-items. The establishment of a multilevel social welfare structure makes sure that public finances are first pooled to socially disadvantaged groups. Most of the social groups with income take part in the contributory social insurance schemes. Meanwhile, the state encourages working units and individuals to participate in supplementary insurance to meet certain higher demands.45

43

China Development Research Foundation [12, p. 1]. Ibid., p. 27. 45 Ibid., p. 28. 44

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References 1. Jing, T., Bi, T.: From narrow welfare to great welfare: a new stage of welfare system with Chinese characteristics. Theory Front, Issue 11 (2009) 2. Zhou, L.: China’s Social Welfare. Peking University Press (2008) 3. Sun, G., Dong, K., et al.: Introduction to Social Security. China Renmin University Press (2000) 4. Jing, T.: Basically Integrated Social Security System. Huaxia Publishing House (2001) 5. Jing, T.: The conceptual basis of China’s social security. Jilin Univ. J. Soc. Sci. Ed. 5 (2003) 6. Jing, T.: On baseline equality. Guangming Daily, August 10 (2004) 7. Jing, T.: Lowest fairness and soft coordination of social security. Sociol. Stud. 6 (2004) 8. Jing, T.: Social security system: base of impartial society. J. Graduate School Chin. Acad. Soc. Sci. 6 (2006) 9. Jing, T.: Baseline Fairness: The Foundation of a Harmonious Society. Beijing Normal University Publishing Group (2009) 10. Jing, T.: Questions on the development of people’s livelihood in the past thirty years: economic development, social justice, and baseline fairness—study of one aspect of people’s livelihood peeking at the full picture of people’s livelihood development. Theory Front 14 (2008) 11. Selected Works of Deng Xiaoping, vol. 3. People’s Publishing House (1993) 12. China Development Research Foundation: Constructing a Social Welfare System for All in China. China Development Press (2009) 13. Dou, Y.: Reform and development of social welfare in China. China Social Welfare 10 (2006) 14. Wang, S.: Building an appropriate all-inclusive-type Social Welfare System in China. J. Peking Univ. 3 (2009)

Chapter 4

The Basic Features of Universally Integrated Welfare Model

The universally integrated welfare model is a new type of welfare model, different from both the residual welfare model and the fragmented welfare model. It is a highly integrated social welfare system with universal coverage. Within the universally integrated welfare model, universality is the basis and premise for the whole system, while integration is its core and the key. The two aspects are interconnected: universality is the basis of integration while integration is the prerequisite of universality.

4.1 The Universality of Social Welfare System The universally integrated welfare model follows the principle of universalism, distinguishing itself from residual welfare model based on the principle of particularism. Universality is the primary feature of the universally integrated welfare model and the basis for building a universally integrated welfare system.

4.1.1 Universality of Social Welfare Objects The most obvious contrast between residual welfare and universal welfare is the number of receivers of welfare benefits. Following the principle of particularism, residual welfare covers only part of social members, mainly disadvantaged groups, such as the impoverished, the elderly, the disabled, women and children, and mentally deranged. In contrast, the universal welfare system observes the principle of universalism, aiming to provide welfare for all members of a society. Here, “all members of a society” has three implications. Firstly, all of them have the right to social welfare. In a universal social welfare system, social welfare is no longer the privilege of a minority of people, but a social right equal to all the people. It is a right granted © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_4

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to both urban and rural residents, both government officials and ordinary workers and farmers. Of course, this does not mean that all people enjoy equal or same welfare benefits. Secondly, all social groups will be considered and included into the social welfare framework. Only when all members of a society are protected by the social welfare system can we guarantee them to enjoy social welfare benefits. In the universal welfare system, the sunlight of social welfare shines on every person. But, different social groups are included into the system gradually not at the same time. Thirdly, all members of a society can enjoy basic welfare benefits. Some social welfare programs are targeted for certain social groups, for example, for the disabled and aged people. But the basic welfare needed by all citizens, such as public health and basic medical security, should be provided to all the people. In the universal welfare system, these basic welfare projects should realize full coverage. For instance, the new medical insurance system being built in China includes the basic medical insurance for urban workers, the basic medical insurance system for urban residents and the new rural cooperative medical system. The scheme has been designed to cover all the people in the country. By the end of 2011, the number of people participating in the basic medical insurance for urban workers was 252.27 million, the basic medical insurance for urban residents 221.16 million, the new rural cooperative medical system 832 million, and altogether there were 1.305 billion people enjoying medical security benefits, basically realizing the goal of “universal medical care”.1 In short, the universal welfare system is enjoyed by all the people, manifesting the mindset of “development for the people, by the people and with the people sharing in its fruits”. Surely, for a big country with 1.4 billion people, there is still gap to fill and blind spot to eliminate in the field of social welfare to further increase the coverage and universality.

4.1.2 Comprehensiveness of Social Welfare Contents To meet the basic welfare needs of all members of a society is also the essence of a universal welfare system. The scope of welfare contents is an important indicator for differentiating residual welfare and universal welfare. The objective of residual welfare is mainly to meet the minimum living security needs of the poor, with a low coverage. In contrast, universal welfare is centered on the basic welfare needs of all members of a society, thus, the welfare contents involve major areas pertaining to people’s livelihood. People’s basic welfare needs encompass employment security, living security, education security, health security, old-age care security and housing security. To meet these needs is to ensure that all the people enjoy their rights to education, employment, medical and old-age care, and housing. One welfare system 1

Ministry of Human Resources and Social Security, 2011 Statistical Bulletin on Human Resources and Social Security Development; Ministry of Health, 2011 Statistical Bulletin on Health Development.

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can be said to be “biased” if it only considers welfare needs of certain social groups. Nevertheless, no country can meet the basic needs of all the people in one step at a time. It is gradually realized with economic development and the improvement in welfare supply capacity. For instance, the expansion of social welfare in China’s rural areas since the reform and opening-up experienced such a gradual process. The new rural cooperative medical system aiming at medical security was established in 2003 provided, the rural minimum living security system intended to provide living guarantee for impoverished farmers was established in 2007, and pilot program for rural social endowment insurance was launched in 2009. After more than 60 years of rapid development since the reform and opening-up, China has continuously adopted more social welfare programs. The social welfare system now has basically covered people’s main welfare needs. For employment security, there are the unemployment insurance system, the on-job injury insurance system, the urban re-employment service system for laid-off workers, the employment protection system for migrant workers, the employment promotion system for college and polytechnic school graduates, and the elimination of the “zeroemployment family” system. In terms of living security, there are the minimum living security system for urban residents, the minimum living security system for rural residents, the support system for rural residents receiving guarantees of food, clothing, medical care, housing and burial expenses (five-guarantee), the living security system for wandering people, and the life assistance system for victims of a natural calamity. In the area of education security, there are the free compulsory education system, the financial aid system for impoverished high school students, the system of secondary vocational education grant, the system of loans for poor college students, the education system for children of migrant workers, and the education welfare system for special populations. For health protection, there are the basic public health service system for urban and rural residents, the basic medical insurance for urban workers, the basic medical insurance system for urban residents, the new rural cooperative medical system, and the medical assistance system for major diseases for urban and rural residents. For old-age security, there are the retirement system for government departments and institutions, the basic pension insurance system for urban enterprise employees, the new social pension system for rural residents, the old-age allowance system, and the elderly welfare service system. For the housing security, the country has established and improved a series of policies, including the urban low-income housing system, the urban affordable housing system, the housing provident fund system, the housing subsidy system and the public rental housing system. During 2005–2010, 11 million families in difficulties moved in new houses, and during the 12th Five-Year Plan period, another 36 million sets of indemnificatory housing were built.

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4.1.3 Comprehensiveness of Social Welfare Forms There are three basic forms of social welfare: cash, service and in-kind benefits.2 The residual welfare model places emphasis on cash benefits, ignoring or underestimating the value of service and in-kind benefits. The universal welfare model believes these three form all have their own advantages and limitations and advocates the synergy and complementarity between the three. Cash benefits are the most direct and convenient form of welfare benefits with a variety of advantages. Welfare providers can save costs because the procedures of giving cash are simple and convenient. Also welfare receivers can buy necessities or use it to meet their other needs. Nevertheless, there are negative effects: some welfare receivers may not be able to use it for reasonable spending. In-kind welfare is the most common and important form of welfare, mainly targeted at basic necessities of life including food, clothing, housing, and transportation and it is usually for victims of natural calamities or poverty-stricken population. For people in absolute poverty, in-kind welfare is the most useful and the most effective guarantee for maintaining their minimum living and even their lives. For families with no housing or poor housing conditions, the most helpful support may be the direct provision of “low-income housing” or “free housing” by the government. For farmers in remote and impoverished mountainous areas, the provision of commonly used drugs with low or no cost is also a kind of in-kind benefits. Of course, in-kind welfare is not without limitations. The social cost is relatively high and there may be a “Trickle-down effect” within the delivery system.3 Service benefits are given in labor services and have become an important form of welfare in modern society, contributing to improving people’s life quality. Service benefits include special care and home care for the elderly, children and the disabled, consultation and training for laid-off workers, free skill training for migrant workers, psychological counseling and psychological intervention for patients with mental illnesses, as well as career advisory service for college students. As the demand for social services increasing rapidly, social services should be made more accessible, targeted and convenient for recipients. The key solution is to comprehensively strengthen the social service system construction. During the 12th Five-Year Plan period, it is necessary to further improve the regulation and policy system, the management system, funding system, and the technological support, as well as develop social service organizations and enhance the social service supply capacity, to meet the increasing needs in the society.

2

Sun et al. [1, p. 33]. The so-called “Trickle-down effect” refers to the effect taking place in the process of social welfare delivery, where various in-kind resources for helping and supporting the welfare objects will be “intercepted” and “swallowed” by various intermediate links. Then there is little remaining when they finally reach the vulnerable group.

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4.1.4 Diversification of Social Welfare Subjects Social welfare subjects refer to the providers, producers and transporters of social welfare. In the process of social welfare development, welfare subjects have become more diversified and increased in number. The residual welfare model also encourages diversification of welfare subjects, but it emphasizes the leading role of the market and families in welfare provision. The government, according to this welfare model, only serves as a supplement. The universal welfare model, on the contrary, while encouraging the market, working units, families and charities to participate in welfare supply, it underscores the dominating role of the state and the government in this process. It regards welfare provision as the government’s primary responsibility and highlights “government-led diversification of provision subjects”. On the one hand, it adheres to the government’s leading position. This is a common practice in most developed countries and a basic symbol of social welfare modernization. China, in the process of pursuing and realizing the grand goal of socialist modernization, can not and should not violate the trend and the universal law of social welfare development. The government’s leading role in social welfare is mainly manifested in four aspects. Firstly, it bears the prime responsibility of choosing a social welfare system that suits national conditions. The choice of the social welfare system in any country, which is the most crucial to social welfare development, can only be and must be exercised by the government. In China, the authority has made the decision to accelerate the establishment and improvement of a social security system covering all urban and rural residents. The second is to formulate laws and regulations to contribute to improving the social welfare welfare and this is also a common practice in countries around the world. The promulgation and implementation of the Social Insurance Law of the People’s Republic of China on October 28, 2010 is a milestone in social welfare legalization in China, which is conducive to regulating various relations in social insurance and safeguarding the legitimate rights and interests of citizens. The third is to formulate and implement social welfare policies. It is not only a major responsibility of a modern government, but also a manifestation of its public policy capabilities. It is of particular significance in China, where the social welfare legislation is lagging behind and the tradition of “policy governance” has long been cherished. Since the founding of the PRC, governments at all levels have promulgated and implemented a series of social welfare policies, which has promoted the development of social welfare in the country. The last is to increase investment in social welfare. The government’s financial support is one of the important sources of social welfare funds. Since the beginning of the twenty-first century, the central and local governments of China have increased financial input in social security year by year. The total expenditure on eight social security projects including education, health, urban basic endowment insurance, as well as minimum living security and medical assistance for urban non-working and rural residents was raised from 882.317 billion yuan in 2006 to 2,575.74 billion yuan in 2011, which is an increase of 1.92 times.

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On the other hand, we should give full play to the role of other subjects. The first is employing units. Benefits provided by employing units include subsidies, in-kind assistance, services and setting up of service facilities. In addition to guaranteeing the interests of employees, offering benefits is also an effective way to enhance internal cohesion and comprehensive competitiveness. The second is families. Families are the most basic and unreplaceable welfare supplier in any era and society and they are the foundation of the entire social welfare system. Of course, we must also acknowledge that with the implementation of the family planning policy and changes in fertility concepts in the society, the size of families in China has been demolishing and become kernelized, which weakened the ability of mutual support within the family. The role of families in welfare supply faces severe challenge. The third subject is neighborhood communities. As a shared region where people live together, communities have always been one main subject of welfare provision. Communities are not only the organizer and provider of welfare but also the receiver, transporter and distributor of government welfare. We should further strengthen the construction of community service systems in urban and rural areas, and vigorously develop social welfare at the community level. The fourth is charitable organizations. Charities are important subjects that provide welfare support to disadvantaged groups. They uphold the principle of humanitarianism to provide welfare in various forms to people in need without seeking returns. They are producers, fundraisers, transporters and distributors of welfare benefits. They can also spread the philanthropic spirit, and be a supplement to other channels of welfare provision.4

4.1.5 Diversification of Welfare Supply Modes Social welfare supply modes are channels through which benefits are provided and social members obtain welfare support. There are mainly four modes of welfare provision: social assistance, social insurance, public welfare and social mutual assistance. In the residual welfare model, the predominant one is social assistance, while the universal social welfare system integrates them all. Social assistance is mainly supported by public finance, and main beneficiaries are vulnerable or special groups that meet certain legally required conditions, such as poor people with incomes below the minimum living guarantee line and victims of natural disasters, etc. Social assistance is offered for free. This nature is apt to produce moral hazards such as “welfare dependence” or “welfare abuse”. Establishing a strict screening mechanism and a dynamic withdrawal mechanism are important means of reducing such moral hazards. Social insurance is the core of the modern social security system and also the dominant welfare supply method in China. It includes the endowment insurance, medical insurance, unemployment insurance, work-related injury insurance and maternity insurance. Social insurance is generally compulsory and follows the principle of rights and obligations consistency. Beneficiaries of social insurance must 4

Bi [2].

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pay premiums in advance to obtain welfare support when needed. According to the law of large numbers, the security ability and level of social insurance largely depend on overall planning and the number of people insured. Therefore, only by improving the top design of social insurance and expanding its coverage can we maximum its function in social security. Public welfare is mainly supported by public finance and aims at improving people’s quality of life. It includes inclusive benefits for all social members and special benefits for certain groups. Inclusive public benefits mainly include public employment, healthcare, basic education, transportation, safety and cultural services. Some inclusive benefits are provided for free, some only charged by costs and other for profit. Special public welfare mainly includes in-kind assistance and services provided to the elderly, the disabled, women and children, and other special groups. The last mode of social mutual assistance is an informal channel of welfare provision. It is voluntary and reciprocal behaviors initiated by non-government organs. It reflects mutual help and support between members of a society. The four types of supply modes coexist with each other and enrich the channels for social members to receive welfare support. The transformation from “residual” welfare to “universal” welfare is not only in line with the common trend of global social welfare development, but also mirrors the direction of China’s social welfare development. And that’s why the 18th National Congress of the CPC proposed to “complete the building of a social security system covering urban and rural residents” by 2020.

4.2 The Integration of Social Welfare System The social welfare development since the reform and opening-up has shown that though social welfare has achieved more universal coverage, the issue of fragmentation has been intensified at the meantime. Therefore, to enhance the integration of welfare programs and build a universally integrated welfare system has become an urgent practical issue. To some extent, the difficulty in enhancing the integration in the social welfare system far exceeds that in increasing universality. The integrated social welfare system is different from the fragmented social welfare system in five aspects.

4.2.1 Integration of Management Bodies 4.2.1.1

Integration of Social Welfare Authorities

At present, China’s social welfare management involves several government departments. The department of human resources and social security are responsible for basic medical insurance for urban employees, basic old-age insurance, unemployment insurance, work-related injury insurance, maternity insurance, basic medical

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insurance for urban residents and new rural social pension insurance; the civil affairs department is in charge of urban and rural minimum living security, urban and rural medical assistance, temporary assistance, resettlement of entitled groups, welfare for the disabled, the elderly, and children, as well as disaster relief; the health department is responsible for new rural cooperative medical care and basic public health services; the education department is in charge of education welfare and education assistance; and the housing and urban–rural development department is in charge of affordable housing and the housing provident fund system. This mechanism enables competent authorities exercise governance in their professional areas but at the same time blocks connection among different departments. Different departments often determine the welfare objects from their own vantage points, resulting in overlaps and gaps in benefits provision. Only through organic integration between departments can we strengthen the communication within the system to reduce or avoid internal friction, hence reduce the operating costs and improve the efficiency of the social welfare system. Theoretically, there are three options for the integration of social welfare authorities. The first is based on the thinking of super ministry which calls for a comprehensive social welfare management organization to administrate the entire system.. Nevertheless, this approach is nearly impossible because of the historical inertia in institutional setup in the country, the rigid division of labor in the administrative management system and the complexity of social welfare programs. The second is to set up a Social Welfare Comprehensive Coordination Committee superior to existing institutions to realize unified guidance and coordination of relationship between various departments. Though this approach may be able to reduce the disadvantages of divided administration to a certain extent, it can lead to institutional expansion and the committee may be questioned about its authority. Its feasibility is in doubt. The third is to establish a mechanism for collaboration and connection among departments based on division of functions. Based on basic welfare needs of members of the society, we should appropriately merge and integrate social welfare projects and build an information-sharing platform and a mechanism for standardized and institutionalized communication, collaboration and connection among departments The last approach is the most feasible and practical one.

4.2.1.2

Integration of Social Welfare Agencies

Social welfare agencies are the executive body of social welfare policies. Thee are mainly three types of social welfare agencies in China now. The first type is social insurance agencies that are set up and administrated by human resources and social security departments. They mainly support the implementation of urban social insurance and new rural social old-age insurance. As of the end of 2009, there were 7,448 social insurance agencies nationwide, including 72 at the provincial level, 1,025 at the prefecture (city) level, and 6,351 at the county (district) level; of which 3,377 were for pension insurance, 2,199 for medical insurance, 358 for work-related injury

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insurance, 900 for new rural social old-age insurance, and 909 for retirement guarantee for government agencies and public institutions. In these agencies, altogether there were 128,691 regular staff members, including 3,892 at the provincial level, 35,866 at the prefecture (city) level and 88,996 at the county (district) level.5 The second type is the new rural cooperative medical insurance agencies that are established and administrated by the health department. At present, there is no unified state-level policy and local institutional arrangements for administrations of these agencies vary widely from place to place. According to a special survey conducted by the Ministry of Health, the new rural cooperative medical insurance agencies exist at the provincial, prefecture (city), county (district), and township levels.6 The third type is social assistance agencies which are set up and administrated by the civil affairs department. They are mainly for supporting urban and rural minimum living guarantee services. A series of problems exist in China’s social welfare agencies. The first is that the nature and functions of these organizations are not uniformed defined. In some places, they belong to government organs or public institutions, while in other places the identities for these organizations and their staff members are vague. The second is the overlapping establishment of agencies. In many places, a complete set of agencies are established for each social welfare project leading to excessive costs and scattered resources. The third is the random choice of agency names. For example, in 2010, Zhejiang Province recognized 11 “Advanced Units for Construction of New Rural Cooperative Medical Agencies”, among which, at the country level, there were various names for the agency, such as “the management center for new rural cooperative medical,” “the office of urban and rural residents’ cooperative medical management committee” “the office of new rural cooperative medical management committee”, “the office of rural cooperative medical management”, “the management center for urban and rural residents’ cooperative medical service”, “the new rural cooperative medical office” and “the office of the new rural cooperative medical management committee”. The fourth is the inadequate policy implementation capabilities, service capabilities and risk control capabilities as well as incompatible information systems.7 It is imperative to reform the management system of social welfare agencies and realize the integration of these organizations. The key is to decide the geographical basis for this task. This book believes that in urban areas, sub-district administration offices can be seen as a basis for integration. A comprehensive social welfare agency should be set up in each sub-district office to bring together various agencies which are gradually unified into an integral whole. In rural areas, townships can be a regional basis for integration, and the procedure is similar to that in urban areas. Integration on the basis of sub-district offices and townships

5

Zheng [3, p. 182]. Department of Rural Health Management, Ministry of Health, Survey of New Rural Cooperative Medical Care Management Organizations and Agencies by the Department of Rural Health Management, Communication on Rural Health Work, No. 14, 2006. 7 Zheng [3, p. 183]. 6

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not only increases the staff of grassroots agencies, improves service capabilities, but also integrates decentralized management resources and reduces operating costs.

4.2.2 Integration of Social Welfare Systems Social welfare programs are the basic element of a social welfare system. Welfare programs should respond to and meet different welfare needs. However, the establishment and management of China’s current welfare programs are based on division of labor among administrations, rather than on welfare needs. At present, the prominent “segmentation” of China’s social welfare system is manifested in four aspects. Firstly, welfare programs that meet the same welfare needs are implemented by more than one authorities. Take the medical security as an example. The new rural cooperative medical system belongs to the health department, the basic medical insurance system for urban employees and urban residents belongs to the human resources and social security department, and the urban and rural medical assistance system belongs to the civil affairs department. Secondly, the welfare system for people with the same social identity is divided into sub-systems. For example, the old-age insurance system is divided into four subsystems, and welfare benefits vary among sub-systems. From the highest welfare benefits to the lowest, they are the retirement pension for government organs and public institutions, basic old-age insurance system for urban enterprise employees, new rural social old-age insurance system and basic old-age insurance system for urban residents. The last one has just launched pilot programs. Thirdly, people with the same social identify are included into different social security programs. The most typical case is the “division” of social security for farmers. Though due to the lagging reform of the household registration system in the country, farmers still bear the identity of “farmers” wherever they go, they are differentiated between land-owning farmers and landless farmers, between left-behind farmers and mobile farmers (that is, migrant workers), or even between farmers in the city and farmers in the countryside. In recent years, the academia has repeatedly proposed and advocated the establishment of a social security system for landless farmers and a social security system for migrant rural workers, and governments at all levels have introduced various policies for establishing these two social security systems. As a result, there will be three separate social security systems for farmers, namely, for left-behind farmers, mobile farmers and landless farmers respectively. Fourthly, there is the urban–rural division within the social welfare system. Since the founding of the People’s Republic of China, the social welfare system development in urban and rural areas has been extremely imbalanced, with urban areas being given priority at all times. After the outbreak of the SARS crisis in 2003, the central government shifted its focus on issues concerning agriculture, rural areas and farmers, among which the social welfare system construction is a spotlight. Efforts have been made to establish a relatively independent rural social welfare system, narrowing the gaps of benefits between urban and rural areas. Nevertheless a dilemma in the

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dual urban–rural social welfare structure has arisen with the rapid development of rural social welfare. On the one hand, the existence of a dual social welfare system is necessary and inevitable, because the dual urban–rural social structure will exist in China for a long time, and urban and rural residents represent large differences in aspects of production modes, lifestyle, income and ideology. On the other hand, with the level of urbanization improves and large numbers of farmers going to cities to work and settle, the dual social welfare system becomes increasingly inadaptable to objective requirements of economic and social development. There is a growing demand for an integrated urban–rural social welfare system. To integrate social welfare institutions, we should first achieve internal integration of the same social welfare institution. Different systems that meet the same welfare needs can be integrated into a unified one and be managed by a single administration, which can both save management costs and improve the efficiency of welfare resources. For example, a unified basic pension insurance system can be established to unit the public basic pension and the personal account pension. The public basic pension represents baseline equality guaranteeing the rights of all citizens 60 years old or older. Benefits of the personal account pension vary according to individual contributions thus reflecting difference in welfare needs. Also, we should achieve integration of different welfare programs for the same social group. For example, for rural poor elderly, it is necessary to integrate the basic medical security system, the minimum living security system, the basic old-age security system, and the basic housing security system to meet their overall welfare needs. Furthermore, we should promote the integration of urban and rural social welfare systems. The realistic way to break the dilemma of dual urban–rural structure is urban–rural integration, but not in a general way. The levels of urbanization and urban–rural gaps vary greatly across the country. The scope, degree, speed and method of urban–rural integration of the social welfare system should be different accordingly. Specifically, there are three options for urban–rural integration. Areas with a higher level of urbanization and small urban–rural gap can adopt a uniformed set of social welfare systems with unified standards for urban and rural areas. Regions where the level of urbanization and the urban–rural gap are at a medium level can adopt one set of systems with diversified standards for urban and rural areas. This practice has considerable flexibility and adaptability and has accumulated successful experience. For example, the new rural social old-age insurance provides different levels of payment for different benefits levels. Places with a relatively low level of urbanization and large urban– rural gap, the feasible method is to establish a connection mechanism between urban and rural welfare systems so that farmers who have turned into urban residents can directly enter the urban social welfare system. With the enhancement of the urbanization level, more and more rural residents will become entitled to urban social welfare systems and eventually achieve urban and rural integration.

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4.2.3 Integration of Social Welfare Policies Social welfare policies are rules for adjusting social welfare relations and regulating social welfare behavior. They are key to ensuring the implementation of the social welfare system. Various social welfare policies constitute a complex social policy system. Currently, there are two types of “separation” in China’s social welfare policy system. The first is separation between welfare policies of the central government and local governments. The social welfare policies formulated by the central government have to be customized to local conditions. During this process, some policies are poorly implemented. The other is separation among different regions, industries and employing units. Boosting a vast territory, China represents large differences in economic development, fiscal strength, GDP per capita, and urbanization level in different regions and provinces. Welfare policies in different places have distinctive traits based on local conditions. Also, welfare levels among industries as well as among employing units belonging to different types of ownership are different. The lack of coordination within the social welfare policy system not only undermines the authority and unity of welfare policies, but also creates new “welfare inequities”. There are two basic ways to integrate the social welfare policy system. The first is the vertical integration, that is, to ensure the uniformity of the same welfare policy at different administrative levels through legislation and administrative forces. This can be done either by top-down or bottom-up approaches. The former reflects the concept of top-level design. It is conducive to realizing the unification of policies and therefore reducing costs of policy integration. The bottom-up approach displays gradual improvement and can fully mobilize and give play to enthusiasm and creativity of local administrations. These two approaches can be implemented successively or simultaneously. Currently, social welfare policies at the national level have basically covered the main welfare needs of the people. The focus should be to speed up the integration process from the bottom up. In specific, the integrating level should be upgraded from county level to prefecture (city) and provincial level The second is horizontal integration. We should enhance the horizontal connection of social welfare policies and promote the balanced development and equality in the social welfare system by means of breaking man-made restrictions and institutional barriers between regions, industries, and types of ownership. As population mobility increases, regions, industries and different types of ownership should proactively explore areas and open up interfaces of cooperation and coordination in the field of social welfare policies. In particular, in this process, economically developed regions must abolish the mentality of regional protectionism and high-income industries must get rid of the industrial protectionism.

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4.2.4 Integration of Social Welfare Information System The information system based on modern information technology and computer technology is fundamental to the scientific, standardized and modernized social welfare management. With the increase of social security programs and number of beneficiaries, it is urgent to speed up the construction and integration of the social security information management system. Before 1998, there was a lack of coordination among government departments in this area and the social security information management mainly relied on traditional manual operations. In August 2002, the General Office of the CPC Central Committee and the General Office of the State Council forwarded the Guiding Opinions of the National Leading Group of Informatization on China’s E-Government Construction, in which social security informatization was listed as one of the twelve systems that were going to be the focus in e-government construction. After more than 10 years of efforts and exploration, certain achievements have been made in social security informatization construction. But the work is still at the initial stage in general and the information management systems of different social security programs are basically isolated from each other, generating many problems.8 For example, different standards are adopted and diverse software and hardware facilities are used. Also, most are local area networks, with low coverage and level. In operation, different departments collect the same information at different times and locations wasting a lot of time as well as personnel, material and financial resources. To make it worse, the information collected by different departments may contradict with each other or stored in different formats thus not conducive for sharing. Furthermore, most of the personnel engaged in this work are non-professionals. Even those who have skills of information technology, they may lack knowledge about social security theories, policies and experience. The integration of the social welfare information system is a complex systematic project, which involves factors such as the social security management system, interests of relevant departments, changes in social welfare policies, and the progress of computer and network technologies. The non-technical factors are the most difficult to coordinate and deal with. It is imperative to build social security information systems that adopt the uniform technical standard around the country, which are connected and capable of information sharing. There are two necessary stages. The first is to integrate social security authorities. Different departments bear distinct responsibilities at this stage. The human resources and social security departments should endeavor to integrate the information systems for the old-age care, medical care, unemployment, work-related injury and maternity insurances for urban residents and should also build a unified information management system for new rural social endowment insurance. In April 2010, the Ministry of Human Resources and Social Security issued the Guiding Opinions on Further Integrating Resources and Strengthening the Construction of Public Service Platforms and Networks for Social Security of Grassroots Employment which specified an overall plan for the construction of urban and rural grassroots social security information systems. The civil affairs 8

Zheng [3, pp. 218–219].

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departments should realize the integration of the urban and rural minimum guarantee information management system, the health departments should realize the integration of the new rural cooperative medical information management system, and the housing and urban–rural development departments should realize the integration of the affordable housing information management system. The second stage is to achieve integration between different social security administrations. The minimum requirement is to realize information-sharing among departments, and the final goal is to adopt the unified “individual social security card” (or “social welfare card”) around the country.

4.2.5 Integration of Social Welfare Monitoring System The social welfare development in many countries evidenced that a sound monitoring system is a guarantee for the healthy operation of the social welfare system. A robust monitoring system can help prevent, discover and deal with problems in the welfare system operation in a timely manner and thus can protect the social welfare rights and interests of the people. The key to the integration of the social welfare monitoring system is to combine internal and external mechanisms.9 The internal monitoring mechanism is essentially an administrative supervision mechanism. It refers to the supervision and control of the welfare system operation by related government sectors according to their functions. China’s internal monitoring consists of top-down and bottom-up monitoring. The former refers to the monitoring of local governments by the central government, lower levels of local governments by higher levels of governments, and departments of lower levels by departments of higher levels. The latter means the monitoring in the opposite direction. There are mainly seven forms of internal monitoring in China. The first is the monitoring by human resources and social security departments. As the authority of urban and rural social insurance in the country, they mainly supervise all aspects and links of social insurance on the basis of the labor law, social insurance law as well as supporting regulations and policies. The second is the monitoring by civil affairs departments who are in charge of social assistance and social welfare services in China. Their monitoring is also based on related laws and policies. The third is the monitoring by health departments who are responsible for basic public health services and new rural cooperative medical services in China. They monitor the operation of public health services and new rural cooperative medical services in accordance with national policies. The fourth is the monitoring by housing and construction departments who are in charge of the country’s affordable housing and housing provident fund system. They monitor housing security affairs in accordance with the country’s housing policies. The fifth is the monitoring by the departments of finance. They mainly exercise its power by supervising fiscal accounts of social insurance funds and examining the financial statements of social security institutions. 9

Zheng [4, p. 471].

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The sixth is the monitoring by audit departments, who are the defender of national financial and economic laws and disciplines. They mainly monitor the compliance of social security institutions with social security laws and regulations, with a focus on the income and expenditure of social security funds. The seventh is the monitoring by the supervision department, which is a special department authorized by the state to supervise and inspect the behavior of officials of state organs. It monitors the work behavior of staff in the social security field, corrects irregularities, and investigates and deals with violations of laws. From the perspective of system design, if internal monitoring institutions can truly perform their respective duties and responsibilities, the healthy operation of the social welfare system will be solidly guaranteed. However, practice shows that there are limitations or even “bugs” with the internal monitoring mechanism, so it is necessary to strengthen the external monitoring mechanism as well. There are mainly six forms of external monitoring. The first is the monitoring by the legislature, whose power comes from the people and therefore supervises the operation of the social welfare system on behalf of the people. The monitoring of the legislature is through social welfare legislation, examinination of government work reports as well as budget and final accounts of the government, supervision of the content of social welfare policies, and influence on the social welfare system by appointment and removal of personnel. It can also form special investigative committees to monitor the implementation of government policies. The second monitoring is by judicial organs. Its monitoring of the social welfare system mainly includes: determining whether the procedures and principles for social welfare policy formation are legal, determining whether the contents and implementation of social welfare policies are legal, and punishing illegal and criminal acts in the implementation of social welfare policies. The third is the monitoring by enterprises. Enterprises are the main responsible party for major social insurance systems in China, and they are obliged to pay social insurance premiums for employees, therefore they have the right and obligation to monitor the management and use of social insurance funds. The fourth is the monitoring by target groups. Every social welfare policy is targeted at a certain social group who are the stakeholders and direct beneficiaries of the police and therefore has the right and responsibility to monitor the operation of the policy. The monitoring of the target group is not only conducive to curbing deviant behaviors and corruption in social welfare management and agencies, but also helping to protect their own social welfare rights. The fifth is the monitoring by social organizations. For example, the labor union is a mass organization that represents the interests of and reflects the demands of its members. To protect its members’ social welfare rights should be one of its important tasks. Women’s Federation should assume the responsibility of supervising the formulation and implementation of welfare systems related to women and children. The Disabled Persons’ Federation should supervise the formulation and implementation of welfare systems related to the disabled people. The sixth is the monitoring by mass media. Mass media, including television, newspaper and periodical, radio, and the internet, play a role in transmitting information, revealing the truth, pointing out problems, and extolling philanthropy in the society. Mass media can take their advantages and propaganda social welfare laws and policies, popularize social security knowledge,

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reflect the voices and demands of social members, expose corruption cases in the operation of the social welfare system, hit out at malfeasance of social security agencies and their staff, and publish social welfare research results.

References 1. Sun, G., Dong, K., et al.: Introduction Social Security. China Renmin University Press (2000) 2. Bi, T.: A primary study of the welfare supply of charity organizations. J. Yunnan Nationalities Univ. 6 (2009) 3. Zheng, G.: The Strategy of Social Security System Reform in China (General Theory). People’s Publishing House (2011) 4. Zheng, G.: Social Security: Concept, System, Practice and Speculation. The Commercial Press (2001)

Chapter 5

The Universally Integrated Social Welfare System

A social welfare system is a social system that responds to and meets the welfare needs of social members. It is necessary to establish a social welfare system according to the structure of welfare needs of social members. According to the baseline equity welfare system, the welfare needs can be divided into two levels: baseline welfare needs and non-baseline welfare needs. Correspondingly, the universally integrated social welfare system includes three basic types: the baseline welfare system, which meets the baseline welfare needs and manifests the consistency of rights; the nonbaseline welfare system, which meets the non-baseline welfare needs and manifests differences of rights; and the cross-baseline welfare system that takes into account both the baseline and non-baseline needs, manifesting both the consistency and differences of rights of social members.

5.1 The Baseline Welfare System The baseline welfare system is a social welfare system that meets the baseline welfare needs of social members. It is the cornerstone of the universally integrated social welfare system and the starting point for the social welfare system construction. Improving the baseline welfare system is the primary task of China’s social welfare development, and it plays a decisive role for achieving baseline equity of social welfare.

5.1.1 Features of Baseline Welfare System The so-called baseline welfare system refers to a social system that reflects the consistency of social welfare rights and meets the baseline welfare needs of social members. The baseline welfare system has three basic characteristics. © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_5

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Basicness

The baseline welfare system is the cornerstone of the entire social welfare system. The modern social welfare system is an organic whole composed of a series of specific welfare systems. Different systems respond to and meet different welfare needs. Among various welfare systems, the baseline welfare system is the foundation that supports the entire “edifice”. For one thing, the baseline welfare system is fundamental, without which there is no equity and justice in a society. Practice shows that a society without a baseline welfare system is a society offering no baseline welfare. It is the fundamental system for maintaining and guaranteeing the baseline welfare and also the essential way to achieve equity in social welfare. For another, the baseline welfare system should have priority. Social welfare needs should be met in order of priority. Baseline welfare needs are the most urgent ones, hence should be guaranteed in the first place. Accordingly, the baseline welfare system should be prioritized in welfare system construction. In the history of social welfare development, the earliest social welfare field in which the governments got involved was the baseline welfare (i.e. poverty relief), and the first social welfare provided was to protect the baseline welfare needs (survival needs) of the poor. This characteristic of the baseline welfare system tells us that the baseline welfare system is the “foundation” of the entire social welfare edifice. If the foundation is not strong, it will threaten the entire building.

5.1.1.2

Equity

The baseline welfare system follows the principle of universalism and treats all social members equally. According to universalism, all members of a society, regardless of nationality, gender, age, ethnicity, class, status, etc., can enjoy the benefits of the baseline welfare equally and be protected by the baseline welfare system equally. Equity of the baseline welfare system is mainly determined by three factors. First, people have the same baseline welfare demands. Among the various social welfare needs, the baseline welfare is common to all. The second is the consistency of the baseline welfare rights. Social welfare rights have now become an important part of civil rights. The equity of social welfare rights includes differentiated equity and non-differentiated equity. The equity of baseline welfare rights belongs to the non-differentiated type, and the consistency of the baseline welfare rights provides legal basis for this equity. The third is the equality of the baseline welfare supply. Welfare supply is the fundamental way to meet social welfare demands. Since welfare demands are unlimited in nature and welfare resources are limited in the society, there are different supply mechanisms for different welfare needs. The baseline welfare demand does not apply to the mechanism of “supply determining demand”. It can only adopt the “demand determining supply” mechanism and implement the “equalization” standard to ensure an uniform baseline welfare. The equity of the baseline

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welfare system requires us to resolutely resist and oppose “specialism” and “selectionism” in welfare system construction, as well as to reduce and eliminate “baseline welfare discrimination” and “baseline welfare gap”. In current China, it is particularly necessary to equalize the baseline welfare rights of urban and rural residents.

5.1.1.3

Primary Responsibility of Government

The government has primary responsibility for the baseline welfare system. The government has become the biggest social welfare provider in modern society. It decides the contents of welfare benefits and formulates welfare regulations and policies. It offers social welfare funds and builds social welfare facilities. It is the producer and provider as well as the distributor of social welfare. According to baseline equity, among the various social welfare responsibilities undertaken by the government, the primary one is to protect and meet citizens’ baseline welfare needs (survival, health and development needs). To establish and improve the baseline welfare system is a legal, political, and moral responsibility that the government cannot shirk, no matter in the traditional or modern society. In the agricultural society, the government provided the “residual welfare” which was mainly restricted to the baseline welfare needs of the people; and in the industrial society, the government took lead in providing the “institutional welfare” which took people’s baseline welfare needs as the starting point and basis. Since the 1990s, China’s governments at all levels have gradually assumed the responsibility of compulsory education for all, increased investment in public health in urban and rural areas, established a minimum living security system for urban and rural residents, and improved the urban and rural social assistance system. These policies demonstrate the government’s primary responsibility in social welfare development. Nevertheless, “primary responsibility” does not mean “full responsibility”. Instead, it calls for enterprises, non-governmental organizations, families and individuals to bear certain responsibilities to meet the baseline welfare needs in the society.

5.1.2 Baseline Welfare System Programs The baseline welfare system encompasses different programs at different stages of economic and social development. In current China, there are mainly three baseline welfare programs, in accordance with the stage of development and based on the welfare needs of the people.

5.1.2.1

Minimum Living Security System

The minimum living security system is a social assistance system to protect the basic living rights of all citizens and it is implemented in most market economies in the

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world. It establishes a minimum living security standard according to the minimum living needs. Citizens have the right to receive cash and in-kind assistance from the state and society as per legal standards and procedures when their lives are in difficulty with income lower than the minimum living standard.1 As a remedy mechanism to relieve poverty, the minimum living security system aims to maintain the minimum living of social members and guarantee their right to survival. It is of fundamental significance to achieve baseline equity. The right to live is the basic right of human beings and the prerequisite for individuals to obtain and enjoy other social rights. It is the “baseline right in social rights”. In this sense, the minimum living security system is a “life-saving” system and the “baseline in the baseline welfare system”, which best demonstrates the social value of baseline equity. The system is crucial for China to move towards a modern society, because it serves to safeguard human rights and social justice. It also lays the psychological foundation for social identification and integration, and the political foundation for the government’s transformation of functions.2 In September 1997, the State Council issued the Notice on Establishing the Minimum Living Security System for Urban Resident. By the end of September 1999, the system was set up at all towns of 668 cities and 638 counties across the country. In September 1999, the issue of the Regulations on Minimum Living Security for Urban Residents symbolized that China’s minimum living security system for urban residents embarked on a legal path.3 As of the end of 2011, there were 11.457 million urban households and 22.768 million people covered by the minimum living security system. Financial expenditures at all levels on urban minimum living security throughout the year totaled 65.99 billion yuan, an increase of 25.8% over 2010, of which the central financial subsidy was 50.20 billion yuan, accounting for 76.1% of the total. In 2011, the national average monthly standard of urban minimum living security allowance was 287.6 yuan per person, an increase of 14.5% over 2010; the national monthly urban minimum living allowance per capita was 240.3 yuan (including one-time living allowance), up 27.1% over 2010.4 The construction of the minimum living security system for rural residents in China started relatively late. Before 2004, only three municipalities directly under the Central Government, namely Beijing, Tianjin and Shanghai, and two provinces, Zhejiang and Guangdong, had established the system.5 The Opinions of the CPC Central Committee and the State Council on Several Policies to Increase Income of Farmers issued in 2004 proposed that “where conditions permit, we should explore to establish a rural minimum living security system”. On July 11, 2007, the State Council issued the Notice on Establishing a Rural Minimum Living Security System in the Whole

1

Tang [1, p. 118]. Jing [2, p. 288]. 3 Hu [3, pp. 62–63]. 4 Ministry of Civil Affairs, Statistical Bulletin on Social Service Development in China in 2011. http://cws.mca.gov.cn/article/tjbg/201210/20121000362598.shtml. 5 Hu [3, p. 73]. 2

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Country, the rural minimum security system has entered a new period of comprehensive construction and fast development. As of the end of 2011, 26.728 million households or 53.057 million people in rural areas enjoyed the minimum living security allowances, with an increase of 1.8% or 917,000 people over 2010. A total of 66.77 billion yuan of rural minimum living allowance was spent by fiscal authorities at various levels throughout the year, an increase of 50.0% over 2010, of which the central subsidy fund was 50.26 billion yuan, accounting for 75.3% of the total expenditure. In 2011, the average monthly standard for rural minimum living allowance was 143.2 yuan per person, an increase of 26.2 yuan and 22.4% over 2010; the national monthly urban minimum living allowance per capita was 106.1 yuan, an increase of 43.4% over 2010.6 Practice has proved that the minimum living security system is the welfare system with the lowest cost and the largest benefit and it also wins the widest support from the people. It plays the biggest role in maintaining the baseline equity of social welfare and reducing the degree of social inequity. As the poverty line rises, the absolute number of impoverished population in China will increase. But the coverage of the subsistence allowance system will be further expanded, which will contribute to maintain baseline equity.

5.1.2.2

Public Health Service System

Public health is highly relevant to the health of each social member. The public health system is the baseline welfare system in the field of health protection. Public health services are the first factor influencing health. The health needs of social members include both public health services and medical services for serious illnesses, while the former is more basic and should be firstly met. If the public health services are adequate, the incidence of major illnesses and medical costs can be reduced. Studies show that health care and medical treatment are the two factors which can directly protect life, while health is the primary one. The World Health Organization has pointed out that more than 80% of people’s health problems can be solved at primary health institutions. Therefore, to meet people’s health needs, we must give priority to the development of the public health service system. Moreover, the public health service system is the foundation of China’s basic medical and health system. In April 2009, the CPC Central Committee and the State Council proposed in the Opinions on Deepening the Reform of the Medical and Health System that by 2020, a public health service system, medical service system, medical insurance system and drug supply security system covering urban and rural residents will be basically established, forming a “four-in-one” basic medical and health system and achieving the goal of “universal medical insurance”. The public health service system is the foundation of the system. Vigorously developing the urban and rural public health 6

Ministry of Civil Affairs, Statistical Bulletin on Social Service Development in China in 2011. http://cws.mca.gov.cn/article/tjbg/201210/20121000362598.shtml.

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service system is a fundamental way to promote the gradual equalization of public health services and achieve equity in the health sector. Lastly, to provide public health services is the basic duty of the government. Public health services are essentially a public product but not an area for market mechanisms to function. In the process of establishing, developing and improving public service systems in all countries, the government contributes the most.7 The fundamental purpose of the CPC is to serve the people wholeheartedly. To provide equalized public health services for all urban and rural residents meet the inherent requirements of building a service-oriented government and are the basic means to promote health equity and achieve social justice. After the SARS crisis in 2003, China strengthened its public health service system construction. First off, the national basic public health service project was implemented. In July 2009, the Ministry of Health, the Ministry of Finance, and the National Population and Family Planning Commission jointly issued the Opinions on Promoting the Gradual Equalization of Basic Public Health Services, in which nine national basic public health projects were initiated, namely the establishment of residents’ health files, health education, vaccination, prevention of infectious diseases, child health, maternal health, elderly health, chronic disease management and severe mental illness management. These projects are provided free of charge for all residents mainly through urban community health service centers, township health centers, village clinics and other primary-level health and medical institutions in urban and rural areas. The second is to implement major public health service projects. On June 18, 2009, the Office of the Leading Group for Deepening Reform of the Medical and Health Care System of the State Council held a video conference and decided to launch six major public health service projects in the year: hepatitis B vaccine for people under 15, breast cancer and cervix cancer examination for rural women, folic acid supplementation to prevent neural tube defects, rehabilitation for millions of impoverished cataract patients, coal-fired fluorosis elimination as well as rural water and toilet improvement. In recent years, the implementation of public health service projects has achieved remarkable results, which improved public health service conditions in urban and rural areas as well as the equalization of basic public health services in the country.

5.1.2.3

Compulsory Education System

Compulsory education is the foundation of the basic public education service system, and the compulsory education system is the baseline welfare system in the field of education. Compulsory education is the base for national education. Education is a fundamental task crucial for generations to come and compulsory education is

7

Ding [4, p. 73].

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the base for education. Compulsory education is the pillar for national rejuvenation and social progress. It is the starting point for building a country with strong human resources and a learning society. Without compulsory education, improving competitiveness of the country is like a tree without the root. Compulsory education is also the initial stage to facilitate individuals to transform from “a natural man” to “a social man” and complete the first process of socialization. It is also a prerequisite for promoting the all-round development of individuals, enhancing their social adaptability and improving their social status. In short, the foremost for education development is the compulsory education. Second, compulsory education is universal and inclusive. On the one hand, compulsory education is universal education equal to all. In the Compulsory Education Law promulgated in 2006, it is stipulated that all children and adolescents who have the nationality of the People’s Republic of China and have reached the school age shall have equal right and have the obligation to receive compulsory education, regardless of gender, nationality, race, status of family property or religious belief, etc. On the other hand, compulsory education is free education guaranteed by the government. Compulsory education in China is a public welfare undertaking. Its funding is guaranteed by governments at all levels, with no charges for tuition and miscellaneous fees. In this sense, China’s compulsory education system is a national (governmental) welfare system that is universal and inclusive. Moreover, compulsory education equity is the starting point of social equity. Education equity is the foundation of social equity, and compulsory education equity is the foundation of education equity. The Outline of the National Plan for Medium and Long-Term Education Reform and Development (2010–2020) states that the basic requirement of educational equity is to ensure that citizens enjoy the right to education in accordance with law. The key is to promote the balanced development of compulsory education and give aid to disadvantaged groups. The higher the level of education, the more differences are allowed in equity. The level of basic public education, i.e. compulsory education represents equity without difference, characterized by universality, equality and consistency; while the level of higher education represents differentiated equity, exhibiting competitiveness, selectivity and diversity.8 In short, equity in compulsory education is the baseline equity, and the compulsory education system is a baseline equity system. There is a process for the compulsory education system to become a baseline welfare system. The first stage is from universal primary education to nine-year compulsory education. On December 3, 1981, the CPC Central Committee and the State Council stated in the Decision on Several Issues Concerning the Popularization of Primary Education that in the 1980s, primary education should be basically made universal across the country, and junior high school education should be made universal in areas where conditions permit. On May 27, 1985, the Decision of the CPC Central Committee on the Reform of the Education System proposed that “nineyear compulsory education should be implemented step by step”. On April 12, 1986, the Compulsory Education Law of the People’s Republic of China passed at the

8

Jing [2, p. 257].

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Fourth Session of the Sixth National People’s Congress on April 12, 1986, stipulated that the State adopts a system of nine-year compulsory education and by the end of the twentieth century, the nine-year compulsory education will be basically popularized. The second stage is when compulsory education changed from “paid education” to “free education”. Since 1986, the compulsory education fee has gone through four stages: “free tuition and paid miscellaneous fees”—“one-off system for miscellaneous fees and textbooks”—“free miscellaneous fees and textbooks, and subsidized living expenses for boarders)”—“no tuition and miscellaneous fees”. The promulgation and implementation of the amended Compulsory Education Law in 2006 provided legal guarantees for free compulsory education. In 2007, all 150 million students of compulsory education in rural areas were exempted from tuition and miscellaneous fees, textbooks were provided free of charge, and 7.8 million impoverished boarders were provided with living allowances. In 2008, tuition and miscellaneous fees for urban compulsory education were waived nationwide.9 At this point, compulsory education has basically changed from “run by the people” to “run by the government”.

5.2 The Non-baseline Welfare System In addition to baseline welfare needs, social members have varied non-baseline welfare needs. In the generally integrated social welfare system, the non-baseline welfare system belongs to the superstructure of the social welfare system. It is of great significance to meet the developmental and manifold welfare needs of social members and achieve “differentiated social equity”.

5.2.1 Features of Non-baseline Welfare System The non-baseline welfare system refers to the social system that reflects the diversity of social welfare needs and meets the non-baseline welfare needs of social members. It has two basic characteristics.

5.2.1.1

Efficiency

The relationship between fairness and efficiency is one important relationship in social development. There are three levels of opposition between fairness and efficiency in the field of social welfare: between the economic system and the welfare system, with the former prioritizing efficiency and the latter stressing fairness; within 9

Zhang Li, China’s 30 Years’ Educational Achievements since Reform and opening-up and Future Prospects, http://www.sociology.cass.cn/shxw/zxwz/t20081008_18851.htm.

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the welfare system, where both fairness and efficiency should be emphasized and fairness should not be prioritized; and within a specific welfare program, that is, different social welfare programs may attach different weights to fairness and efficiency but none of them should be missing. Unlike the baseline welfare system which emphasizes fairness while considering efficiency, the non-baseline welfare system mainly meets the developmental demands of citizens, and must hold efficiency first while giving due consideration to fairness. Only in this way can it fulfill the diversified welfare needs. This philosophy is best demonstrated in the dominance of market and social mechanisms. Only by relying on market and social mechanisms can we motivate market forces and social forces and cultivate a sense of responsibility in individuals to reduce “welfare waste”, avoid “welfare dependence”, and lighten the “welfare burden” of the government. In other words, in the non-baseline welfare system, efficiency is the prerequisite of fairness. Without efficiency, there is no fairness.

5.2.1.2

Selectivity

In a social welfare system following the principle of baseline equity, the government’s responsibility is to “guarantee the baseline.”10 Non-baseline welfare needs are characterized by distinct individual preferences, namely there are differences among social members in terms of welfare contents and urgency of demand. Therefore, contrasting with the “universal” nature of the baseline welfare system, the nonbaseline welfare system is “selective” and follows the principles of particularism. Selectivity is reflected in two aspects. The first is the choice of the government. It is not the government’s primary responsibility to provide non-baseline benefits, so the government has a choice of whether to establish the non-baseline welfare system, when to establish it and what kind of system to establish. The government can supervise and regulate the non-baseline welfare system, but not necessarily directly manage it. For high-income groups with strong capability of self-protection, the government can even ignore their non-baseline welfare needs. The second is the choice of citizens. Individuals know their needs best, and they have choices in whether to participate in non-baseline welfare systems, which kind of and when to participate. Individuals can selectively participate in non-baseline welfare systems based on their actual needs as well as their incomes and financial capability.

10

Jing [5].

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5.2.2 Forms of Non-baseline Welfare System 5.2.2.1

Individual Account System

The individual account system is a self-protection system in which all funds from different sources are recorded in individual accounts whose deposits are wholly or partially owned and controlled by individuals, according to provisions of relevant laws and policies. The individual account system is essentially a compulsory or semi-compulsory savings scheme completely dependent on accumulation. On the one hand, the system can serve as an incentive to motivate people to participate in social security and encourage more contributions to gain more benefits. On the other hand, it can lighten the social welfare burden of the society to reduce moral hazards and adverse selection in social security. There are two basic types of individual account systems. One is the comprehensive individual account system. The Central Provident Fund in Singapore is a model of a comprehensive account system. The Singapore government enforces individual savings through legislation and sets up a fully accumulated Central Provident Fund system. The provident fund is funded by contributions from both employers and employees, and the contribution ratio is dynamically adjusted according to changes in economic conditions of the two parties. Depending on purposes, the provident fund is credited into three sub-accounts: Ordinary Account, MediSave Account and Special Account. The Ordinary Account weights 75% of the fund and is used to participate in security plans like public housing, residential real estate, non-residential real estate, family-member protection, family protection, education plans, as well as basic and enhanced investment. The MediSave Account accounts for 15% of the fund. It is used to pay hospitalization and outpatient expenses for the account holders as well as his or her spouse, children, parents and grandparents who are Singapore citizens or permanent residents. The Special Account accounts for 10% of the fund and is mainly used for elderly living expenses and emergency expenses.11 The second is the separate individual account system. The individual account system with Chinese characteristics is a representative of this type. Since the 1990s, China has established five individual account systems successively during the social security system reform.12 As China implements a system of “integrating social pooling with personal account”, the five types of individual accounts are linked to respective “social pooling accounts” without internal connections among themselves, thus they are called separate individual account systems. There are five separate individual account systems in China. The first is the individual account for urban employees’ basic endowment insurance. This account is linked to the “social pooling account” within this insurance system. Premiums are paid by both employees and

11

Zhang and Chen [6, p. 113]. China’s choice of the “personal account” system among various social security systems also stems from the country’s profound welfare tradition, in addition to the consideration of attracting and stimulating welfare funds. But the topic is too complicated to be discussed here.

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employers. The deposits can only be used for old-age care and may not be withdrawn in advance. Once the employee or retiree passes away, the individual payment of the account can be inherited.13 However, due to the pension insurance system reform, most of these accounts are empty. The second is the individual account for urban employees’ basic medical insurance. This account is linked to the “social pooling account” in the same system, and premiums are paid by both employees and employers. It is used for general outpatient expenses.14 The third is the individual account for provident fund. The Regulations on Management of Housing Provident Fund amended in 2002 stipulated that each employee should have a housing provident fund account, and employees and employers deposit housing provident funds in the same proportion. The housing provident funds paid by employers and employees are deposited in individual’s housing provident fund accounts, and the account balance belongs to the individual. If the employee passes away, the balance of the housing provident fund can be inherited. The fourth is the family account for new rural cooperative medical scheme. The family account corresponds to the “pooling funds for serious illnesses”, and its funds come from contributions in the scheme paid by family members and government subsidies. This type of account is essentially an expanded individual account. The fifth is the individual account for new rural social pension insurance system. This type of account corresponds to the “basic pension account”. The funds come from individual contributions, collective subsidies and subsidies from other economic organizations, social welfare organizations, and other individuals to the insured, as well as subsidies from local governments.

5.2.2.2

Supplementary Insurance System

The supplementary insurance system meets the welfare needs of employees beyond the basic protection. It is based on the statutory basic social insurance, and up to the choice of employers to participant it or not. This system is a special guarantee system between the basic social insurance system and the commercial insurance system, because it has characteristics of both autonomy and public welfare. It focuses on the non-baseline welfare needs of employees. China’s supplementary insurance started in the early 1990s. In 1991, the State Council issued the Decision on the Reform of the Pension Insurance System for Enterprise Employees, which proposed to establish the supplementary pension insurance enterprises for the first time.15 In the Article 75 of the Labor Law of the People’s Republic of China, adopted on July 5, 1994, and implemented on January 1, 1995, it states: “The State shall encourage the employing unit to set up supplementary insurance for labourers according to its actual conditions”, It provides a legal basis for 13

Zheng [7, p. 65]. Ibid., p. 105. 15 Zheng [8, p. 226]. 14

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establishing a supplementary insurance system by enterprises.16 Currently, there are two major supplementary insurance systems in China: the supplementary pension insurance system for enterprises and the supplementary medical insurance system for urban employees. The supplementary pension insurance system for enterprises refers to the supplementary endowment insurance system voluntarily established by enterprises and their employees on the basis of the basic pension insurance to improve the level of old-age protection for employees. In 1991, the Decision on the Reform of Pension Insurance System for Enterprise Employees issued by the State Council put forward “With the economic development, (the State shall) gradually establish a system that combines the basic pension insurance with the supplementary pension insurance for enterprises and the employee-saving pension insurance”, planning the basic framework of a multi-level pension security system for enterprise employees in China. In 1995, the Ministry of Labor issued the Opinions on Establishing a Supplementary Pension Insurance System for Enterprises (referred to as the Opinions), providing preliminary policy specifications for enterprise supplementary pension insurance. The Opinions stipulated that the basic conditions required for enterprises to establish a supplementary pension insurance system are: they have participated in the social pooling of basic pension insurance and paid their premiums in full and on time; they are relatively stable in production and operation; and their democratic management foundation is good. In 2000, in the “Pilot Scheme on Improving the Urban Social Security System” (the “Scheme”) promulgated by the State Council, the supplementary pension insurance for enterprises was officially renamed as “enterprise annuity”, and the system became “the enterprise annuity system”. The “Scheme” proposes that “If condition permits, enterprises can establish the enterprise annuity system for employees, and adopt market-based operations and management. Enterprise annuities are fully funded and managed in the form of individual accounts. They are paid by the enterprise and its employees. If the enterprise payment is equal to or less than 4% of its total sum of wages, the payment can be included in its cost.” In December 2003, the Ministry of Labor and Social Security issued the “Pilot Measures for Enterprise Annuities” stating that “Enterprise annuities refer to the supplementary pension insurance system voluntarily established by enterprises and their employees on the basis of participating in basic pension insurance in accordance with the law.” In February 2004, the Ministry of Labor and Social Security, the China Banking Regulatory Commission, the China Securities Regulatory Commission and the China Insurance Regulatory Commission jointly issued the “Administrative Measures for Enterprise Annuity Funds”, which primarily established a system framework and a collaborative regulatory system for the management and operation of enterprise annuity funds in China.17 In February 2011, the Ministry of Human Resources and Social Security, the China Banking Regulatory Commission, the China Securities 16 17

Song [9, p. 127]. Zheng [8, pp. 226–227].

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Regulatory Commission and the China Insurance Regulatory Commission jointly issued a revised “Administrative Measures for Enterprise Annuity Funds” which went into effect on May 5, 2011.18 The supplementary medical insurance system for urban employees refers to the supplementary medical insurance system established by urban employers and their employees to meet the needs of other medical services not covered by the basic medical insurance on the basis of participating in the basic medical insurance in accordance with law. It mainly includes medical subsidies for civil servants, subsidies for large medical expenses and enterprise supplementary medical insurance. In April 1994, the Opinions on the Pilot of the Employee Medical System Reform jointly issued by the National Commission for System Reform, the Ministry of Finance, the Ministry of Labor, and the Ministry of Health, proposed to “develop the employee medical mutual assistance funds and commercial medical insurance as a supplement to meet the medical needs beyond the basic medical insurance stipulated by the state. But the principle of voluntary participation and free choice must be adhered to”. In December 1998, the State Council issued the Decision on Establishing a Basic Medical Insurance System for Urban Employees which officially proposed the concept of the “basic medical insurance system”, clarifying that “medical expenses exceeding the maximum payment can be solved through commercial medical insurance and other channels”. In 2001, The Outline of the 10th FiveYear Plan for National Economic and Social Development of the People’s Republic of China stated: “Proactively promote the reform of the basic medical insurance system for urban employees as well as the reform of the medical institution and drug distribution system. Encourage qualified employers to establish the supplementary pension and medical insurance for employees which can play the role of commercial insurance”.19 At present, China has basically established medical subsidies for large expenses for employees throughout the country. Most regions have implemented the civil service medical subsidy system, and qualified enterprises have established supplementary medical insurance.20

5.2.2.3

Commercial Insurance System

Commercial insurance is “a market-oriented risk-sharing mechanism, adopted by commercial insurance companies based on the law of large numbers and the principle of equivalent exchange. Being a commercial transaction, it objectively serves as a supplement to the social security system”.21 China took a time to understand the role of commercial insurance in meeting people’s welfare needs and improving their welfare standards. In 1993, the Third Plenary Session of the CPC 14th Central 18

Website of the central government: http://www.gov.cn/flfg/2011-02/23/content_1808854.htm. Yu and Hu [10]. 20 From the website of the Ministry of Health: http://www.moh.gov.cn/publicfiles/business/htmlfi les/mohzcfgs/s9664/200904/40042.htm. 21 Zheng [8, p. 330]. 19

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Committee passed the Decision on the Establishment of a Socialist Market Economy System which proposed that “we will step up the building of a sound social security system that is based on social insurance, assistance and welfare, with basic oldage pension, basic medical care and subsistence allowances as its backbone, and supplemented by charity and commercial insurance”. Commercial insurance mainly includes old-age pension insurance and medical insurance, both of which contain diverse schemes. In most cases, people who are able to buy commercial insurance are basically from middle-income and high-income groups. Commercial insurance is a new channel for meeting welfare needs above the baseline, hence to improve people’s welfare standards and life quality. Therefore, we believe that the commercial insurance system is a non-baseline welfare system that plays an important role in meeting the non-baseline welfare needs of social members. “By the end of 2007, the insurance industry’s accumulated fund for pension and health insurance reached 1.9 trillion yuan, and professional pension insurance companies were entrusted to manage enterprise annuities of 15 billion yuan, accounting for 90% of entrust business by judicial persons.”22

5.3 The Cross-Baseline Welfare System The cross-baseline welfare system is a welfare system that aims to respond to and meet the different levels of welfare needs. In addition to baseline and non-baseline welfare needs, there also exists the distinction between the baseline level needs and non-baseline level needs within a welfare item. To meet both levels of needs, the cross-baseline welfare system come into being.

5.3.1 Features of Cross-Baseline Welfare System The cross-baseline welfare system takes into account both the consistency and diversity of social welfare rights. It has two basic characteristics.

5.3.1.1

Integration

Integration is the primary feature of the cross-baseline welfare system. Horizontally, it gives consideration to both the consistency and diversity of the same welfare item. For example, everyone has the old-age security demand, but may choose different welfare schemes. Vertically, it consider a social member’s both baseline and developmental needs for a same welfare item. In addition, the system also balances fairness and efficiency. It gives consideration to both “non-differential social fairness” 22

Zheng [7, p. 342].

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and “differential social fairness”. The former is related to the baseline welfare and emphasizes “absolute fairness and relative efficiency”, and the latter is related to the non-baseline welfare and emphasizes “absolute efficiency, relative fairness”. This feature is a merit of the cross-baseline welfare systems. But it adds to the difficulty in designing and operating the system, for example, where is the baseline and how to determine the weight and proportion of baseline and non-baseline welfare.

5.3.1.2

Complexity

The cross-baseline welfare system is a complex welfare system. The complexity firstly is reflected in the funding mechanism. In this system, money-raising mechanisms for baseline and non-baseline welfare needs are different. The baseline needs can be either fully funded by public finance, jointly funded by the government, the employing units, and individuals, or only by the employing units, and individuals. The non-baseline part can either be fully paid by individuals or jointly by employing units and individuals. If these mechanisms are not properly coordinated or balanced, it might result in chaos in system operation. The complexity also lies in outcomes of the system. The cross-baseline welfare system strives to strike a balance between fairness and efficiency. However, in practice, there may be three results of the system. The first is the most ideal one, that is, it not only guarantees the baseline demands, but also meets different non-baseline needs. The second is “robbing Peter to pay Paul”, either to divert the fund earmarked for baseline welfare to the non-baseline welfare or vice versa. The third is a lose-lose situation, in which neither the baseline welfare nor the non-baseline welfare needs are adequately fulfilled. The first result is the desired one, but the other two have a relatively high probability under the influence of various factors.

5.3.2 Forms of Cross-Baseline Welfare System The cross-baseline welfare system attempts to reflect the consistency and diversity of social rights in a social welfare system. It takes into account both the baseline welfare and the non-baseline welfare needs and strives to achieve a balance between fairness and efficiency. The theoretical foundation for the system is perfect, but there is not yet a system prototype corresponding to this “ideal type” of system in reality. Nevertheless, there are three forms of systems that are similar or close to it.

5.3.2.1

System of Integrating Social Pooling with Individual Accounts

This term was invented in China in the early 1990s. During the reform of the pension insurance and medical insurance systems for urban employees at that time, in view of the shortcomings of excessive responsibilities of the state and employees in paying

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premiums and absence of individual participation, the authority innovated the funding mechanism to form the system of integrating social pooling with individual accounts, based on learning from foreign countries’ pay-as-you-go and fully-funded systems. In November 1993, the Decision on Several Issues Concerning the Establishment of a Socialist Market Economy System passed at the Third Plenary Session of the 14th CPC Central Committee stated that “The pension and medical insurance funds for urban employees shall be borne jointly by employing units and individuals, adopting the mechanism of integrating social pooling and individual accounts.”23 This model is essentially a pooling method for social insurance funds, which consists of a unified account from social pooling and individual accounts. Funds of the unified account come from the government and employing units (enterprises) to ensure social fairness and have the function of mutual assistance. Individual accounts, highlighting the principle of efficiency first and funded by employing units (enterprises) and individuals, reflects self-protection of individuals24 Zheng Gongcheng believes that the system integrating social pooling with individual accounts is a unique combination of the pay-as-you-go and fully-funded systems.25 Yuan Yuling holds that the system “introduces the deposit fund system for individual accounts in addition to the pay-as-you-go system for social pooling, and the accumulated fund is on individual accounts. With both incentive and supervision mechanisms while maintaining the mutual assistance mechanism, this system combines the advantages of the fullyfunded and pay-as-you-go tools while preventing and overcoming their weaknesses and possible problems.”26 According to the baseline equity theory, the model of integrating social pooling with individual accounts is similar to the cross-baseline welfare system. Social pooling reflects the consistency of baseline needs and the principle of equity, while individual accounts manifest the differentiation of non-baseline needs and the principle of efficiency. In current China, four social welfare schemes adopt this model. The first is the basic old-age insurance system for urban employees. In July 1997, the State Council promulgated the Decision on Establishing a Unified Basic Old-age Insurance System for Enterprise Employees, proposing to establish a basic old-age insurance system based on integrating social pooling and individual accounts. In December 2005, the State Council issued the Decision on Improving the Basic Oldage Insurance System for Enterprise Employees which further improved the system. In October 2010, the Social Insurance Law of the People’s Republic of China (hereinafter referred to as the Social Insurance Law) adopted by the 17th Meeting of the Standing Committee of the 11th National People’s Congress stipulated: “The basic old-age insurance adopts the mechanism of integrating social pooling with individual accounts”, and “the basic old-age insurance fund is composed of social polling and individual accounts”. The second is the basic medical insurance system for urban employees. In December 1998, the State Council promulgated the Decision 23

Zheng [7, p. 103]. Zhang [6, p. 47]. 25 Zheng [7, p. 79]. 26 Cheng [11, pp. 52–53]. 24

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on Establishing a Basic Medical Insurance System for Enterprise Employees, stipulating that the basic medical insurance fund comprises social pooling and individual accounts and a basic medical insurance system based on this model was thus established. The Social Insurance Law passed in 2010 no longer mentioned the model of “combination of accounts” system. The third is the new rural cooperative medical system.27 In December 2003, the Guiding Opinions on Furthering the Pilot Work of New Rural Cooperative Medical Care jointly issued by 11 departments including the Ministry of Health proposed to “reasonably set up pooling funds and family accounts” and “proactively explore a model mainly based on pooling subsidies for large medical expenses supplemented by subsidies for small cost. Family accounts can be established alongside pooling funds for major diseases. Family accounts are funded by individual payment to pay for outpatient medical services. The remaining part of individual payments and financial subsidies at all levels form the pooling fund for major diseases which is used for reimbursement for large medical expenses or inpatient medical expenses of participants of the new rural cooperative medical insurance”. The fourth is the new rural social old-age insurance system. In September 2009, the State Council issued the Guiding Opinions on Piloting New Rural Social Old-age Insurance which stipulated that “Pension benefits comprise basic pensions and individual accounts for old-age insurance.” The Social Insurance Law adopted in 2010 wrote that “The new rural social old-age insurance benefits comprise basic pensions and individual accounts for old-age insurance”.

5.3.2.2

Social Service System

Social services are a social action aiming to meet life needs of social members in the form of labor. It has become an increasingly important welfare benefits in modern society which differentiates from cash and in-kind benefits. The social service system is in turn a major social welfare system. In short, social services are a range of social activities, social work, social affairs and other public services provided by the state and society to ensure and improve life quality of all social members especially vulnerable groups. There are three reasons why this system is labeled as a cross-baseline system. For one thing, social service demands have different levels. Social services can be divided into essential services and non-essential services, while the latter include developmental and entertainment services. Essential social services reflect the commonality and consistency of needs, and they are indispensable for maintaining and guaranteeing basic life. Possessing the characteristics and attribute of public goods, essential social services are mainly supported by public finance and provided by governments at all levels. In this sense, they can be called “basic public services”, following the principle of equalization and universalism. Non-essential social services reflect the

27

The “family account” in the new rural cooperative medical scheme is essentially an extended “individual account” and thus can be treated as “individual account”.

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differentiation and preferences of social members. Being non-public or individualized products, they are mainly provided by market and social mechanisms. In this sense, non-essential social services can also be called non-essential public services, following the principle of marketization and particularism. For another, recipients of social services have levels. Social services are for all social members belonging to different groups, for example, there are “advantaged groups” and “vulnerable groups”. People of the “advantaged groups” are capable of enjoying all basic social services and even enjoyment services, while those of “vulnerable groups” might find it hard to access basic services. In addition, there are different levels of social service supply. Some social services are free or low-charge welfare benefits that are targeted at disadvantaged groups, while some are paid or even high-cost for-profit services that are mainly targeted at all social members. Essential services as welfare benefits for vulnerable groups possess the attribute of baseline services, and non-essential for-profit services for advantaged groups are non-baseline services. To strengthen the construction of the social service system, we must give priority to providing “baseline services” and take into consideration “non-baseline services”, thus it is called the cross-baseline welfare system.

5.3.2.3

Mutual Assistance System

The mutual assistance system is a social welfare system in which social members help and support each other in order for survival and development. As an informal welfare form, mutual assistance has a long history, and the history of human society is exactly a history of mutual assistance. It has been a major channel for individuals (families) to receive welfare benefits in different stages of human history. The mutual assistance system has four basic characteristics. Firstly, it is a folk welfare system rather than government-led. It is organized and implemented by social organizations rather than government agencies, and funded by private fund-raising rather than public finance. Moreover, its operation is based on folk customs not on executive orders.28 This nature of social mutual assistance distinguishes itself from social assistance, social insurance, public welfare, and also mutual assistance insurance initiated by the labor union, which is a quasi-governmental social group. Secondly, social mutual assistance is based on the voluntary participation by social members. People have free willingness as whether or not and what kind of mutual assistance to join in. Thirdly, it is bidirectional, and participators can be both the supplier and receiver of mutual assistance.29 Fourthly, social mutual assistance has the nature of social exchange, to be specific, a reciprocal social exchange. Both providers and receivers have clear expectations of returns which take place during the operation process or after it.

28

Jing [12, p. 173]. Social mutual assistance is not an equivalent of social assistance, because the latter is not only unidirectional but also led by the government.

29

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Social mutual assistance happens in both production and life. Mutual assistance in the domain of life is of the nature of social welfare. There are two levels of social mutual assistance here. One is for meeting the baseline welfare needs, for example, for securing the right of survival and minimum living of impoverish groups. This level of social mutual assistance mainly exists in primary social groups, such as families, clans, and neighbors, where people offer life necessities to other members to help them out of difficult times. Especially in famine years, this kind of mutual assistance among primary social groups played a very important role in maintaining the survival of the poor and social stability. In remote regions where social security and public services are lacking, mutual assistance is of great significance to resolve the problems of birth-giving, old-age care, disease, death, poverty and other major issues of people’s well-being. Another example is relatives, friends and neighborhoods voluntarily giving financial support to children from poor families for them to go to college. The second level of social mutual assistance is for meeting people’s non-baseline welfare needs. For example, the employee mutual assistance insurance initiated and carried out by labor unions at all levels provide protection for union members on aspects not covered by basic social insurance. Also, some high-income groups spontaneously establish mutual assistance organizations or conduct mutual assistance activities to meet their enjoyment needs, which are by no means belong to the baseline social mutual assistance. In short, the rich contents and different levels of mutual assistance fulfill both baseline and non-baseline welfare needs thus should be placed at the cross-baseline welfare system.

References 1. Tang, J.: Research on the Poverty Line of Chinese Urban Residents. Shanghai Academy of Social Sciences Press (1998) 2. Jing, T.: Baseline Fairness: The Foundation of a Harmonious Society. Beijing Normal University Publishing Group (2009) 3. Hu, W.: An Introduction to Social Assistance. Peking University Press (2010) 4. Ding, Y.: Social Construction in China: Strategy and Policy Options. Peking University Press (2008) 5. Jing, T.: Welfare Sociology. Beijing Normal University Publishing Group (2010) 6. Zhang, Y., Chen, H.: An Introduction to Social Security. Nanjing University Press (1999) 7. Zheng, G.: 30 Years of Social Security in China. People’s Publishing House (2008) 8. Zheng, G.: The Strategy of Social Security System Reform in China (General Theory). People’s Publishing House (2011) 9. Song, X.: Report on the Reform and Development of China’s Social Security System. China Renmin University Press (2001) 10. Yu, G., Hu, S.: A study on the strategy of developing complementary medical insurance for urban employees. Health Econ. Res. 7 (2002) 11. Cheng, S.: Reform and Improvement of China’s Social Security System. Democracy and Construction Press (2000) 12. Jing, T.: Striving to promote the construction of a social security system in accordance with national circumstances—a welfare model with baseline equality. Theory Front 18 (2007)

Chapter 6

The Mechanisms of the Universally Integrated Social Welfare

The mechanism of universally integrated social welfare regulates the operation process of welfare schemes and coordinates relationships between various social welfare projects. It helps to realize the goal of universal integration of the social welfare system. It includes the responsibility, coordination, supply and demand, and management mechanisms.

6.1 The Responsibility Mechanism of the Universally Integrated Social Welfare Behind any kind of social welfare system, there is a certain kind of responsibility relationship and structure. Social welfare systems differ from one another in terms of responsibility structure and mechanism. Therefore, to discover and reveal the responsibility mechanism is conducive to achieving social scheme integration and realizing social welfare goals.

6.1.1 Overview The distribution and implementation of social welfare responsibilities need to be constrained by a mechanism, which runs through the whole process of social welfare system construction. Each reform of the social welfare system is accompanied by continuously adjusting and redefining of responsibility relations and structure as well as the choosing of the responsibility mechanism. Different social welfare models reflect different responsibility relationships and have different responsibility mechanisms. Extensive research and practice has been conducted in this regard at home and abroad. © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_6

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Research on the Overseas Responsibility Mechanism

Institutionalized and systematic social welfare started in Western industrial countries. Scholars in the West started research on the responsibility mechanism of social welfare systems early, and the results have influenced the social welfare system construction in those countries. As early as in 1958, Willensky and Leibohaus identified two types of welfare systems based on the size of government’s responsibility in welfare supply: “residual welfare” and “institutional welfare”. The former recognizes families and the market as the main supplier of social welfare while the latter regards the government as the major subject of welfare provision. On this foundation, Titmas distinguished “residual” “industrial achievement” and “redistribution” welfare in 1974.1 Later on, Aspin-Anderson contrasted “liberal, corporatist, and social democratic welfare systems” according to the degree of non-commercialization. Among them, the “social democratic” system regards the government as a major subject in delivering welfare benefits and building welfare systems. The corporatist approach stresses responsibility sharing, attributing welfare responsibilities to the government, employers and employees. The liberal welfare system deems that employers, individuals and other social entities all bear social welfare responsibilities while the government mainly shoulders the responsibility in social assistance. Based on these ideas, countries in the West formed their respective social welfare responsibility structure and mechanism in accordance with actual national conditions, which serve as a good foundation for China to scientifically set up its own responsibility structure and mechanism for the social welfare system.

6.1.1.2

Construction of the Domestic Responsibility Mechanism

After the beginning of the reform and opening-up and when the country was transforming to a market economy, the Chinese authority accelerated the reform of the “work unit” welfare system formed in the era of the planned economy. It strived to build a “societal” welfare system covering employment, life, health, education, housing, public welfare and other welfare items, centering on the needs of enterprise employees and reflecting differentiations in occupations and social strata. The existing social welfare system derived from the “societal” system as a result presents obvious fragmentation and lack of universality and integration. Strengthening the universal integration of the social welfare system has become a social consensus. Since the 16th CPC National Congress, China has quickened social welfare development, calling for the establishment of a responsibility mechanism for the social welfare system. Some scholars advocated the primary responsibility of the government and the sharing of responsibilities by other parties. They believe it to be the internal requirement of the social welfare system and also a realistic choice in line with national conditions. The government, according to them, should

1

Titmuss [1].

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shoulder the responsibilities of legal system building, financial support and supervision in social welfare building.2 Also, the financial responsibility relationship and structure among governments at different levels in social welfare system has been defined.3 Some scholar calculated the optimal scale of social welfare expenditure in China, using the Cobb–Douglas production function and based on the spending of various welfare projects released by the National Bureau of Statistics since the 1990s, and then accordingly proposed the government’s financial responsibility in the welfare system.4 Some also explored the structure of welfare expenditure using the Cobb–Douglas production function and taking into consideration population aging, concluding that the government should fund “75% of the sum of the proportion of the aged population as well as the proportion of unemployment security expenditure, industrial injury and maternity security expenditure, and the expenditure on entitled groups”.5 These studies have laid a solid foundation for us to explore the responsibility structure and relationship of the social welfare system. Generally speaking, there are still many problems in the responsibility boundary, implementation and mechanism of China’s current social welfare system. For example, the altered mission of the welfare system from history to the present day is not clear; the respective responsibilities of the central and local governments are not distinct; there is inconsistency between duties and responsibilities for local governments6 ; the responsibility boundary between the government, the market, society, and individuals is blurred7 ; and supervision of the welfare system is inefficient. Due to the fragmentation of the social welfare system, the social welfare fiscal expenditures are unreasonable. Moreover, there are still debates as to what mechanism or what kind of welfare model to choose. Some advocate the government-led appropriately all-inclusive model, some worry it might cause China to suffer from welfare dependency and insist on the residual social welfare,8 while others call for a “welfare for all” model.9 One reason for the above-mentioned problems is the traditional culture in China. Chinese people have held long the thinking that families are the biggest source of security, and also there has long been the urban–rural gap in welfare provision. Due to these types of “path dependence”, people have not formed a corresponding concept of responsibility in the modern social welfare system. Another reason is that the responsibility relationship of welfare suppliers is not clarified. For instance, it is not clear enough which welfare schemes should be organized by the central government, and which ones are at the discretion of local governments. In addition, there are many

2

See Wang [2]; Jin and Li [3]; Yang [4]. Zheng [5]. 4 Wang [6]. 5 Mu [7]. 6 Zheng [8]. 7 Jing [9]. 8 Wang [2]; Zheng [5]. 9 China Development Research Foundation [10, p. 64]. 3

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“containment factors” that affect the clarifying of responsibility mechanism of the social welfare system.10

6.1.1.3

Types of Responsibility Mechanisms

There are two types of responsibility mechanisms: responsibility division, specifying the responsibility relationship between subjects of benefits provision, and responsibility sharing, examining obligations of different subjects for the same welfare item. The two mechanisms work separately in the system. Responsibility sharing involves the collaboration of all responsible parties, clarifying the size of their respective responsibilities and assuring that all parties enjoy the fruits brought about by the universal integration of the social welfare. Of course welfare supply bodies tend to evade responsibility involuntary due to their nature of rationality, and that’s why the responsibility division mechanism comes into being. The responsibility division mechanism stresses the defining of range of liabilities, for instance, which belong to the government, market and society, and families and individuals. These two mechanisms constitute a whole system of responsibility allocation to facilitate the universal integration of the welfare system. The two mechanisms are interdependent. On the one hand, the responsibility division is the premise of obligation sharing. All responsible parties can properly share responsibilities only if the responsibility boundaries are clear. On the other hand, the sharing is the inevitable result of the division. To divide the responsibility boundaries is not to reduce responsibilities, but to form a more reasonable sharing mechanism and to improve the entire social welfare cause and the well-being of the people. One thing worthy noticing is that for the responsibility division mechanism, it is necessary to scientifically evaluate various social welfare items and focus on the most urgent demands of the universal public. Also, a monitoring mechanism is crucial.

6.1.2 Responsibility Division Mechanism The responsibility mechanism is the primary mechanism of a universally integrated social welfare system, and it helps to scientifically formulate the responsibility relationship and structure, and promote the implementation of other mechanisms such as the adjustment mechanism, supply and demand mechanism, and management mechanisms. This section will elaborate the basic content of the responsibility mechanism of the universally integrated social welfare system.

10

Li [11].

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6.1.2.1

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Necessity

The responsibility division mechanism is an inherent need for constructing a universally integrated social welfare system. A universally integrated welfare system aims to guarantee that all the people can universally receive all kinds of social welfare benefits in a country where the economic output per capita is relatively low. To this end, all parties and entities should join and take their corresponding obligations based on a scientific division. The government, economic organizations, social charities, families and individuals, all these parties have different functions, such as producer, transporter, fundraiser and distributor of social welfare benefits.11 A responsibility division mechanism should be formed to clarify these functions and guarantee these parties to perform their obligations. China’s social welfare system is not yet perfect. Some social welfare projects, such as old-age services and public safety, are inadequate, and others are generally missing, such as unemployment, work injury and childbirth welfare for rural migrant workers and farmers. Also, many employees of private enterprises are not able to get housing provident. Some projects intended for all present severe fragmentation, which impairs the rights of those eligible. One factor contributing to the unbalanced and unjust social welfare supply is the lack of a responsibility division mechanism, which is intended to define the responsibility boundaries in welfare supply among various bodies so as to promote the universal integration of the social welfare system. The universal integration of the social welfare system is an unprecedented social development project, covering the most welfare needs and welfare projects in human history. There is no experience to draw on even from the developed countries. The number of welfare supply objects in China is almost equivalent to the total population of Western countries, and current welfare programs in the country are highly fragmented. We need to integrate fragmented welfare programs and projects around the whole country, including those in Hong Kong, Macao and Taiwan, China to reduce gaps in welfare benefits and avoid welfare inequality and stratification. This task requires us to distinguish the respective responsibilities of related subjects and set up a relatively complete responsibility mechanism that is compatible with the welfare system we are endeavoring to build.

6.1.2.2

Content

The responsibility division mechanism for a universally integrated welfare system contains four aspects. First of all, the mechanism precisely defines responsibilities and requirements of welfare providers such as the government, enterprises, society, families and individuals. For example, the responsibility of the central government is to establish a universal and integrated welfare system that reflects baseline equity, as well as scientifically and reasonably determine the baseline of various social benefits. It 11

Jing [12].

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also provides funding guarantee for various welfare projects for urban residents, farmers, flexible employees and other self-employed or people without jobs under current taxation systems. Local governments shall, in accordance with requirements of the central government, guide and encourage other entities to participate in social welfare provision and supervise the payment of social insurance by enterprises for their own staff. It is also responsible for developing public benefits consistent with local economic conditions, “raising and allocating resources for welfare purposes”12 to ensure the goal of universally integrated social welfare to be achieved. The responsibility division mechanism also involves defining responsibility boundaries between the government and enterprises, organizations, working units and individuals. It clears up that some benefit provision primarily relies on the government while others on enterprises, families or social organizations. Secondly, the mechanism can reasonably allocate responsibilities to relevant parties for various social welfare projects. Every social welfare project includes inkind benefits, cash transfers and service benefits. Authorities should clarify how can these forms of benefits be covered and integrated, as well as the source and amount of financial support. Meanwhile, the responsibility boundaries among different levels of governments in terms of financial support to welfare programs should be recognized. For instance, the old-age guarantee requires the government to integrate pension systems for staff of public sectors, enterprise employees, flexible employees, urban and rural residents, and measure the future demand of payment. The authority should also distinguish basic pensions and supplementary pension, supervise enterprises to pay pensions for their employees, and assume responsibility for pension payment of non-working or self-employed people, thereby forming a complete welfare liability system. In addition, the implementation of social welfare projects such as institutional old-age care, community care, rehabilitation and physical therapy services requires the intervention of non-governmental entities and government preferential policies. For another instance, with the social welfare system integration, enterprises and other organizations also provide social welfare funds, technology and personnel. Therefore, the responsibility of employees’ “work benefits” or “occupational benefits” naturally falls on the employers.13 Also, the role of families in increasing the wellbeing of family members is irreplaceable. The responsibility division mechanism thus reveals the responsibilities of various subjects in benefits provision. Thirdly, the mechanism also works in the organization and implementation of social welfare projects. The organization and implementation of a universally integrated social welfare system should take into consideration of diverse and multi-level welfare needs of the people and be conducted at all levels of governments as well as among various responsible parties. For example, old-age and medical service benefits should take into account people’s most basic welfare needs, rather than be completely “privatized and commercialized”,14 blindly pursuing economic benefits according to

12

Gilbert and Terrel [13, p. 18]. Ibid., p. 10. 14 Ibid., pp. 212–213. 13

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market rules. Again, benefits such as pensions, medical care, work injury, unemployment and childbirth have been designed and implemented for a long time with disparities in urban and rural areas, among different ownership systems and people of different employment status, resulting in prominent fragmentation and lack of universality. The integration of these welfare programs needs not only to distinguish the scope of basic benefits and non-basic benefits, but also to clarify requirements for the government, such as to establish a universal pension system, provide basic pensions and public health services, and set up a basic health system. In other words, in the supply of benefits and implementation of welfare projects, it is necessary to accurately divide the responsibility boundaries between organizers and the implementers and give specific requirements for relevant parties, to ensure the smooth delivery of social benefits. Finally, the mechanism is also needed in the supervision of social welfare projects. Effective supervision is a guarantee for the smooth implementation of welfare programs and for the universal integration of social welfare systems. It can ensure all subjects to fulfill their responsibilities and form a joint force in social welfare construction. That is to say, the responsibility division mechanism inherently includes supervision, to prevent unclear or unreasonable responsibility sharing as well as failure in responsibility performance. To this end, supervision must take place during the division of responsibilities as well as the organization and implementation of social welfare projects to avoid deliberate evasion of responsibilities and secure the various links of benefit delivery so as to effectively improve the well-being of the people.

6.1.2.3

Realization Path

To secure the realization of the responsibility division mechanism for a universally integrated social welfare system, we need to focus on the following three aspects. For one thing, to form the mindset of responsibility sharing in social welfare is the prerequisite. Minds are the forerunner of action. Only when people have the awareness and understanding of responsibility sharing can different responsible parties proactively shoulder welfare responsibilities and thus form a reasonable responsibility division mechanism. For another, to specify responsibility requirements for each party in each project is a precondition for establishing the mechanism. In fields like employment, living, health, education, housing and public welfare, we must refine the responsibility requirements, improve the responsibility division structure, and define the scope of responsibilities of each supplier, to establish a reasonable responsibility division mechanism. For example, in order to improve the public toilet facilities in urban areas, the provincial government should give explicit requirements concerning the number, construction area and sanitary conditions of toilets as well as the funding and personnel of the project, attribute responsibilities for these matters for cities and counties under its jurisdiction based on population density, mobility and other factors.

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The third is to strengthen the implementation of the responsibility division mechanism and reduce the randomness in this process. A set of scientific, reasonable, objective and fair evaluation methods and procedures should be designed and incorporated into the annual performance evaluation of governments at all levels and their leadership, so that those who contribute to implementing the mechanism are rewarded. On the contrary, governments who do not perform their responsibilities should be called to account.

6.1.3 Responsibility Sharing Mechanism The responsibility sharing mechanism attempts to integrate various responsible subjects for a joint force of social welfare construction. Together with the responsibility division mechanism, they serve as a strong guarantee for achieving a universally integrated social welfare system.

6.1.3.1

Necessity

With the increasing coverage of social welfare programs and advancing social welfare system in recent years, the establishment of a responsibility sharing system has become an important link in promoting the integration of welfare systems. First off, there are diverse subjects of benefit provision in the welfare system, including the government, social and economic organizations, families and individuals, and they all should bear welfare responsibilities. It is necessary to allocate their responsibilities in a scientific way so as to create joint efforts to realize the goal of welfare development. Also, welfare responsibilities are multifaceted and sometimes overlapping in one welfare project, which requires us to establish the responsibility sharing mechanism so as to ensure that every responsibility is well performed. The social welfare system firstly, has political responsibilities, that is, to maintain social stability and social harmony. Secondly, there are economic responsibilities, because social welfare not only has the function of secondary distribution but also is a kind of social production. Finally, welfare development should be in line with people’s cultural psychology. At last, the mechanism can build consensus and increase collaboration among benefits providers in order to realize the goal of the universally integrated social welfare. Social welfare construction covers political, economic, social, cultural and many other areas. Its responsibilities include mobilizing various subjects and planning social welfare programs, as well as managing and supervising the implementation of social welfare projects. To fulfill these responsibilities requires cooperation among all relevant parties.

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Problems

Since the beginning of the reform and opening-up, China’s social welfare undertakings have continuously progressed in practice and gradually established a social welfare system comprising social insurance, social assistance and public services. However, there are still overlaps and gaps in many areas. As part of the overall system, the responsibility sharing mechanism exhibits multiple problems as well. First off, there is a lack of awareness of cooperation and responsibility sharing among relevant parties. In terms of supply, it is necessary to integrate all subjects, including the government, society, and family (individual), and let them shoulder due responsibilities. Social welfare benefits can be divided into in-kind, cash and service benefits. This inherently requires us to unite the consensus of all responsible parties and strengthen cooperation in various aspects, in order to realize diversified welfare delivery. However, at present, various subjects lack the sense of responsibility and cooperation. Not only different welfare projects fail to fully integrate the strength of the government, business, society, family and individual,15 even the relevant subjects involved in one project are not well integrated.16 For example, many departments are active in going for welfare projects that can receive financial subsidies, while setting lots of conditions for those that need funding. This hinders the establishment of a functional responsibility sharing mechanism. Secondly, the multi-subject participation mechanism has not been formed. It is not practical to solve the basic welfare needs of the people relying on a single welfare supplier. For some time, some social welfare projects have relied too much on the government, without integrating enterprises, charitable organizations and families. For example, old-age benefits are mainly realized by the social old-age insurance provided by the government, while the social endowment benefits and aged-care services provided by other entities are ignored by the people. The professional annuities of government bodies, public institutions and businesses are not well established, and social organizations and families are universally absent from old-age services. For other social welfare projects ostensibly requiring the participation of multiple subjects, due to lack of a sound responsibility-sharing mechanism, many entities tend to fleeing from their responsibilities. Lastly, the implementation and supervision of the responsibility-sharing mechanism is inadequate. The realization of the mechanism depends not only on a clear sense of responsibility acknowledged by various entities, but also on implementation and supervision. Nevertheless, the implementation of the mechanism is inadequate, some subjects even take advantage of it to shrink their responsibilities. Moreover, there is a lack of effective methods to monitor responsible parties, like governments at all levels, enterprises, society and other organizations. The result is that some welfare 15

In the field of social assistance, especially disaster relief, the strength of social organizations has not been fully mobilized, and enterprise annuity benefits have not been established universally, so the pension benefits for employees are still at a low level. 16 Endowment benefits include not only pensions provided by social security departments, but also endowment services and family care. This requires the government, enterprises, endowment service organizations, and family members to form a reasonable responsibility sharing mechanism.

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projects are oversupply while others are unattended, and some social groups receive benefits more than enough while other groups’ benefits are inadequate, creating new injustice.

6.1.3.3

Realization Path

Building a universally integrated social welfare system to improve the welfare level of all members of a society and promote justice in social development, not only needs to improve the responsibility division mechanism, but also requires to form a diverse supply and multi-participation mechanism and improve the implementation and supervision of the responsibility sharing mechanism. The first is to develop the concept and sense of responsibility sharing among responsible parties. Only when multiple subjects of provision have the awareness of responsibility and cooperate with each other can we increase the universality and coverage of social welfare and thus build a social welfare system with Chinese characteristics. Without coordination, each relevant party working in its own way can hardly ensure the reasonable supply of benefits, thus is not conducive to improving social welfare levels. The second is to accurately define the responsibilities of involved parties in the entire welfare system as well as within a welfare project and form a scientific responsibility structure. Take the old-age security as an example. The government should hold the baseline of guaranteeing the basic life of the aged, while higher level of needs can be satisfied through family assistance, personal accumulation, social mutual assistance, etc., or with the help of old-age services provided by enterprises or charitable organizations. This requires us to intensify the reform of welfare supply subjects, supply modes and channels, and form a responsibility sharing mechanism characterized by both cooperation and competition. Also, in this mechanism with diverse subjects and supply channels, it is necessary to determine who is the dominant responsible party and who plays the supplementary role. It is necessary to take effective measures to integrate responsible subjects and promote the more equitable development of the social welfare system. The third is to strengthen the supervision of the responsibility-sharing mechanism to ensure the realization of it. It is necessary to monitor the work of relevant functional departments of governments at all levels as well as enterprises, especially by including the implementation of the mechanism as an important aspect of assessing cadres and enterprises.17 Meanwhile, it is necessary to take measures to encourage various social organizations to participate in all links of social welfare construction to supplement the government and enterprises. In addition, it is necessary to guide

17

For example, the government’s industrial and commercial, health, drug supervision, quality supervision and other departments can supervise the production, wholesale, retail, and use of the lunch box, which is a most basic food safety benefit. But in reality, no department assumed the reprehensibility.

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all subjects to strengthen self-supervision and mobilize the consciousness of supervision by all sectors of society, especially the people, to make joint efforts to realize the responsibility sharing mechanism of the social welfare system.

6.2 The Adjustment Mechanism of the Universally Integrated Social Welfare The goal of integrating social welfare systems is to, adhering to principles of guaranteeing the basic, improving people’s well-being and promote social harmony, redefine responsibilities of benefits providers and range of benefits for various groups of people, so as to adjust the social welfare structure as well as make the supply– demand relations of social welfare be adjustable in rigid growth. Hence, the adjustment mechanism is an important mechanism for the universally integrated social welfare system.

6.2.1 Overview of Adjustment Mechanism This section explores what adjustment functions the social welfare system possesses and how these functions can be implemented.

6.2.1.1

Definition

The concept of adjustment mechanism originated in the field of natural sciences at an early time. It states that any organism will gradually develop some kind of adjustment mechanism during its growth for it to better adapt to society. In the mid-nineteenth century, German physiologist Hermann Von Helmholtz found the adjustment function in the eye in his studies, thus proposed the “relaxation theory”. In 1904, Marius Tscherning corrected Heimholtz’s deficiencies and believed that the eyes had a “tension” function. Later on, the “regulatory mechanism” gradually applied to the field of social sciences, indicating that a system has the ability to make adjustments and promote its own development. The adjustment mechanism in the social welfare arena is rich in connotation and can be defined from a number of dimensions such as degree, function and goal. In terms of degree, the mechanism is to adjust the number and level of welfare benefits, so that the social welfare system and included programs and benefits can meet the basic needs of the people. It will contribute to promoting the well-being of the people as well as economic and social development while avoiding welfare dependence and heavy burdens on social welfare construction. The mechanism can also optimize the

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goals of the welfare system construction to enhance the adjustment function of social welfare. In other words, the adjustment mechanism enables the social welfare system to regulate the quantity, level and degree of welfare benefits. It on the one hand guarantees the sufficiency of welfare supply and on the other hand prevents welfare dependence. It ensures welfare expenditure while avoiding heavy public financial burden. Moreover, it should also help to prevent the concentration of benefit provision in certain social groups, and at the same time be vigilant against problems that may arise during welfare system integration. For example, currently, the retirement benefits for staff from government organs and public institutions are higher than pension benefits for ordinary workers as well as urban and rural residents. Another problem is that the elderly care services in cities are not yet fully developed while in rural areas, they are still in the initial stage. To this end, we need to adjust the existing retirement pension system to make it more fair and sustainable. Again, during the construction of the social welfare system, we relied too much on the experience of developed Western countries, and even simply transplanted foreign policies and practices. As a result, many projects are too rigid to be adapted to China’s national condition, which hinders the sustainable development of the social welfare cause. The adjustment mechanism is just to make the system more flexible.

6.2.1.2

Types

Social welfare adjustment mechanisms can be divided into three patterns. The first is the rigid one, the second is the flexible one and the third is an intermediate one between the other two. The rigid mechanism has two meanings. For one thing, it refers to the principle that stipulates as people’s welfare demands grow with economic and social progress, the level of benefits provision should also rise. For another, the rigid mechanism underlines the government’s “inescapable and unavoidable baseline responsibility and primary responsibility” in solving the most basic welfare needs of all members of a society, no matter what social welfare model and system to choose.18 This kind of responsibility conduces to social fairness and justice, economic development and social solidarity. Therefore, the rigid adjustment mechanism is to combine the welfare needs of the people with the government’s baseline responsibility. In fact, the rigid adjustment mechanism in the social welfare domain exists in many countries, bringing about expanding scope of welfare benefits, more and more welfare items, and rising level of social welfare. Increasing welfare supply requires more investment, resulting in heavy burdens on public finance. But the attempt to reduce welfare will cause many social problems. The second is the flexible adjustment mechanism. This mechanism allows social welfare needs and the welfare level to continuously improve to adapt to economic development and changing social welfare culture. Therefore, the flexible adjustment 18

Jing and Bi [14].

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mechanism promotes the improvement of the entire welfare system. In addition, after the establishment of various social welfare programs, it can “constrain the social welfare expenditure to a reasonable range.”19 The flexible mechanism helps to coordinate the social welfare construction and people’s well-being with economic and social development. The flexible adjustment mechanism can mobilize various subjects, such as enterprises, charities, families and individuals to supplement the government to provide welfare benefits. It can also call up the market mechanism as well as mutual assistance and self-assistance and other welfare supply mechanisms to improve people’s well-being. The third is an intermediate between the two above-mentioned mechanisms. It tries to make the rigid adjustment mechanism more flexible and overcome problems resulted from the social welfare system with a single adjustment mechanism in order to promote the sustainable development of the social welfare system.

6.2.2 State of Social Welfare Adjustment Mechanism After more than thirty years development, China’s social welfare has been progressed to cover more areas and benefit more people with more programs and a higher level. A social welfare system with Chinese characteristics has taken shape as well as the adjustment mechanism associated with it.

6.2.2.1

Mechanism Construction

For one thing, the rigid adjustment mechanism is increasingly manifested in social welfare projects. Before the reform and opening-up, welfare benefits in China were mainly delivered by employing units. The rigid mechanism required all units to be responsible for the welfare of their own staff. Especially the aged-care, medical care, education, employment, work-related injuries and other welfare benefits of those working in government bodies and public institutions as well as their families were guaranteed. However, then, the level of welfare benefits was generally low. After the reform and opening-up, the government strengthened the social welfare system reform. The coverage and variety of pensions, medical care, living security and other projects were further increased and the level of welfare was enhanced. For example, in 1978, the total fiscal spend on social security and employment was only 1.891 billion yuan and it rose to 6.645 billion yuan in 1992. In the following years of 2002, 2004, 2006, 2008 and 2010, fiscal expenditures on social security and employment were 263.622 billion, 311.608 billion, 436.178 billion, 680.429 billion and 913.062 billion yuan respectively, accounting for 11.95%, 10.94%, 10.79%, 10.87% and 10.2% of the total fiscal expenditure in those years, and their proportion in GDP 19

Jing [15].

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were 2.19%, 1.95%, 2.06%, 2.26% and 2.3% in each year.20 In fact, according to the calculation by Wang Yanzhong, in 2000–2010, government spending on welfare items such as pensions, medical care, unemployment, work-related injuries, and childbirth accounted for more than 35% of total fiscal expenditure,21 and its proportion in fiscal revenue exceeded 40%22 This is where the rigid mechanism plays a role. In addition to increasing expenditure, the government reinforced the construction of social welfare projects. All sectors of the society came to recognize that the government “bore avoidable and unavoidable primary responsibilities” for providing the most basic welfare for its people.23 Some studies even advocated attributing nonbaseline welfare responsibilities to the government, which to some extent has scaled up the rigid mechanism. For another, the flexible adjustment mechanism is reflected in some social welfare projects. The flexible mechanism is the key to the sustainable development of the welfare system. It ensures to maximize social welfare effects with minimal investment. In recent years, policies of the new rural cooperative medical insurance, the new rural social endowment insurance, the social pension insurance for urban residents and many other schemes have set standards for government subsidies. Places with large fiscal revenue have raised the funding standard for the new rural cooperative medical care to more than 200 yuan, while others have integrated the basic medical insurance system for urban and rural residents, and unified the compensation standards for medical insurance systems for enterprise employees as well as urban and rural residents. Some local governments, such as Suzhou and Xiamen, raised the monthly 55-yuan subsidy for new rural old-age insurance participants stipulated by the central government to more than 200 yuan, which fully demonstrates the function of the flexible adjustment mechanism. In the field of minimum living security, the current standards promulgated by local governments can only guarantee the supply of food for eligible groups and the strength of all social sectors should be involved in providing other living necessities. For example, related companies and public institutions reduce costs of electricity gas, water as well as public transportation and tuition fee. At the same time, other social organizations and social groups also bear the social welfare responsibility proactively. For example, enterprises give donations to families stricken by poverty. The subjects of benefits provision are diversified and this is where the flexible adjustment mechanism plays its role.

6.2.2.2

Problems

Two shortcomings can be detected in the implementation of social welfare adjustment mechanisms in China. 20

See China Statistical Yearbook 2011, China Statistics Press, 2012. The five expenditures in 2007 accounted for 34.1% of total government fiscal expenditures. 22 Wang and Long [16]. 23 Jing and Bi [14]. 21

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Firstly, the role of the rigid adjustment mechanism for some welfare projects is too rigorous. In building the social welfare system, careful analysis should be done as to which projects and areas should be adjusted by the rigid mechanism and which to be adjusted by the flexible mechanism. For example, under the rigid mechanism, the retirement benefits of state organs and public institutions continue to increase, while pensions of enterprise employees grow slowly. The ratio of the former to the latter is up to 3 times. Pension benefits have become a catalyst for widening the income gap. At this time, there are about 40 million retirees of governmentaffiliated institutions. The feeble attempt to reduce their pensions will inevitably cause resentment.24 However, if the authority endeavors to raise the pension income of more than 350 million enterprise employees will lead to huge financial burden on the government.25 Due to lack of flexibility of the adjustment mechanism, any effort to reduce pension benefits will lead to many problems. The second is the universal absence of the flexible and intermediate adjustment mechanisms. The flexibility in the adjustment mechanism can serve to meet the welfare needs of the people without adding too much financial burden to the government to promote the sustainable development of social welfare. Nevertheless, currently, the flexible mechanism are universally lacking in many welfare programs with only a few programs such as the new rural cooperative medical system, new rural social old-age insurance, and social endowment insurance for urban residents display a certain flexibility. For example, in the field of medical security, the basic medical and health system has not been established and didn’t function well, thus people still find it difficult and expensive to get medical services. As a result, many regions have to increase fiscal input to expand the scale of hospitals and raise inpatient reimbursement rates. Yet, to supply convenient and affordable basic medical services is the real solution to this problem. Without it, no matter how much investment and reimbursement will not fundamentally meet the health needs or help to foster a healthy lifestyle of the people, and then solve the medical problem or 1.4 billion Chinese people. The flexible mechanism in the fields of medical and health care requires to build a basic medical and health system, and guide people to go to community medical centers for minor illnesses and hospitals for major or serious illness. There are two main reasons for the situation. On the one hand, China’s social welfare system is constructed mainly based on learning from other countries, but the domestic situations change with time. The employing unit-based welfare system practiced before the 1980s was largely borrowed from the Soviet Union, in which the government was responsible for the construction of the social welfare system as well as the formulation and implementation of certain social welfare programs. The implementation of most welfare projects such as for old-age care, medical care, 24

In the world, any reform that reduces social welfare will cause social welfare movements and even social unrest, which can even endanger the social governance and political domination of the government. For example, according to Zheng Bingwen, there were more than 100 welfare-related social strikes in France in 2008. 25 Statistical Bulletin on National Economic and Social Development in 2011, website of the National Bureau of Statistics.

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work-related injury, and education was by government agencies, enterprises, and other economic and social organizations. The establishment of a socialist market economy system in the 1990s required a matching social welfare system. However, the Soviet Union collapsed and could no longer offer us lessons to draw on to reform the system. We had to turn to Europe, America, Southeast Asia and other developed countries and transplanted their welfare systems uncritically. In this process, an effective flexible adjustment mechanism was not set up properly. On the other hand, the construction of internal adjustment mechanisms of the welfare system has not gained due attention. The construction of a social welfare system for China’s socialist market economy is for reducing the income gap and better protect and improve people’s livelihood during rapid economic development. For this reason, governments at all levels regard the welfare system as a supplement to the market economy. For example, during the state-owned enterprise reform through reducing staff to increase efficiency which resulted in increasing laid-off and unemployed workers, local governments advocated establishing a minimum living security system. After a large number of farmers migrated into the city for work and were not provided with basic welfare benefits, which resulted in many economic and social problems, local governments gradually introduced pensions, medical care, work-related injury and other scheme for rural migrant workers as well as an education system for their children. Again, when the empty-nested phenomenon in China became severe after more and more farmers went to cities for work, governments began to explore a social care system for rural left-behind women and elderly. People did not treat the welfare system as an integral part of the socialist market economy. The government did not take proactive actions to improve the social welfare system needless to say its adjustment mechanisms.

6.2.3 Design of Adjustment Mechanism for Social Welfare System The universally integrated social welfare system attempts to integrate the rigid adjustment mechanism with the flexible adjustment mechanism to form an adjustment mechanism combing the two in order to promote the sustainable development of the social welfare system.

6.2.3.1

Design of Rigid Adjustment Mechanism

The rigid adjustment mechanism mainly stipulates the government’s responsibility in social welfare provision and is established based on people’s rigid welfare needs. The mechanism can be defined in three aspects. From a qualitative perspective, the rigid adjustment mechanism guarantees that the provision of welfare benefits and the construction of the entire social welfare

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system must be compatible with economic development. Social welfare progress should be commensurate with economic development and living standards of the people. Also, social welfare recipients should constantly increase to strive for the goal of universal coverage. This is a rigid requirement as well as the baseline for social welfare system construction. We should abide by this principle in the entire process of social welfare system construction. For example, after efforts for nearly a decade, the number of people participating in medical insurance (including the new rural cooperative medical system and medical insurance for urban residents) reached 1.234 billion in 2009.26 In 2011, the number exceeded 1.3 billion, basically realizing full coverage. However, participants of the same welfare programs may receive different benefits due to various factors and this is a problem for the rigid adjustment mechanism to solve. From the quantitative perspective, the rigid adjustment mechanism must formulate welfare projects, provide financial input, and specify the scope of benefits enjoyed by welfare receivers. To be specific, the government and society must scientifically define the rigid needs of the people in welfare programs such as employment, living, health, education, and housing, as well as items to be included in each of the programs. The responsibility of the government should be defined such as in institutional and system construction. Also, the responsibility of welfare funding and supervision should be also determined. For example, statistics show that in 1995, 2000, 2002, 2004, 2006, 2008 and 2011, the number of people participating in medical insurance was 7.459 million, 37.869 million, 94.012 million, 204 million, 567 million, 1.033 billion, and 1.305 billion respectively,27 basically achieving universal coverage. However, for other welfare benefits such as pensions, work-related injuries and childbirth, although the number of participants has been increasing since 1995, the total number is far from full coverage. In the year of 2011 with the largest number of people insured, numbers of participants for the afore-mentioned three welfare items were only 625 million, 177 million, and 139 million, respectively. The rigid adjustment mechanism should function here to expand the coverage of these welfare programs. From the angle of universal integration, the rigid adjustment mechanism includes two aspects: rigid universality and rigid integration. Rigid universality emphasizes the comprehensiveness and universality of social welfare projects rather than diversification and selectivity. For example, in terms of old-age benefits, we must attach equal importance to old-age insurance and service programs, and aged benefits should cover all elderly people who reach a certain age, rather than only a specific group of them. Rigid integration advocates the integration rather than fragmentation of social welfare projects, and the full coverage rather than selectivity of recipients. According to this mechanism, the government bears the responsibility and obligation to integrate various fragmented social welfare systems, and try to make it a 26

China Health Statistics Yearbook 2009. Data for 1995–2008 originated from the 2009 China Labor Statistics Yearbook; data for new rural cooperative medical care originated from the China Health Statistics Yearbook 2009; data for new rural social endowment insurance originated from the Statistics Bulletin on Labor Security in 2009.

27

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booster for narrowing the gap between the rich and the poor, and achieve equality in social welfare construction and development.

6.2.3.2

Design of Flexible Adjustment Mechanism

The flexible adjustment mechanism tries to diversify benefits provision subjects, continuously increase social welfare input, clarify the responsibilities of each welfare supply party, so as to give full play to every party and improve the well-being of the people. For example, in the field of education, focusing on the goal of “ensuring that all the people enjoy their rights to education”, the authority should formulate a complete policy system and guarantee its funding. In addition, it should also mobilize social forces to set up non-profit schools or increase donation to education for improving facilities and conditions in schools and recruiting teachers. Moreover, enterprises should be encouraged to provide professional skill training to improve employees’ business skills and professional competence. In a word, we should call together all social sectors to develop lifelong education. In other words, the mechanism is to increase welfare suppliers in order to reduce the limitations brought about by the government being the single responsibility body. In term of the institutional arrangements, the flexible adjustment mechanism should be an intrinsic nature of every welfare project and this is the prerequisite for the effective performance of the mechanism. It is necessary for each program to include both the baseline welfare (rigid part) and the non-baseline welfare (flexible part). The baseline welfare is mainly the government’s task, while the non-baseline welfare should draw social participation. For instance, in terms of employment benefits, the government should bear the responsibility of establishing systems of unemployment insurance, employment service and minimum wage. And for living benefits, the government should take initiative to establish the minimum living security, basic old-age insurance and other systems aiming at basic needs of the people. On this basis, the government should provide tax incentives and lower the entry threshold to facilitate enterprises and social organizations to join in welfare provision and increase funding for welfare projects. Again, in the field of elderly care services, the government should assume the responsibility of building facilities and establishing elderly care institutions, but its major attention should be on the universal old-age care service demands of seniors without family members nearby or from five guarantee families and the oldest old. While for higher service demands such as recuperation, it is necessary for non-governmental entities to take part. For health care benefits, the government must give priority to disease prevention, medical assistance, and the construction of medical insurance systems to meet the basic medical needs of the people.28 High-end medical and health care as well as hospice care services nonetheless require social input. In addition to the philanthropic spirit and the sense of social responsibility, the productive function of these social welfare projects is another important factor attracting social participation. 28

Of course, the construction of these social welfare projects also requires social investment.

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6.2.3.3

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Design of Rigid-Flexible Coupling Adjustment Mechanism

The rigid-flexible coupling adjustment mechanism is to integrate the rigid and the flexible adjustment mechanisms into an organic whole in order to promote the sustainable development of a universally integrated social welfare system. From the perspective of benefits provision subjects, this mechanism must clarify the scope of the government responsibility and also encourage enterprises, social organization and individuals to engage in benefits supply, so as to develop a diversified supplier structure led by the government in which the responsibility boundaries of each supply subject are scientifically divided. It specifies that the government is mainly responsible for baseline welfare needs and measures to ensure the effective implementation of the responsibilities. On this foundation, the government should guide enterprises, non-governmental forces and individuals to engage in social welfare provision to improve the well-being as well as happiness and satisfaction of the people. In terms of welfare projects, this mechanism must ensure that each project is a unity of rigidity and flexibility so as to ensure the sustainable development of the entire social welfare system. For example, for education benefits, the government should develop a complete policy system for preschool education to higher education as well as vocational education. It should also guarantee funds for education envelopment and determine its proportion in fiscal revenue and fiscal expenditure, and the ultimate goal is to ensure that all the people enjoy their rights to education. At the same time, the government should put forward specific and practical policies of tax incentives and government subsidies to guide and encourage all sectors of society to invest in education for improving school conditions and increasing education welfare at large. Again, in the field of medical and health care, the government must shoulder the responsibility to solve the problem of “expensive and difficult to access medical services”, to invest more into healthcare. It should also endeavor to accelerate the construction of basic medical and public health services at the community level, reduce medical and drug costs, so that the basic health needs of the people are effectively guaranteed. At the same time, the government should introduce specific measures to encourage private capital and social forces to invest in healthcare services, so as to continuously reduce the risk of diseases, improve the life quality, and improve the health and welfare level of the people.

6.3 The Supply-Demand Mechanism of the Universally Integrated Social Welfare The supply and demand of social welfare benefits are a contradiction in nature: welfare suppliers always seek to meet welfare needs of the people with the minimum benefits while welfare demanders always expect more and higher-level benefits. Therefore, this mechanism is for coordinating this contradiction and striking a balance between these two sides, so as to prevent economic and social problems might

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be triggered by them. The supply and demand mechanism mainly includes: supplyoriented mechanism, demand-oriented mechanism and supply–demand balancing mechanism.

6.3.1 Supply-Oriented Mechanism The supply-oriented mechanism determines welfare supply modes and channels according to the capacity and status of providers so as to meet the welfare needs of the people and promote the stable and harmonious development of the society.

6.3.1.1

Emergence

The supply-oriented mechanism is an important means to improve people’s wellbeing. It has gone through a process before its formation. Before the reform and opening-up, welfare benefits were mainly provided by employing units. Social members belonged to different units who provide benefits to their staff and family members of the staff. Employing units determine the content and methods of welfare provision based on capacities. An employing unit was not only responsible for meeting the welfare needs of childbirth, old age, illness, and death of employees but also their family members. American scholars Neil Gilbert and Paul Terrel once said that the working units “provide not only the income for everyday expenses, but also a variety of benefits, or the so-called additional or occupational benefits”.29 However, the welfare supplies of working units were under the request of the government in terms of supply amount, objects and modes. Therefore, in the supply-oriented welfare mechanism, the government was the largest welfare provider, that is, it was virtually government-led supply. After the beginning of the reform and opening-up, in order to adapt to the socialist market economy, China initiated the social welfare system reform. Though many welfare items were divorced from working units and became the responsibility of government organs, it was still a kind of supply-oriented mechanism. For example, in the field of social insurance, personal social insurance benefits were determined by the choice and payment of employing units. Some units who paid the maximum amount of premiums for five welfare items of pension, medical care, unemployment, workrelated injury and maternity, and their employees hence could enjoy all the social insurance benefits. However, some other units might only pay for pension, medical care and unemployment insurance, and their employees could not get benefits of work-related injury and maternity. For another example, the basic pension of the new rural social endowment insurance, the compensation types and compensation amount of the new rural cooperative medical care system, the standard of the minimum living guarantee and other projects were all based on local governments’ policy preferences 29

Gilbert and Terrel [13, p. 11].

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and financial capacity. That is, the content and amount of benefits the people could have were dependent on the provider. Also, in the field of public welfare and social services, although people could purchase items according to their own needs, the supply level and content was still relying on suppliers. The government, as the main body of social welfare supply, created conditions for the production of social welfare, or provided benefits to members of society through purchase from other providers. The government was also responsible for transmitting welfare benefits as well as for integrating the scattered welfare resources. In other words, both in the era of the planned economic and the market economy, China’s social welfare has always been supply-led rather than demand-led. The formation of the supply-oriented mechanism has a far-reaching historical background and social foundation. Firstly, it is closely related to the administrative philosophy of the government. Major reasons for the government to become the main welfare supplier in China include the change of state function and enhancement of government capabilities.30 But another important reason is China’s unique social structure. China is a country with the family as the core, and the whole society is a big “family” with the government naturally becoming the guardian. It has the responsibility to control welfare resources, decide the social welfare system, formulate social welfare policies and regulations, provide social welfare funds, set up welfare facilities, and allocate and transfer all benefits, which inevitably helps to form a supply-oriented welfare mechanism. Secondly, it is linked to the financial capacity of governments at all levels. The sustainable development of social welfare requires stable and reliable economic support. Since the beginning of the reform and opening-up, China’s economy has been growing rapidly. In 2011, the GDP reached 47.1564 trillion yuan, becoming the world’s second-largest economy, with fiscal revenue surging to a record 10.374 trillion yuan. Nevertheless, the per capita net income of urban and rural residents in China was relatively low. In 2011, the annual per capita net income of farmers in China was only 6,977 yuan, and the annual per capita disposable income of urban residents was only 21,810 yuan.31 Compared with huge social welfare needs, social welfare funds and donations from all walks of life were not ample. For example, as of the end of 2011, there were 46,000 adoption agencies nationwide, with a total of 3.964 million beds, taking 2.934 million people including the aged, the disabled and orphans. There were 22,000 welfare enterprises, employing 628,000 disabled persons.32 However, compared with the large population of the aged and disabled, these welfare facilities were far from sufficient. In this case, a supply-led mechanism is a more practical choice.

30

Zhou [17, p. 97]. National Bureau of Statistics, Statistical Bulletin on National Economic and Social Development 2011, website of the National Bureau of Statistics. 32 Ministry of Civil Affairs, Announcement on the Development of Social Services in 2011, http:// www.mca.gov.cn. 31

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Thirdly, it is also a countermeasure to cope with challenges brought about by social changes. We are in a risk society. All individuals and families face the challenge of resisting unpredictable risks. The government needs to take proactive actions to mobilize and integrate social welfare resources to protect the people, especially the vulnerable. In this process, the government also has the obligation to solve problems like welfare contention, welfare inequality, welfare concentration, and welfare insufficiency. This provides a solid social foundation for the formation of the supply-oriented mechanism.

6.3.1.2

Problems

Although the supply-oriented mechanism for social welfare has a deep economic and social foundation, it still presents problems due to limitations of supply subjects’ understanding of social welfare, the institutional arrangement and the implementation of social welfare projects. The first problem is the oversupply of some welfare benefits. Under the influence of supply-led mechanism, it is impossible for benefits providers to comprehensively and accurately grasp the welfare needs of welfare demanders, and therefore cannot accurately provide timely welfare items and services, which will generate repeated and over supply, thereby wasting welfare resources. For example, as the providers of welfare in families, parents are the deliminator of the welfare content. Some of them tend to offer more material and service benefits than their children need. Again, employing units as the supply body of employee benefits may repeatedly provide same benefits within a specific time, such as rice, oil, eggs, etc., which are redundant for single staff or those with only two members in the family. For another example, on holidays, too many volunteers crowd into welfare homes to accompany and entertain the aged. The second is the insufficient supply of some benefits. Due to the information asymmetry between the supply and demand sides, social welfare supply is more based on experience and rely on judgment of providers. While some welfare contents are oversupplied, others are bound to be inadequate. For example, the elderly care and medical services provided by the government obviously lag behind the needs.33 Benefits for low-income families, five guarantee household, and other low-income groups can only meet their demand for food with other individualized needs are rarely taken into consideration. Also, some families tend to neglect children’s need for emotional support as well as education on life and values. The third is the lack of flexibility in benefits provision. Benefits providers are at the core of the supply dominated mechanism. They often decide the contents and means of welfare supply based on their own supply capacity with less consideration given to the actual needs of receivers. That’s the reason for co-existence of welfare concentration and insufficiency in the current social welfare system.

33

On days other than holidays, few volunteers come to provide services for the elderly.

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Improving Method

We can improve the supply-oriented mechanism from the following three aspects. First off, we should increase suppliers. The failure of fulfilling basic social welfare needs of the people to a large extent is because of insufficient suppliers and hence inadequate benefits. Therefore, we must mobilize various organizations, groups and institutions such as enterprises and charities to actively participate in social welfare undertakings. We should also give full play to the role of families in delivering welfare, to reduce the welfare burden on the government. Meanwhile, it is necessary to tap the capacity of each supplier to increase the amount of benefits. For example, we should explore means to encourage families to provide welfare for neighbors in addition to family members of their own. In addition, it is necessary to optimize the supply mode to avoid oversupply of social welfare. While the general welfare supply is insufficient, oversupply exists in some welfare projects or social services. It is necessary to improve welfare supply channels and means, for instance, by increasing indirect supply as well as the selectivity and flexibility of supply, so as to make welfare provision more well-targeted and effective. For example„ the prevalent in-kind benefits for seniors in social welfare homes can be changed to donation of shopping cards so that they can buy things they need. Again, the voluntary services can be fragmented and delivered on days other than holidays. Furthermore, welfare supply should be geared to needs and a balance should be stricken between supply and demand. Many problems of the supply-oriented mechanism are largely resulted from the failure to effectively provide well-directed benefits based on welfare needs. Therefore, subjects of benefits provision must conduct investigations into the types and quantity of welfare demands as well as means to deliver welfare so as to closely match the welfare supply with the welfare demand. For example, in families, parents should communicate with children, understand their actual needs, and provide flexible benefits rather than simply buying them clothes or giving pocket money. Also, voluntary service providers should try to understand the welfare needs in welfare homes in order to provide targeted supply and maximize the welfare efficiency.

6.3.2 Demand-Oriented Mechanism of Social Welfare System The contents and means of welfare supply are after all determined by people’s welfare needs. A demand-oriented mechanism is crucial for maintaining the vitality of the social welfare system. It determines programs, contents and means of welfare supply according to actual needs so as to improve the social welfare level of the people.

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Introduction

Although the supply-led mechanism for the social welfare system has already taken shape in China, the emergence of the demand-oriented mechanism will be inevitable. For one thing, the establishment of a demand-led mechanism is an inherent requirement of the social welfare system. All societies and individuals have expectations for welfare benefits. Accurately grasping the welfare needs of different social groups can enable decision makers and executors of welfare policies to determine target groups and thus maximize the efficiency of welfare policies. According to Brand Shaw’s point of view, welfare demands of a person includes three aspects: benefits granted by welfare projects, sensation-related needs based on their feelings, and expected benefits based on comparison with peers.34 For another, the establishment of a demand-oriented mechanism is the main trend of contemporary social welfare systems. In the 1980s, developed countries in the West initiated the reform of social welfare systems. One of the measures was to proactively promote the development of social work and improve people’s welfare through social services on the basis of establishing a sound social welfare system. What ran through the reform was to determine the welfare projects as well as supply channels and methods based on the needs of the people. To this end, Len Doyal and Ian Gough in their book A Theory of Human Need summarized human welfare needs as “health, self-reliance, food and nutrition, housing, work, natural environment, medical care, childhood protection, supporting groups, physical and economic security, education, birth control and fertility”,35 which provided a theoretical basis for establishing a demand-oriented welfare mechanism. In the 1980s, Jim Ife proposed that people had different welfare needs, so we could formulate social welfare and social service policies from the angle of welfare receivers rather than suppliers, resulting in different ways of allocating social welfare resources.36 Of course, the emphasis on the needs of welfare demanders only has limitations. Paul Spike tried to integrate the demandoriented mechanism with the supply-oriented mechanism, emphasizing that social welfare demands can only be well met by the welfare system formulated at the state level.37 This offers a theoretical basis for us to establish a demand-oriented mechanism. Moreover, the establishment of a demand-oriented mechanism reflects the mentality of putting people first. Focusing on “the people as a whole” is the current trend in social welfare development in China.38 From the perspective that “practice is the way people exist”, Marx believes that the development of a society is a history of the continuous development of human needs: “their needs are their nature”.39 Without needs, human beings cannot survive or develop. In terms of social product 34

Quoted from Jing [12, pp. 180–181]. Doyal and Gough [18, pp. 170, 241, 277, 315–317]. 36 Ife [19]. 37 Spinker [20]. 38 See Peng [21]. 39 Karl Marx and Frederick Engels, Vol. 42, People’s Publishing House [22, p. 132]. 35

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distribution, Marx believes that the second distribution should adhere to the principle of on-demand distribution. Needs constitute a condition of “free and comprehensive development for everyone”. Naturally, it has become the basis of social welfare system construction aiming at improving people’s livelihood and welfare. Without regard to people’s needs or only taking care of welfare needs of limited groups, a welfare system will eventually lose its universal recognition and support. Therefore, to establish a demand-oriented mechanism has become an important aspect of today’s social welfare system construction.

6.3.2.2

Problems

Since the 1980s, China’s welfare provision has been undergoing a transition from mainly relying on employing units to the state and society. The supply-oriented mechanism has been formed in this process while the demand-oriented mechanism was exhibited in some projects. For example, the new rural cooperative medical program piloted in 2003 demonstrated the demand-oriented mechanism. In institutional arrangements, the program focuses on the actual medical needs of farmers. Farmers can voluntarily decide to participate or not. Considering the relatively low income of farmers as well as the seasonality and volatility of their income, the program not only stipulates low level of contribution, but also allows farmers to postpone the payment to the harvest season of autumn. In terms of compensation methods, because farmers are often driven into poverty due to illness, the program adopts the hospitalization reimbursement method which effectively reduces the burden of medical expenses of participating farmers. For the new rural old-age insurance system, based on the needs of insured farmers, the government not only provides the basic pension, but also sets different levels of payment. These measures have created conditions for promoting the full coverage of China’s pension and medical insurance systems. Nevertheless, the demand-oriented mechanism of the social welfare system still has the following deficiencies in practice. First, the mechanism has not been established universally. In addition to the abovementioned two projects, it only works in another few programs, such as the retirement and cadre welfare for staff of government organs and public institutions, and social endowment insurance system for urban residents. The minimum living assistance, charities, disaster relief, and some other projects are also guided by the basic welfare needs of the people. But, social insurance, social services, special treatment for entitled groups, education, housing, public health, and public welfare programs are still dominated by supply without a demand-oriented welfare mechanism. The second is that some welfare projects targeted for special groups exhibit the tendency of excessive welfare supply, which is also not conducive to promoting equality in the social welfare system. For example, according to a case revealed in a report, 126 staff members in a bureau-level unit of in some place are equipped with 42 official vehicles, that is, on average, every three person owns one official

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vehicle.40 Also, in some provinces and cities, the monthly transportation subsidy for leading cadres is up to 2600 yuan per person, which allows each cadre to drive more than 100 km per day,41 while in some area, the monthly subsidy for gasoline consumption per person for cadres of the section or department level is 2400 yuan. In addition, many cadres still enjoy high welfare benefits such as secretaries, full-time drivers, health doctors, etc. This impairs the fair allocation of limited social welfare resources and will inevitably breed class stratification in social welfare. There are profound historical and practical reasons for these problems. First of all, the traditional thinking of using official status as the sole judge of a person’s social worth still exists in social welfare construction. Therefore, the social welfare supply is to some extent centered on the demands of officials: the higher the administrative rank is, the more benefits an official can get. Hence, the needs of the people are attached least importance. Secondly, some believe that demand oriented is a capitalist approach, which will lead the country into a welfare stare. Socialism should emphasize individual dedication to rather than demand from the society. Thirdly, people tend to think that the operating mechanism of a social welfare system should depend on the economic strength of a country or a region. Therefore, limited fiscal capacity can only provide relief-type social welfare rather than inclusive or appropriate all-inclusive benefits. According to this thinking, the demand-led mechanism will overwhelm the entire financial system, and welfare policies formulated on the basis of this mechanism are merely a short-sighted one.42

6.3.2.3

Realization Path

A social welfare system led by demands should effectively solve the problem of insufficient basic welfare needs. The basic welfare needs are indispensable to the survival and development of everyone. That are the core contents of China’s social welfare system construction and determine the scope and boundary of welfare responsibilities. The non-basic demands are considered to be based on the fulfillment of basic needs. According to Len Doyal and Ian Gough, basic welfare needs include health and self-reliance. The former refers to the chance to survive as well as life expectancy and morbidity, etc., while the latter includes mental disorder, cognitive deprivation and opportunities for economic activities.43 The Indian economist Amartya Sen also incorporated education and health into the list of basic welfare needs. In view of China’s own condition, we deem that the basic welfare needs should focus on employment, living, health, education, housing, and public welfare. They are the fundamental factors to consider in building the demand-led social welfare system. 40

Astonishing: 126 People equipped with 42 Official cars, Yangcheng Evening News, December 15, 2007. 41 No longer equipped official cars in Hangzhou, strong determination of reform, People’s Daily Online, August 23, 2011. 42 Chen [23]. 43 Doyal and Gough [18, pp. 170, 241, 277, 315–317].

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An implementing mechanism should be established to ensure the implementation of the demand-oriented mechanism. The implementing mechanism runs through the whole social welfare system. It will reward people or actions that comply with the system or rules and will punish those violate the system or rules. As the main welfare provider, the government should be aware of its welfare responsibilities as well as how much to invest to meet the basic welfare needs of the people. Enterprises should establish social insurance funds, enterprise annuities, and mutual assistance funds for employees to effectively address their welfare needs such as old-age care, medical care, unemployment, work-related injury, childbirth and mutual assistance. In addition, enterprises should proactively take part in offering other social services within their own capacities. Social groups, communities and families should also customize their welfare benefits and services on the foundation of welfare needs. The realization of the demand-oriented mechanism also requires us to form a demand-led management mechanism. Management mechanism is the organic integration of various management factors during the implementation of the social welfare system. It includes incentives and disciplines. As far as incentives are concerned, we can give both material and spiritual incentives after a goal is achieved or in the process of implementation. Higher-level authorities should strength the guidance and support for social welfare projects that are geared to the basic welfare demands of the people. They should also improve those welfare projects that have not yet adopted a demand-oriented mechanism, and give full play to the initiative of the people in social welfare delivery. The smooth implementation of the demandoriented mechanism depends largely on the degree of public acceptance. Therefore, we must reinforce the supervision and self-discipline of the departments at all levels and guide them to carry out social welfare programs in accordance with demands. In addition, it is also necessary to encourage the people to actively participate in welfare construction and promotes the realization of the demand-oriented social welfare mechanism.

6.3.3 Supply–Demand Balancing Mechanism The supply-oriented and demand-oriented mechanisms of the social welfare system as well as their problems and implementation provide a basis for the realization of the supply–demand balancing mechanism.

6.3.3.1

Urgency

In China, the supply-oriented mechanism is generally adopted while the demandoriented mechanism is rarely seen, and the two are not well integrated, restricting the sustainable development of the social welfare system. It is very important to establish a supply–demand balancing mechanism and strengthen the universal integration of the social welfare system.

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Firstly, it is an inherent need of a universally integrated social welfare system to establish a supply–demand balancing mechanism. Being the inevitable model of China’s social welfare system construction, the universally integrated social welfare system implies the universal supply of welfare benefits, universal establishment of welfare programs, and the universal coverage of welfare receivers. It also means the integration of welfare projects and institutions, the supply and demand mechanism, and the implementation and management mechanism of welfare projects. The universal supply of social welfare programs implies a balance between supply and demand in which the basic welfare goals of the people are met based on diverse participation of various welfare supply subjects and the country’s own capacity. The term integration does not mean a simple combination of fragmented systems, nor is simple reduction of welfare programs to reduce the supply burden. It is to draw a top-level design for the entire social welfare system and integrate various welfare programs in order for a balance between supply and demand. Therefore, the supply– demand balancing mechanism has become an important operating mechanism for a universally integrated social welfare system. Secondly, establishing a supply–demand balancing mechanism is an important aspect of deepening the social welfare system reform. In recent years, the government has been increasing investment in social welfare to guarantee the people’s well-being, and various programs have been established or improved. However, people are still not satisfied with the current situation because there are large gaps between welfare benefits for different groups. The gap in welfare has even become a catalyst for the widening of income gap. Data shows that the Gini coefficient in China has increased from 0.4 in 2000, 0.49 in 2006, to over 0.5 in 2010. Again, data from the National Bureau of Statistics shows that in 2009, in China, the per capita disposable income of urban residents and rural residents was 17,175 yuan and 5153 yuan respectively, and the ratio was about 3.3:1.44 And in 2011, the two figures were 21,810 yuan and 6977 yuan, with the ratio falling only a little to about 3.13:1. If social welfare income is included, the actual income gap between urban and rural residents will exceed 5:1. In other words, the construction and implementation of individual social welfare projects contributes little to improving social equity. For example, in education, though authorities around the country have attached great importance to compulsory education and issued policies to improve both hardware and software of schools, the school choice issue still remains a problem. The Compulsory Education Law encourages students to enter publicly provided schools near their residence, but many parents are often willing to pay money to get their children into good schools with better education resources. The “school-choosing fee” in some places can reach as high 250,000 yuan for primary schools. As the schoolchoosing fee rises each year, it becomes even more difficult for students to go to a good school. For another example, although we have strengthened the construction of the medical insurance system and basically established a medical insurance system that covers almost all citizens including personnel of public institutions, enterprise 44

National Bureau of Statistics, Statistics Bulletin on National Economic and Social Development in 2009, February 25, 2010.

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employees, rural and non-working urban residents, juveniles, etc. The payment and reimbursement ratios between systems are very different. It is still hard or too expensive for some people to get medical care. This requires us to strengthen the universal integration of the social welfare system and achieve a balance between supply and demand, so that the construction of social welfare projects will continuously improve the well-being the people and social equality. Thirdly, establishing a supply–demand balancing mechanism is the direction for building a universally integrated social welfare system. A balanced social welfare supply–demand mechanism should consider both national economic and social conditions as well as the basic welfare needs of the people. The only consideration of supply capacity can lead to unbalanced social welfare projects construction: some projects are vastly invested while others are left unattended, and even the basic welfare needs are not met. On the contrary, if the welfare needs of the people are the only focus, it is very likely to result in heavy welfare burdens and even bring down the entire fiscal system. The phenomenon of welfare dependence in Western welfare states has triggered the ponderation on “whither the welfare states?”45 These lessons are worth learning. Therefore, the supply–demand balancing mechanism is crucial for the sustainable development of a universally integrated social welfare system.

6.3.3.2

Content

The supply–demand balancing mechanism in the social welfare system refers to a mechanism in which supply and demand restrict each other and work in a balanced manner. It includes the following two aspects from the perspective of “universal integration”. For one thing, the mechanism inherently contains a supply balancing mechanism, which is the basis of the supply–demand balancing mechanism. To ensure the realization of the supply balancing mechanism, it is necessary to mobilize various entities to participate in social welfare provision and reasonably allocate their responsibilities. The responsibility should not be solely on the government without involvement of enterprises, charities, families and other social organizations, nor should it be solely on the market, relying on society and enterprises. The supply balancing mechanism also includes the balanced development of welfare projects. Social welfare is not equal to social insurance or social assistance. Employment, living, healthcare, education, housing, public welfare and other benefits that are related to the people’s well-being must be included in welfare construction. Moreover, the mechanism should strive for a balance in methods and modes of welfare supply, rather than focusing on a single form of welfare provision. For example, it should balance between in-kind benefits and spiritual consolation and between monetary benefits and service benefits.

45

Zhou [24].

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For another, the supply–demand balancing mechanism also includes the demand balancing mechanism. The first step is to carry out investigations in order to accurately understand the welfare needs of the people, distinguish between basic and non-basic welfare needs, and then mobilize the government and all sectors of society to take actions to meet the basic welfare needs of the people. Also, it is a must to pay attention to the coordination of welfare projects, to avoid oversupply of some benefits while making sure the fulfillment of basic demands. In particular, we should prevent the seeming “equalization” of welfare needs with actual differentiation. For example, the Constitution stipulates that citizens have equal rights to education, while the reality is that rich families can send their children to expensive and high-quality schools while children from poor families can only go to ordinary schools. It is imperative to reasonably determine the content of welfare needs and adjust social welfare needs to an appropriate level while guaranteeing the baseline of welfare benefits, in order to promote the realization of the supply–demand balancing mechanism for the universally integrated social welfare system.

6.3.3.3

Realization Path

The realization of the balancing supply–demand mechanism requires a more sophisticated social welfare system, proactive participation of various parties, and enhanced supervision. Firstly, it is necessary to pay attention to the top design of the universally integrated social welfare system. China’s social welfare system construction has entered a critical stage and a top level design is needed. We must reflect on the structure and model of the entire social welfare system from the perspective of universal welfare, and shape the overall plan, construction goals and development prospects of the system from all-rounded aspects. Under the guidance of this mentality, for example, the old-age welfare are more than preservation and appreciation of pension funds and continuous improvement of pension standards. It should also include the universal integration of pension benefits at all levels and the convenience of aged care services. In education and employment, welfare benefits are not only about raising the enrollment rate and the employment rate, but also about improving education quality and sustainable employability. This is the also a requirement for other social welfare programs. Secondly, it is necessary to choose the universally integrated social welfare institutions. In the view of welfarism, the top-design of a welfare system should be characterized by high-level, wide-coverage and non-discrimination, believing that all classes should be incorporated into a universal insurance system,46 in order to ensure that everyone lives a decent life. This kind of institutional arrangement has led to the dilemma of “Whither the welfare state?” China should avoid this kind of top design, nor should we regard the welfare system as a supplement to economic construction and hence “commercialize” the benefits provision. In China, the welfare 46

Aspin-Anderson [25, p. 31].

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system emphasizes the government’s unavoidable responsibility to ensure people to obtain living necessities and secure the rights to survival, so that they can share fruits of social development, and actively engage in social competition. This is the baseline of welfare responsibility. Above this line, the market should play a role in coordinating the government, society and family (individual) in welfare provision and maximize effects of welfare inputs. Thirdly, to strengthen the supervision of the universally integrated social welfare system. Effective supervision is a guarantee for the implementation of the balancing supply–demand mechanism. On the one hand, we should strengthen the supervision of welfare program implementation to prevent the failure of provision subjects to perform obligations, and strengthen the supervision of delivering channels of each welfare item to improve the effectiveness of welfare provision. It is also necessary to enhance follow-up supervision. We should track and rectify problems found in the process of welfare provision, investigate and act on the nonfeasance of responsible parties, so as to protect basic rights and interests of welfare demanders. On the other hand, we should strengthen the supervision of social welfare demanders and make it clear that the government’ focus is on basic welfare needs, while he non-basic welfare needs should be regulated and provided by the market, society and families. Meanwhile, it is also necessary to strengthen the supervision of the implementing agencies, and any violations of laws and rules should be halted.

References 1. Titmuss, M.R.: Ten Lectures on Social Policy (Jiang, S., trans). The Commercial Press (1991) 2. Wang, S.: Building an appropriate all-inclusive-type Social Welfare System in China. J. Peking Univ. 3 (2009) 3. Jin, H., Li, L.: Social security and government responsibility. Chin. Public Adm. 3 (2010) 4. Yang, F.: The government’s responsibility for social security system during the period of transition. China Soft Science 8 (2004) 5. Zheng, B.: 60 years of the social security in China: achievements and lessons. Chin. J. Population Sci. 5 (2009) 6. Wang, Z.: Research on the optimal scale of China’s social security fiscal expenditure: based on the perspective of fiscal sustainability. Agrotech. Econ. (Soc. Sci. Ed.) 1 (2010) 7. Mu, H.: A study of social security level in China. Population Res. 1 (1997) 8. Zheng, G.: Studieson China’s social security reform and theoretical orientation. Econ. Perspect. 6 (2003) 9. Jing, T.: Health problem of peasant: mutual cooperation between government, market and society. Hebei Acad. J. 4 (2006) 10. China Development Research Foundation: Constructing a Social Welfare System for All in China. China Development Press (2009) 11. Li, S.: The Government’s responsibility in social security. Comparative Econ. Soc. Syst. 5 (2002) 12. Jing, T.: Welfare Sociology, pp. 228–229. Beijing Normal University Publishing Group (2010) 13. Gilbert, N., Terrel, P.: Dimensions of Social Welfare Policy (Huang, C., et al., trans.). East China University of Science and Technology Press (2003) 14. Jing, T., Bi, T.: Building a welfare society with Chinese characteristics. People’s Tribune (2009) 15. Jing, T.: Lowest fairness and soft coordination of social security. Sociol. Stud. 6 (2004)

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16. Wang, Y., Long, Y.: Analysis on China’s fiscal expenditure on social security since 1978. Fin. Trade Econ. 1 (2011) 17. Zhou, P.: Social Security and Social Policy Research. China Human Reources&Social Security Publishing Group (2007) 18. Doyal, R., Gough, I.: A Theory of Human Needs (Wang, C., et al., trans.). The Commercial Press (2008) 19. Ife, J.: The determination of social need: a model of need statements in social administration. Aust. J. Soc. Issues 15(2) (1980) 20. Spinker, P.: Social policy, themes and approach, 2edn. Policy Press (2008) 21. Peng, H.: On the orientation of the needs-based social welfare transformation in China. Nankai J. 4 (2010) 22. Karl Marx and Frederick Engels, vol. 42. People’s Publishing House (1979) 23. Chen, P.: Building a unified social security system is a short-sighted national policy that harms international competitiveness. China Reform 4 (2002) 24. Zhou, H.: Whither the Welfare States. Social Sciences Academic Press (2006) 25. Aspin-Anderson: The Three Worlds of Welfare Capitalism (Bingwen, Z., trans.). Law Press China (2003)

Part II

System Construction

Chapter 7

The Scientific Basis of Welfare Realization Process

With full coverage basically realized in the social security and social welfare construction, China has marched to a new stage of system integration, improvement and finalization, which is characterized by a longer duration, more complicated problems, more arduous tasks and higher requirements for scientificity. In fact, scientificity should be an requirement at any stage of system construction. However, at the previous stage, the goal of achieving “full coverage” could be realized step by step and from segment to segment and there were no such strict requirements concerning the coordination and balance among “segments,” i.e. systems as well as the proportional distribution among systems and among variables within a system. Entering the stage of system integration, perfection and finalization, these requirements will stand out and become unavoidable barriers, which will hinder the timely realization of welfare goals. So, what new scientific issues have been raised in the new stage of improving social security and how can we solve these problems? To answer these questions, we need to explore the scientific foundation of the welfare realization process.

7.1 The Meaning of the Scientific Basis of Welfare Realization Process The “welfare realization process” here includes the process of full coverage. But it mainly focuses on the process of integration, improvement and finalization of social security and social welfare systems. It mainly refers to the following scenarios. First, how to promote the formation of conditions through welfare construction. Second, how to improve the system in time with conditions. Third, how to maintain the coordination and balance between conditions and systems as well as within the system in the process of system improvement.

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_7

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The “scientific basis of welfare realization process” has three major requirements. First, find out the fundamental variables that affect the process of system improvement. Second, discern relatively established links in the case of constant change of conditions, and confirm objective relations in the case of uncertainty of subjective factors. Third, solve fundamental problems scientifically, and adopt scientific attitude and procedure. For the realization process of social security and social welfare, at least the following issues are fundamental: the proportion of welfare expenditure in GDP, the proportion of welfare expenditure in fiscal revenue, the structure of social welfare responsibility (including the responsibility division between the government and market mechanisms), the structure of social welfare demand and supply, the principles and methods of social welfare distribution, the adjustment mechanism of social welfare and the evaluation of social welfare efficiency. Since they are “fundamental problems”, they will not be easily resolved and will be manifested in a certain form as long as welfare construction continues. Even if they are solved temporarily, they will become fundamental problems when conditions change or when the system reaches a new stage. In other words, the answer or solution to these problems can only be relative, temporary and partial. Here what provided is merely a preliminary discussion of these issues from the perspective of baseline equality theory.

7.2 The Basic Proportional Relationship of the Scientific Basis of Welfare Realization Process1 The scientific foundation of the realization process of social welfare consists of a variety of proportional relationships, among which the most fundamental ones are: the proportion of welfare spending in GDP, which reflects the relationship between economy and society, and is sometimes colloquially named as the relation between production and living; the proportion of welfare expenditure in fiscal revenue, which reflects the relationship between government and society; and responsibility allocation in benefits provision, which reflects the responsibility borne towards welfare benefits by each subject of benefits provision (social organizations, families, individuals and governments).

7.2.1 Proportion of Welfare Expenditure in GDP The proportion of welfare expenditure is the result of the game among various stakeholders in the society. In fact, the proportion itself cannot be evaluated quantitatively, as it is not the case that “the higher proportion the better” or “the lower proportion the 1

Sincere thanks shall be given to Dr. Gu Jintu, an associate professor from Hehai University for all the help he has provided in the writing of Sect. 7.2–7.3.

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better”. Instead, there must be a reasonable conclusion based on scientific evidence. In theory, at a certain point in time, there should be a certain ratio. But at different points in time, the ratio changes. So, over a period of time, this ratio should be distributed in an interval. It is not a fixed number, but an appropriate relationship and an effective mechanism. Taking baseline equality as the basic theory of social welfare can help to better determine the proportion. For the convenience of discussion, this chapter divides the welfare into the baseline welfare (set as BW) and the non-baseline welfare (set as NBW). NBW refers to the benefits above the baseline. According to the baseline equality theory, the BW responsibility is assumed by the government, while that of NBW shall be jointly borne by the government, communities, employers and families and other subjects of benefits provision. From the perspective of practical social welfare operation, BW has the following characteristics: small elasticity of project content, relatively fixed object and easy measurement. NBW is characterized by features of flexible contents, complex objects and less measurability. With the baseline equality theory, we can grasp the relatively stable and easily measured BW among a large number of complex social welfare types and contents, and use this variable value to explore the relationship between social benefits and GDP. Total social welfare expenditure (set as W) is divided into BW and NBW, and the relationship between W and GDP can also be divided into two parts: the relationship between BW and GDP, and that between NBW and GDP. In reality, the relationship may vary: the proportion of W in GDP may be appropriate, high or low; the proportion of BW in W may be appropriate, high or low; the proportion of NBW in W may be appropriate, high or low; and the three kinds of changes may cross each other. For instance, the proportion of W in GDP may be appropriate, and that of BW and NBW in W may be higher or lower respectively; or the proportion of W in GDP may be relatively low, and that of BW and NBW in W may be relatively low and high respectively. The different relationships between them demonstrate different problems in social welfare that need to be addressed separately. According to the baseline equality theory, BW is the key to the relationship among the three, as it is rigid, while NBW is flexible. Therefore, to guarantee appropriate proportions of these three factors in GDP, it is necessary to keep a proper proportion of BW in GDP (assumed as RBW). RBW = BW/GDP = BW/W · W/G · G/GDP = Q · P · H

(7.1)

In this equation, G stands for the sum of national income, Q refers to the proportion of BW in W, P is the proportion of W in national income, and H is the proportion of national income in GDP. The underlying logic is that the proportion of BW is related to the proportion of GDP, national income and W. At present, the proportion of BW in China is relatively low, which is caused by both direct and indirect reasons. The direct reason is that the proportion of W is relatively low, and correspondingly, the proportion of BW in W is low (this is an internal problem of social welfare, which is rooted in the principle choice of welfare

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system). The indirect reason is that social welfare spending accounts for a relatively small proportion of national income (this is related to secondary distribution, and the root lies in the inadequate depth and breadth of social benefits implementation), and national total income takes up a relatively low proportion of GDP (it is concerned with primary distribution, rooted in the economic structure and the primary income distribution system). BW ultimately depends on P and H, that is to say, it can only be improved when the proportion of economic growth and national income in GDP is increased. From here we can see that the social welfare system is a systematic operation. Without GDP growth, it will be difficult to improve social welfare systems. However, economic growth alone is not enough. Only when the primary distribution, the secondary distribution and the internal distribution of social welfare are reasonable or properly handled can social welfare undertakings develop steadily and healthily. From the perspective of research, to clarify this proportion, scientific answers to the following questions must be provided. (1) Accurate calculation of welfare expenditure; (2) Factors that determine the proportion and their interrelationships; (3) The mechanism that can regulate their mutual relationship. Only by solving these three problems can this proportion be deemed as scientifically justified. The concept of social welfare mentioned here should be the sum total of governmental input, corporate input and individual input, i.e. the total social welfare responsibility of all subjects of benefits provision, or in other words, the proportion of secondary distribution in GDP. The larger the number of secondary distribution, the more social welfare can be adjusted and the smaller the space for market allocation.

7.2.2 The Proportion of Welfare Expenditure in Fiscal Revenue The proportion of welfare expenditure in fiscal revenue is mainly a question of how to deal with the relationship between welfare expenditure and other government expenditures. According to the baseline equality theory, the people’s well-being is the inevitable responsibility of the government. According to the basic living conditions and the current situation of people as well as the requirements of national development, BW can be measured in a comparatively accurate way. Fiscal expenditure can be divided into three main parts: welfare expenditure, universal public expenditure and government’s own spending. If the proportion of public expenditure (such as national defense and foreign affairs) is an issue of ruling strategies, the proportion of government’s own spending is an issue of governance integrity and competence. The most important indicator of “governance for the people” lies with the proportions that welfare expenditure and government spending take in the fiscal expenditure. Of course, we should not think that the greater the proportion of welfare expenditure is, the better. The rationality degree of any relationship should have a scientific base.

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Then how to define this “degree”? A baseline of the social welfare system shall be determined first to define the responsibility of fiscal expenditure for social welfare expenditure and allocate social welfare benefits flexibly according to fiscal expenditure capacity. According to the baseline equality theory, the basic living needs of social members, especially middle- and low-income people, must be guaranteed by the government. In this way, the question of the proportion of W in fiscal revenue can be transformed into the question of “how to determine the proportion of BW in fiscal revenue.” The key to this problem is the determination of the baseline. By determining the baseline, the demand for BW shall be determined as well, and can be compared with the level of revenue. After a period of correction, we can also summarize the reasonable proportion between the two and establish the linkage mechanism between them to ensure that BW is at an appropriate level (of course, the baseline is different in various social welfare fields and needs to be corrected over time). Take the adjustment of subsistence allowances for example. If W increases, the standard of subsistence allowance can be determined according to the total amount of subsistence allowance and the number of recipients. This, of course, requires a detailed survey of economic and social fundamentals. BW expenditure can be expressed as the following equation:  BW =

(B − X )d X

B = f (G F, N W )

(7.2) (7.3)

In the above formulas, X represents the existing BW, B is BW that should be achieved, GF is the government’s fiscal revenue, and NW is the non-welfare expenditure in the finance. If it is a dynamic situation, then BW depends on the fiscal revenue of the previous year and non-welfare expenditure. The essence of the problem is the ratio relationship between W and NW described above. The key is to analyze whether non-social welfare expenditures (administrative fees, military expenditure, police, industrial investment, etc.) are appropriate and necessary. The appropriateness of welfare expenditure should not be judged merely by its relationship with economic growth, nor should it be assumed that higher speed of economic growth must certainly entail faster increase of welfare expenditure. In fact, the relationship between the two is not so simple. It is affected by the country’s governing philosophy, political system, economic system, cultural tradition and ideology and other factors. In the 1980s, the welfare level of the Nordic countries was regarded as too high. However, when the Thatcher government in Britain and the Reagan government in the United States promoted neoliberalism and advocated the reduction of social welfare, the Nordic countries went against the trend and increased the total welfare instead. They held that high welfare was basically moderate. Hence, more research is needed on the evaluation criteria of appropriateness.

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To scientifically determine the proportion of W in fiscal revenue, we should not have only one principled requirement (the level of social security shall be in line with that of economic development), nor should we blindly refer to foreign practices and experience. We must build a solid basis for a correct proportion relationship. This is the original intention of the baseline equality theory: to discern stable factors among unstable ones; to find out relatively definite relations among uncertain ones; to identify representative relationships among interlaced ones; and to discover representative part of an unpredictable whole. Taking the combination of the minimum living allowance program, compulsory education system, and public health and medical insurance systems as the hallmark system of baseline equality does not mean that other systems are unnecessary or not important. Baseline equality is an attempt to use the “decomposition method” to study a complex problem. It may have defects, but it discusses the scientific basis for system rationality, policy rationality, and relations between welfare-related variables. It cannot be viewed simply as an issue of the level of welfare benefits being high or low, or the concept of equality justifiable or not. The key to solving the problem of the proportion of W in fiscal expenditure is to clarify the responsibility structure of social welfare.

7.2.3 Relationship of Social Welfare Responsibility The main responsible subjects of social welfare are governments at various levels (central, provincial, municipal, county-level, and township-level government), the market, society (enterprises, non-governmental organizations and local communities), families and individuals. The allocation principle of social welfare responsibility is to bring the initiative of all parties into play and form the best combination. Among them, it is very important to clarify the baseline responsibility of the government and the boundary where market mechanisms function. Lessons learned since the reform of the social security system tell us that a lot of problems lie with it. Why is the case that in the period of planned economy when the economy was so undeveloped, there was no problem of students not attending universities after being enrolled because of poverty? Why, under the previously undeveloped rural economy, could farmers rely on cooperative medical treatment to meet the basic medical needs? Why is it that after the 1990s, when GDP had increased several times, there were serious problems like “difficulty in going to school” “high tuition” “hard to get medical care” and “expensive to get medical care”? Leaving everything to the market mechanism with no clear lines of responsibility between the government and the market, can lead up to negative consequences. It is necessary to design the responsibility structure of the social welfare system meticulously and give full play to all parties while taking into account the needs of economic growth and appropriately meeting welfare needs of the people. According to the baseline equality theory, the responsibility of BW is borne by public finance, while that of NBW is borne by the state, society, family and individuals jointly. The sharing of responsibilities between the state and society mainly depends on the social

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effects of social benefits programs. The greater the social effects (including positive external effects and long-term effects) of welfare programs, the more responsibilities the government and society should assume. Such allocation principle is not only to maximize the efficiency of social welfare expenditure, but also to limit the impracticably growth of social welfare demand. In terms of establishing a fundraising structure with shared responsibility, China has made important explorations in practice. For instance, the financing structure of the new rural cooperative medical scheme is very different from that of the medical insurance system in Europe and America. There are seven or eight billion farmers in China. How can we solve their medical-related problems? It is neither possible for farmers to shoulder it by themselves because their incomes are too low to cover the fees. Besides, they are not employed by enterprises in which employers may pay a large part for the workmen. The solution lies in shared responsibility among the central government, local governments and individual farmers. Let’s assume the total amount needed is 30 yuan. Originally, the three parties pay 10 yuan respectively. The collection and mobilization of 10 yuan from each household is tedious and scattered, so some handling personnel propose that the central finance pay a lump sum of 30 yuan to spare the troubles. The central government can afford the amount, but if the farmers are not asked to pay the 10 yuan, the medical reimbursement may appear to be public funds that can be obtained, possessed and paid for free. And for those free of diseases, they may not care about the operation of the cooperative medical care system at all. Instead, if farmers are asked to pay their 10 yuan, they may shoulder the due responsibility and show attention to the system. So we can see that this equilibrium mechanism is very clever, and this financing structure is actually the responsibility structure, the management structure and the supervision structure. Not unexpectedly, in some places, there appear the phenomena like “cover-ups” and “insurance fraud.” Some county-level finance departments are unwilling to pay for farmers’ insurance, so they fabricate the number of farmers covered by insurance. For example, the actual number of participants of the insurance is only 10,000, but they report the number to be 20,000 fraudulently to the central finance department, which will pay the medical compensation for 10,000 participants with the amount adequate for 20,000 people. For issues like this, by involving the masses in a wide range of ways and making them stakeholders can we engage them in supervision and ensure the healthy functioning of the system.

7.3 Construct a Balanced Structure of the Scientific Basis of Welfare Realization Process How to adjust and coordinate the realization process of social welfare so that it can maintain internal and external balance, and healthy and sustainable operation? There are a number of fundamental issues here. The most important one is the balance between demand and supply, and this is reflected in social welfare distribution

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principles and methods, which depends on the appropriate adjustment mechanism, and effective adjustment in turn relies on the benefit evaluation to form a flexible feedback system.

7.3.1 Balance Between Demand and Supply 7.3.1.1

Social Welfare Demand

Social welfare demands vary according to social development, local conditions, as well as culture and economic level in different places. BW referred to in the baseline equality theory is the basic welfare, which has a small elasticity, must be satisfied and is easier to be satisfied. NBW, such as recreation benefits and part of the developmental welfare, has a great elasticity in demand and is difficult to meet universally. A reasonable demand structure must give priority to the basic living needs of the people. Welfare needs can be divided into basic and non-basic parts, and priority should be given to meeting the basic needs. Among all people, emphasis should be given to ensure the basic needs of vulnerable groups or low- and middle-income people. To form a reasonable demand structure, there must be adjustment, guidance, priorities and different demand fulfillment strategies. Talking about equality of opportunities or social equity in the abstract terms does not help to determine the legitimacy of people’s welfare needs. It makes it difficult to provide social benefits to those with real needs. This kind of empty talk often gives priority to the needs of the rich. The outcome is that whoever is rich or able to pays premiums will be satisfied and guaranteed, and the more he pays, the more compensation he receives, thus changing social insurance into commercial insurance. The social security system, which is supposed to promote social equity, may turn out to accelerate widening of inequality.

7.3.1.2

Social Welfare Provision Structure

Welfare is scarce in any society at any time and under any circumstances. Even when a society is extremely rich, its welfare may be easily exhausted. So welfare provision is always a real teaser. In history, there were mainly three ways of benefits provision. The first one is to draw lots, which was the most primitive and illogical way towards which nobody is hard to deny the result. The second one is equal division in correspondence with the number of people. The third sets order of priorities and focus, which are exactly the structure and policy of benefits provision as mentioned in this section. The first two have no scientific rationality at all, while the third is difficult to be implemented scientifically and reasonably either. But by adopting baseline equality, it will be easier to determine the order of priorities. Baseline equality stresses

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the needs of the majority, especially the low- and middle-income groups. It is the responsibility of the government as well as the focus and soul of social policy. The problem for equality in general is that it can lead to social benefits tilted to the powerful party under the influence of powerful groups. Welfare provision needs to be regulated instead of completely following the market. For example, some developers claim to build houses for the rich only. Then the government can use tax method to adjust: for luxury housing, very high tax is levied per square meter, such as 10,000 yuan/m2 , and for commercial housing for the public, only 500 yuan per square meter is levied; and for low-rent housing, subsidies will be given to developers by the government, such as 500 yuan per square meter. The problem is that there is no such policy or train of thought. The government needs to make up policies to adjust the welfare supply structure and clarify its inclination.

7.3.2 Principles and Channels of Social Benefits Distribution 7.3.2.1

Principles

There are three principles of social benefits distribution, including protecting labor, safeguarding basic human rights and embodying social values. Social benefits usually give priority to those who are unable or incapacitated to work, or to those who are poor regardless of specific reasons. This gives the illusion that welfare has nothing to do with labor. Welfare is a basic human right that should be safeguarded, but in what ways? Welfare is not created by human rights per se, but by labor. If the relationship between welfare and labor is separated, welfare will become water without source. Therefore, while implementing universal welfare, we must prioritize employment policy, ensuring that employment income is substantially higher than unemployment benefits, in order to stimulate the initiative to work of people with required ability and guide them to cherish the chance of employment. In general, the minimum living allowance should be significantly lower than the minimum wage, and the unemployment insurance should be significantly lower than the average wage. Most of the unemployment insurance can even be converted into the job training subsidy. In the case of voluntary unemployment, the unemployment insurance premium can be reduced to a level close to the subsistence allowance. In the case of passive unemployment (e.g. unemployment due to national industrial policy adjustment or employer downsizing), the employing unit should pay for the subsistence allowances until the re-employment, so as to prevent arbitrary downsizing and reduce passive unemployment. In summary, it is a must to give consideration to the three principles of protecting labor, safeguarding basic human rights and reflecting the orientation of social values in social benefits distribution, while embodying social fairness and stimulating social vigor at the same time.

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Channels

Welfare benefits should be allocated in different ways: free of charge, low charge, or based on payment. The objective is to form a reasonable responsibility sharing mechanism. No matter how sound a social welfare system is, the basic condition to maintain the normal functioning of a society is that the vast majority of people have the ability to support themselves. The ability to sustain and develop on one’s own is necessary for every individual or family. An income adjustment and insurance mechanism is needed for secondary distribution. It is conducive to realizing risk sharing in the society and ensure that the basic needs of individuals and families lacking self-reliance are met. It also helps them develop and strengthen self-reliance. Therefore, the choice of benefits provision methods does not depend on the financial capacity, as if the welfare can be provided for free if there is sufficient finance. It depends on the type of welfare programs, the situation of welfare recipients, and the effect of welfare programs. Generally speaking, recreation benefits are provided based on payment, while subsistence benefits are universally provided for free. The developmental welfare is more complex and can be based on payment or for free under different circumstances. In practice, many more detailed policies and regulations have been created. Take the new rural cooperative medical scheme for example. The reimbursement ratio of hospitalization in counties differs from that in cities or outside the province. It is difficult to realize and maintain any balance. The demand for social benefits is always greater than supply, as no matter how developed a country is or how prosperous the economy is, the capacity of welfare provision is always limited. Therefore, to realize and keep the balance between demand and supply, we must explore and find the equilibrium point or degree. It is generally believed that the level of social security (social benefits) should be commensurate with that of economic development, and a linkage mechanism should be established between economic growth and welfare growth. But in reality, both economic development and social welfare are unpredictable. Paradoxically, when the economy is in a downturn or even in crisis, the demand for social security and social welfare may become even stronger because of serious unemployment, business difficulties and rising prices. However, when the economy grows smoothly, it is easy for individuals to find jobs, for enterprises to make profits and for workers’ incomes to increase, and the price is usually not high. Therefore, although the government revenue is abundant, the demand for social security (social benefits) is not high. Therefore, the baseline equality theory advocates that the demand should be divided into the basic part and the non-basic part, so as to ensure that the basic part remains stable under any circumstances, and the non-basic part can fluctuate with situations, so as to realize dynamic equilibrium. We should rely on the stability of the basic part to maintain the certainty and predictability of the social security and social welfare level. Letting the non-base part adapt to and adjust the economic fluctuation can not only reduce social risks, but also seek the dynamic balance between welfare demand and supply.

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The per capita funding for the new rural cooperative medical scheme has risen rapidly from 30 to 200 yuan. But after several years of operation, there is no big deficit. Why is that? That is thanks to the two balance mechanisms between demand and supply: deductible line and limit line. The new rural cooperative medical scheme only reimbursed for hospital expenses of serious diseases at the beginning with the objective of enabling farmers’ affordability of medical treatment and avoid poverty caused by diseases, hence a deductible line was defined. However, since the total funding is limited, it cannot meet the needs of all people. If one or more people with serious illness spend all the money, others’ rights will be deprived. This is obviously unfair. The limit line was thereby initiated. These two mechanisms can control the total revenue and expenditure, so there are no outstanding debts resulted in the scheme. Compared with the current medical insurance for urban workers, it is more balanced between demand and supply.

7.3.3 Adjustment Mechanism and Efficiency Evaluation of Social Welfare 7.3.3.1

Adjustment Mechanism

Social welfare can be easily adjusted upwards and difficult to be adjusted downwards. There is little chance of a cut. In recent years, strikes in Britain and France have been triggered by attempts to cut benefits cut, which led up to social unrest and the ouster of heads of government. In fact, making an increase in welfare might not be an easy job as well, because it is prone to produce chaos and disturbance in the society. But fluctuations in economy and changes in demographics tende to call in crisis, hence the adjustment in social welfare is inevitable. Rigid adjustment should be made when flexible adjustment is ineffective. Once the security and welfare system is well established and people’s interests are fixed, it is a tougher task to adjust social benefits. China’s social security and social welfare system is still in the process of establishment and improvement. If the adjustment mechanism can be in place in advance, any adjustment of social benefits in the future will be more convenient. We should seize this rare “window time” to design and pre-install the adjustment mechanism. Adjustment of social welfare provision can be divided into external adjustment and internal adjustment. The former is mainly related to economic development, while the latter is related to subjects of benefits provision. External adjustment mechanism is based on economic and social survey information, including fiscal revenue, national security expenditure, loss from natural disasters, balance of international payments, per capita income of the people, Gini coefficient and demographic information and so on. Nicholas Barr mentioned in To Chinese Readers in November 2002 that for China, the establishment of old-age insurance shall depend on a series of preconditions in public and private sectors. In the public sector, these conditions involve

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political support for the pension reform package, administrative capacity to enforce taxes and payments, ability to maintain macroeconomic stability, as well as effective supervision and management. Preconditions in the private sector are adequate demographic information, existence of financial asset and capital markets, and the ability to manage fund appreciation. The internal adjustment mechanism is based on social stratification and mobility, welfare distribution principles and methods, change prediction of welfare demand, supply capacity and sustainability assessment, etc. The supply and demand of social welfare work under both market mechanism and planned mechanism, as well as both government mechanism and social mechanism. With the increase in social welfare provision, whether in total amount or per capita benefits, there will be greater demand for social welfare. It is necessary to take moral hazard into account and acquire basic information in a timely manner so as to take preventive measures in advance. The baseline equality theory classifies social benefits into basic and non-basic parts, and the adjustment mechanism is divided into rigid and flexible types accordingly. The rigid adjustment mechanism is to guarantee basic living needs, especially of the low- and middle-income groups. The flexible adjustment mechanism is to solve non-basic living needs, for instance, recreational needs. The objective of the adjustment mechanism is to clear the responsibility boundary between the government and market as well as define priorities and focuses of benefits provision. With a combination of rigid and flexible mechanisms, we can conduct timely and appropriate adjustment of the relations between social benefits and economic, political and other external factors. In this process, the requirement of meeting basic needs and safeguarding the interests of vulnerable groups is rigid, while the benefits provision also changes with external factors to adapt to practical conditions.

7.3.3.2

Social Effect Assessment

The effective adjustment of social benefits depends on the measurement of social benefits effect. Only when the effect of welfare expenditure is known for sure can the various regulatory mechanisms and instruments function properly. For example, if the minimum wage is raised by a certain amount, what impact it will have on workers’ lives and the employment market and how much costs have been increased for businesses? There are many links in the process of welfare expenditure taking effect on the improvement of people’s lives. This process involves the participation of market organizations, services provided by non-governmental organizations, community services, and family services. To determine the overall effect of welfare spending requires economic and social survey. Social effects of welfare benefits are mainly reflected in the following aspects: the satisfaction of basic living needs, the exploitation of development potential, the adjustment of class relations, the maintenance of social stability, as well as the improvement in human capital, social identity and moral level, etc. They can all be measured by a range of indicators, such as poverty incidence, employment rate,

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average educational level, hospital admission, average life expectancy, and social participation, satisfaction and acceptance, and so forth. Based on the measurement of social welfare effect and the baseline equality theory, we can determine the BW vector. We can then adjust the relationship between social welfare status and social welfare effect by controlling BW vector. Its principle is to determine the baseline expenditure of various social benefits according to the social welfare effect indicators of the previous stage. The baseline expenditure of social welfare will affect the overall welfare status of the society. In turn, it will generate new social welfare effect, form a feedback, and enter a next round of adjustment process. The analysis of social welfare operation data can also optimize output feedback matrix, improve system performance and social welfare operation efficiency, thus strengthening the overall social welfare provision. According to this principle and combining with the method of social cybernetics, we can construct the output feedback control system of social benefits. x(k + 1) = Ax(k) + Bu(k), x(0) = x0

(7.4)

y(k) = Cx(k)

(7.5)

In this equation, x(k) ∈ Rn × 1 is the social welfare status vector, u(k) ∈ Rm × 1 is the BW vector, and y(k) ∈ Rr × 1 is the social welfare effect vector (observable vector). A, B and C are all parameters which can be determined by empirical data. A and B are respectively the regression coefficient matrix between the social welfare status in phase k + 1 and phase k, and the BW expenditure in phase k. C is the regression coefficient matrix between social welfare effect and BW expenditure. H is the output feedback matrix, which is undetermined (Fig. 7.1). Therefore, based on the principle of baseline equality, we can establish the benefits feedback mechanism. In other words, when welfare expenditure occurs, its effect can be clearly reflected. We can’t follow some high-welfare states, who won’t realize that their welfare is too high until laziness prevail and when the welfare level is to rigid

Fig. 7.1 Feedback mechanism of social benefits

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to be lowered. We take the welfare expenditure of BW as a vector to establish the welfare feedback mechanism, and win the possibility to solve the problem of welfare rigidity.

7.4 Scientific Attitude Towards the Scientific Basis of Welfare Realization Process Previous sections expounded basic issues of the scientific basis for building a welfare society. The so-called “scientific basis” not only involves scientific understanding, but also concerns scientific attitude, that is, rational view towards social security and social welfare. In terms of scientific understanding, after so many years of efforts to improve social security and social welfare, there are still many problems. In scientific attitudes, the problem is more serious. When it comes to social security and social welfare, it is irresponsible to talk high-sounding words or make casual promises. What is meaningful is to seek scientific basis and scientific argumentation for every problem.

7.4.1 Avoid Politicization in Social Security and Social Welfare Endeavor It is true that social security and social welfare is related to politics. Attention from country leaders and government competence all matter in this regard. However, the social welfare cause which is highly relevant to people’s well-being should not be overly politicized. In essence, social security and social welfare are parts of social construction and social development. It is a relatively independent social undertaking which shall not be subject to political changes. Social security and social welfare are the basis of a modern society. They shall not be used as governmental achievements to show off, or overly stamped with the personal marks of the leaders. As a basic project of the society, the social welfare system construction must be done well; if not, it will be detrimental. It cannot be simply held that with the starting point of “loving the people”, the outcome will be definitely beneficial for the people. In this light, shall Bismarck, the “Iron-blooded Prime Minister” who was the first to implement social insurance and known for his brutal suppression of the workers’ movement, be deemed as “loving the people”? A government or a leader must bear the love for the people in mind when doing all kinds of work. It is the same case with the construction of social security, which must be carried on with the intention of benefiting the people and the attempt to do better. However, this, like other causes pertaining to the people’s well-being, needs to be treated scientifically and rationally.

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Various welfare systems should be designed and developed for the people’s wellbeing, rather than political hype. It is necessary to strive to grasp the essential connection of things and act in accordance with objective laws. We cannot overemphasize the logical necessity between social welfare and Western democracy. Admittedly, democracy is conducive to the expression of public opinion and people’s needs, but social security and social welfare should strike a balance between demand and supply instead of emphasizing the demand unilaterally. The history of social welfare development in Europe has proved that the relationship between social welfare and democracy cannot be reduced to a one-way relationship. It is a two-way influence relationship that can be positive or negative. For the government, it is not rare to exchange welfare for votes. On the people’s side, it is not uncommon that they enjoy high benefits and in the meanwhile choose to resist the austerity measures the state implemented for getting out of the economic crisis. This is a far cry from the 1997 Asian financial crisis, when officials and citizens in South Korea and other countries and regions made joint efforts to cast off the crisis quickly. As far as China is concerned, it should not be considered that since the level of social welfare is still low, we are far away from the “welfare crisis”. In fact, our ability to withstand risk and the sustainability of our institutions are relatively weak. We must ensure that our endeavor to enhance the social welfare level as well as systems and policies adopted are on a scientific basis. Or, we will easily fall into a “crisis” and “trap”.

7.4.2 Avoid Empiricism in Social Security and Social Welfare Construction Social security and social welfare construction should learn from experience at home and abroad, but we should avoid empiricism. First, we should avoid simple comparison with foreign experience, or regard the empirical data from abroad as a universal rule. For example, based on the comparison between China and some developed countries with a higher proportion of national welfare expenditure in GDP, some people conclude that the proportion in China is too small. This simple comparison is worth questioning. Foe one thing, according to research by Prof. Lin Zhifen in Nanjing University of Finance and Economics, countries adopt different criteria for measuring social security programs, providers and forms. Careful analysis may reveal that the relative difference between China and other countries will not be so large.2 For another, we should not regard the proportion in developed countries as a universal standard. As a matter of fact, some developed countries are trying to adjust some of their basic proportional relationships in these years because these relations are not appropriate for their own conditions. The determination of a proportional relationship involves many factors. Take the proportion of total welfare expenditure in GDP as an example. This relationship is influenced by 2

Lin [1].

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economic, political, cultural and many social factors. Among economic factors, there are different stages of economic development, different national economy structure, as well as development strategies and goals of national economy, etc. It is mistaken to determine the relationship without referring to these factors and the interactions among them. Moreover, it is true that the current proportion of welfare expenditure in GDP is relatively low in China and we should improve it as the country has entered a new stage of development. But the criterion and standard adopted should be determined by our own situation, rather than experience from developed countries. Second, understand the macro linkages between welfare development and economic development, globalization, population structure and mobility, as well as industrialization and urbanization. Social security and social welfare undertakings involve a wide range of areas and are closely related to the immediate interests of the people and the future of national development. It is necessary to recognize and treat these undertakings from a holistic and macro perspective, attach importance to overall planning and top-level design, encourage theoretical innovation, and stress scientific argumentation and procedures. We should avoid decisions solely dependent on experience or imagination. Arbitrary investment merely determined by financial capacity without any definite standard should be prevented. For example, in some places, authorities raise the level of security, such as the standards of subsistence allowance or the standard of minimum wage, based on the practice of other provinces (municipalities) rather than objective laws. Finally, make clear about essential relationships, especially those affecting the fairness and rationality of social welfare. The social welfare system is in nature a system to promote social fairness. For a long time in the past, China’s social security was only provided to urban workers. This was one main factor contributing to widening urban and rural disparities. Since the 1990s, the income gap between rural and urban residents has been above 3:1. With the urban–rural gap in social security and welfare subsidies added, the actual urban–rural income disparity would be over 5:1. The discrimination based on social identities and caused by disparities in social security is best demonstrated by rural migrant workers. A large number of rural migrant workers are still regarded as “second-class citizens” because they cannot enjoy the same social security as urban workers, even if they have been working in a city for one decade or two. Obviously, in the practice of the social security and social welfare, it is necessary to distinguish the essential relations from non-essential ones, as well as essential requirements from non-essential requirements. If we only focus on immediate and short-term needs while ignoring long-term effects, it would be a waste of resources in the long run and will create new inequities and conflicts.

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7.4.3 Avoid “Emergency Response” Approach to Social Security and Social Welfare Policies China has complex national conditions and represents large urban–rural, interregional and income gaps. The social security and social welfare undertakings were promoted bit by bit without an overall design. As a result, there emerged the problem of extreme fragmentation. This is understandable and inevitable in a sense. But the fragmentation tendency impairs the equity, adaptive mobility and sustainability of social security. It is a problem must be solved for further development of social security in the country. After decades of efforts, China had basically realized full coverage of the social security system by the end of 2012. To further integrate, improve and finalize the system, we cannot continue to adopt the “emergency response” approach. Admittedly, the existing system is crude and unsustainable. For example, in the new rural cooperative medical scheme, the hospitalized expense can only be reimbursed at a prcentage of 30% at the beginning, and it has been increased to 40%, 50%, 60% and soon to 70% year by year. The improvement is fast. However, studies must been conducted concerning the influence of reimbursement ratio on behavior. According to our survey, when the reimbursement ratio of hospitalization exceeds 85% and plus, patients tend to extend their length of hospitalization, because they can enjoy hospitalization services at extremely low price or even for free. It is no surprising that the average hospitalization duration in some places reaches ten days or more, which is certainly a waste of medical resources. Internationally, seven-day hospitalization is recognized as the most efficient for medical expenditure. It is unscientific to claim that the higher reimbursement ratio the better, regardless of specific conditions and economic ability. The total funding for medical insurance is limited and the level of payment is relatively low. If everybody is to enjoy full reimbursement, then both the payment and financial inputs must be increased. And it is not all about money. With the basic material needs met, there will appear more diversified and richer human needs, among which some can be satisfied by money, and some others cannot. In aged care, health and other fields, in addition to in-kind and cash benefits, welfare provision should include social services and psychological support. These channels of benefits provision should complement each other. That is to say, to further improve the level of social security and the living standards of the people, we need to master the system connection: the connection between one system and another, as well as the connection between the welfare system and the environment. For example, there are close connections between the social insurance system and the social assistance system, and between the subsistence allowance system and the minimum wage system. These systems also connect with employment. There are also connections between different parts within each system, and between systems and external conditions. Ignorance or mishandling of these connections will cause friction and conflict among systems, or the effect of the whole welfare system can be negated.

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If the realization of full coverage of the social welfare system is mainly a test of our philosophy and empathy, then the realization of perfection is more of a test of our wisdom, perseverance and patience. We need to solve not only the problems that the Western welfare states have basically solved but also those they have not solved, and more importantly, the problems that they have not encountered. Only by encouraging bold innovation can we find a way out. In a rapidly changing society in transition, we should take measures in the following aspects: properly control the proportion of social welfare expenditure in GDP to prevent the public debt crisis caused by national welfare; adjust the ratio between standards of the minimum wage and subsistence allowance (or poverty line) to reduce welfare dependency and avoid employment crisis; rationally determine the proportion of education and social security spending in total government expenditure to maintain social vitality and avoid negative growth; and build a family-, community-, and institution-based old-age care system to avoid pension crisis. Solutions to these problems points to the introduction of a new welfare model and a new welfare realization path, that is, the social welfare system suitable for the Chinese people, based on China’s national conditions and infiltrated with Chinese culture. Yeun-wen Ku, a Taiwanese scholar, issued an early call for the establishment of an indigenous social welfare system.3 Prof. Cai Hanxian, who attended the Beijing Xiangshan Forum in 2012, expected and predicted that based on the long history of our Chinese nation, the richness of culture and the elite team of experts, we can follow the feasible concept and effective ways in the classic The Doctrine of the Mean which says “honor his virtuous nature and follow the path of inquiry and study; reach the breadth and greatness and penetrate the refined and subtle to the end; reach its greatest height and brilliancy and follow the path of the mean”, so as to “secure life and fortune for the people and continue lost teachings for past sages”. We should establish a new welfare system not only for ourselves but also for sharing with other countries.4 This preliminary discussion of the scientific underpinnings of the welfare realization process is, rightly or not, subtle effort towards this goal.

References 1. Lin, Z.: An international comparison and reference of social security statistics. Stat. Res. 10 (2011) 2. Ku, Y.: The age of uncertainty: the development of international social welfare on a tightrope. In: Cha, H., Ku, Y. (eds.) New Thinking of Social Welfare Policy. Incorporated Housheng Foundation (2001) 3. Cai, H.: The contribution of Chinese traditional welfare concept to the profound modern welfare system—make a living for the people with running water of the headstream. In: Jing, T., Ge, Y. (eds.) Basic Experience of Social Welfare Across the Taiwan Straits. The Straits Publishing and Distributing Group & Lujiang Publishing House (2013) 3 4

Ku [2]. Cai [3].

Chapter 8

The Construction Goals of the Universally Integrated Social Welfare System

In accordance with the requirements of the Scientific Outlook on Development, the third plenary session of the 16th central committee of CPC put forward for the first time the strategic decision of “The Five Overall Plans”, giving priority to “balancing urban and rural development”. The 17th National Congress of CPC called for “accelerating social development with the focus on improving the people’s well-being”. Concerning the social welfare system, the 18th National Congress of CPC proposed to “strive to run education to the satisfaction of the people”, “deliver a better job in creating employment”, “make every effort to increase individual income”, “promote balanced development of urban and rural social security system” and “improve people’s health”. This inherently requires the reform of the previous “fragmented” and “residual” social welfare system, and the construction of a universally integrated social welfare system so as to make social welfare part of the social structure and an important force to promote social stability and social harmony. Universal integration is the inherent requirement and direction of welfare construction, We need to use scientific method to construct the indicator system and specific contents of social welfare universal integration and establish the construction goal and implementation means in this regard, based on studies on both theories and practice in this area at home and abroad.

8.1 The Demand of the Universally Integrated Social Welfare System A universally integrated social welfare system is neither a “residual” nor a “fragmented” social welfare system. It is an integration of the two. Universal integration is the essential attribute of social welfare and the objective requirement of social welfare construction.

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_8

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Nowadays, the academic circle simply defines universal integration of social welfare as “balancing the urban and the rural areas” “ensuring that all rural and non-working urban residents enjoy social welfare”,1 and the first step is to “reach full coverage in urban and rural areas while allowing urban–rural differences and promote gradual assimilation and convergence”.2 Liu Lingling summed it up as “safeguarding the equality of rights” “covering urban and rural areas, allowing moderate differences” “linking urban and rural areas” and realizing “urban and rural integration”.3 According to Wang Yanzhong and Zhang Shifei, the construction goal of the universal integration of social welfare system has “near, medium and long term” goals.4 Some studies also suggest that the goal of universal integration is to build a social welfare system that is appropriate all-inclusive and shared-by-all.5 However, the existing researches have not touched upon the connotation, features or assessment of universal integration. To build a universally integrated social welfare system, we need to do the following: make clear that the demands and recipients of social welfare should be universal and avoid selective picking of recipients; ensure that social welfare programs are available to every member of society and that every supply subject has universal and equitable access to them; organize fragmented social welfare systems, contents and implementation mechanisms to build a universally integrated social welfare indicator system, and promote the fair and sustainable development of the social welfare system. Since the 16th National Congress of CPC, people from all walks of life have paid increasingly more attention to the building of the people’s well-being and expansion of the coverage and fields of social welfare, universal integration has become the construction direction of our social welfare system. It embodies the fundamental requirement of letting the people share the fruits of economic development and serves as an important means to promote social harmony. The goal of building a universally integrated social welfare system is to gradually establish a social welfare system that covers the entire population, with complete programs, comprehensive contents, interconnection and organic integration through the joint efforts of the Party, the government and all sectors of society, and to improve the equality of welfare provision on the basis of improving the welfare level of all members of society. We will strive to build a social welfare system based on Chinese experience and with Chinese characteristics, and then provide a Chinese model and Chinese path for the construction of people’s livelihood.

1

See also Wang and He [1], p. 2. Zhang [2]. 3 Liu [3], p. 37. 4 Wang and Zhang [4]. 5 Wang [5]. 2

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8.1.1 Expand Universality of Social Welfare System A universally integrated social welfare system is multi-level and multi-faceted. We can analyze it from dimensions of universality and integration to facilitate the building of a universal social welfare system covering urban and rural areas with rich contents and diverse suppliers.

8.1.1.1

A System for the People

To establish a social welfare system for all citizens, rather than for a special group or privileged class, is the internal requirement of both universal integration and social justice. Examinations should be conducted on the coverage current social welfare programs to make sure that all citizens enjoy the right to social welfare. For example, in the fields of education, employment, health, living, housing and public welfare, social welfare programs should be set up for all citizens, rather than for particular groups. Some programs seem to be aimed at specific groups on the surface, but in essence they are not. Take the minimum living security system as an example. Although only a small number of people are now benefiting from it, this system does not exclude other groups. Anyone with an income lower than a certain standard or a living under a certain level is entitled to it. Security housing and low-rent housing benefits share the same attributes. However, some social welfare programs are not designed or implemented for all citizens. For example, the housing provident fund system is merely available to employees in Party and government organs and public institutions, state-owned enterprises, collective enterprises in cities and towns, foreign-funded enterprises and urban enterprises. Employees of some private enterprises and flexible employees in cities and towns are excluded from the program. Take the Regulations on Unemployment Insurance implemented in 1999 as another example. It is only for employees of “state-owned enterprises, urban collective enterprises, foreign-funded enterprises, urban private enterprises and other urban enterprises”,6 while excluding employees of other types of businesses or staff of Party and government bodies and public institutions.

8.1.1.2

A Comprehensive Social Welfare System

The universally integrated social welfare system should strive to achieve universality and comprehensiveness in social welfare program supply. Ever since the 16th National Congress of CPC, all sectors of society have focused on social welfare development and increased the input in social welfare, propelling the development of 6

CF. Article No. 2 in Regulations on Unemployment Insurance, 1999.

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many social welfare programs and entitling more people to the fruits of the reform. Despite this, our social welfare programs are not yet comprehensive enough, and some are even not in place. For example, we have always attached great importance to the construction of the retirement pension system, and the pension systems for various personnel have been gradually established and improved. However, elderly care service, especially home-based care services, which is an important part of the retirement pension system, has not been well constructed and developed, so the current old-age security is not comprehensive enough. For another example, due to the absence of enterprise pension system, the old-age pension of employees of enterprises is generally low. Also, the inadequacy of rural social endowment insurance, especially the elderly care service, caused most farmers still rely on family support or self-support in old-age security. The universally integrated social welfare system is a comprehensive social welfare system, which is built around employment, livelihood, health, education, housing and public welfare. Among them, the employment benefits focus on the building of a relatively sound system about employment service, job placement, and unemployment insurance, to provide people with employment consultation, employment training, employment recommendation, unemployment insurance and income insurance as well as provide job placement for the disabled and other special groups. The livelihood welfare mainly examines the establishment of systems concerning pension insurance, elderly care service, minimum living security and social special care, and whether the basic living needs of all people can be effectively addressed. Health welfare emphasizes the establishment of relatively complete medical insurance, medical assistance, work-related injury insurance, maternity insurance, disease prevention and public health and other systems. The education welfare emphasizes the universal coverage of educational resources, so that everyone enjoys the right and opportunity to receive education. Housing benefits focus on ensuring that “all the people enjoy their rights to housing”, and proactively guides qualified people to buy commodity houses, thus propelling the establishment of a multi-level housing security system. The public welfare is to construct relatively comprehensive welfare programs centering on public security, public services and public facilities, and to vigorously promote the universalization of public welfare and enhance the accessibility of public welfare.

8.1.1.3

A System Covering Urban and Rural Areas

A comprehensive social welfare system needs to cover urban and rural areas. It is the reflection of social welfare universality, as well as the inherent requirement of integrating the urban–rural dual structure. The 18th National Congress of the CPC made it clear that we should “promote coordinated development of the social security system in urban and rural areas”, meaning that we should institute “a complete, multitiered and sustainable system for providing basic social security” for “both the urban and rural population”, and establish a mechanism for determining and adjusting social security benefits for all the people.

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A social welfare system covering urban and rural areas includes an unemployment insurance system covering urban and rural areas (rather than just for employees of urban enterprises), a job placement system covering urban and rural areas (not just for placement of veterans, athletes, and disabled people with urban household registration), and a medical insurance system, a medical assistance system, and a public health system covering urban and rural areas (not just addressing public health issues in cities and towns). It should also allocate educational resources in urban and rural areas and ensure that all the people enjoy their rights to education. To some extent, the coverage of urban and rural areas can be regarded as one of the indicators to test the universality and fairness of a social welfare system, as well as the premise for universal integration. Social welfare, with no urban and rural coverage, is not universal or generally integrated.

8.1.1.4

A System with Multiple Subjects of Benefits Provision

A universally integrated social welfare system should attach importance to the diversity of provision subjects, by supporting enterprises, social (charity) organizations, families and individuals apart from government as the major subjects of benefits provision, for they have irreplaceable responsibilities in social benefits provision and can increase the social welfare supply. For example, the employee mutual help system and pension system established by enterprises are naturally part of social welfare. In addition, charity donations and assistance from all walks of life can also improve the benefits of recipients. For another example, material goods, daily care, mental support and emotional care provided by the family will inevitably enhance the unity of a family and improve the benefits level of family members. The universally integrated social welfare system emphasizes the diversity of the benefits provision means. Benefits can be provided either after or before the need happens, either through in-kind and monetary welfare or in forms of services and spiritual consolation. Diversified benefits supply can meet diversified and personalized welfare needs of the people, so as to make the provision of social welfare more universal. The above analysis shows that to build a universally integrated social welfare system, we need to form diversified subjects of benefits provision by guiding society (charity) organizations, families and individuals to to supplement the government in social welfare undertakings. The ultimate goal is to form a welfare system with multi levels of welfare providers and thus promote the universality of social welfare provision.

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8.1.2 Enhance the Integration of Social Welfare System The term “integrate” is generally corresponding to “converge” and “colaborate”. It was originally a concept in physics, referring to the combination of scattered parts in some way to become an organic whole and play an overall function. Later, Emile Durkheim applied it to the field of social life to represent the integration of social organism, social order and social morality.7 Correspondingly, in the field of social welfare, “integrate” means to make welfare programs, contents, institutions and policies form an organic whole. The universality of a welfare system means not only the full coverage of welfare objects but also the organic entirety of the system. It needs to integrate programs designed for various classes and groups, and management and service functions of different departments. Therefore, it includes not only the integration of competent departments, welfare institutions, urban and rural areas and benefit types,8 but also the integration of provision types and means, social welfare functions. Moreover, there is the integration of welfare organization, implementation, operation and supervision departments. The goal is to promote equal and fair provision of social benefits and ensure equitable access to various social benefits among the people.

8.1.2.1

Integration in Management Bodies

The establishment of the social welfare system requires a relatively complete set of management agencies rather than fragmentary ones. It is necessary to clarify the objectives, tasks and requirements of each department in the provision and implementation of social welfare programs and the construction of the social welfare system, so as to better promote the establishment and improvement of the social welfare system. In the field of social welfare, many countries around the world have reformed the previously common itemized management model. For example, before the 1990s, Japanese management agencies of social welfare were relatively decentralized. Since the beginning of the twenty-first century, the Japanese government has strengthened the integrated reform of social welfare management agencies, integrating the Ministry of Health and Welfare established in 1938 and the Labor Ministry established in 1947 into the Ministry of Health, Labor and Welfare of Japan. The change in the name of the governing body means the change of work content and tasks accordingly. After the integration, the responsibilities of the Ministry of Health, Labor and Welfare of Japan cover social security, health care and other aspects, 7 In Dictionary of Etymology, “Zheng” is explained as “to collect and reorganize”, and “He” is explained as “gather, pool and match”, etc. CF. Dictionary of Etymology, The Commercial Press, 2009. 8 Bi [6].

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including national health, medical insurance, provision of medical services, drug and food safety, social insurance and social security, employment, social assistance for vulnerable groups, environmental protection, rehabilitation of the elderly, etc. Its responsibilities cover relevant functions of health, inspection and quarantine departments in China including the Ministry of Health, Food and Drug Administration, the Ministry of Human Resources and Social Security, the Ministry of Civil Affairs and the General Administration of Quality Supervision.9 Another example is that Finland integrates the ministries in charge of national pension, unemployment insurance, medical insurance, family benefits, health care and work-related injury insurances into the Ministry of Social Affairs and Health. Likewise, after the collapse of the Soviet Union, Russia integrated departments responsible for pension insurance, health care, consumer protection, labor and employment into The Ministry of Public Health and Social Development.10 Through the integration reform, the relevant administrative departments of these countries can take a holistic view in the construction of the whole social welfare system and improve the management efficiency of the whole social welfare department. Similar reforms have taken place in other countries. As far as China is concerned, after the reform and opening-up, there are a variety of administrative departments in charge of different social welfare undertakings. With the government speeding up the construction of the social welfare system, more and more social welfare administration departments are involved, which entails an upward tendency of fragmentation in the management institutions and gives rise to numerous problems to the provision and implementation of the social welfare system. For example, the management agencies of security housing, low-rent housing and public housing in each city involve the departments of Housing Public Fund Management Center, Housing and Urban and Rural Construction Bureau, Bureau of Civil Affairs and so on. It requires frequent coordination work among various departments, which often reduces the provision and implementation efficiency of security housing. Therefore, in order to establish a universally integrated social welfare system, we need to carry out necessary integration of the administrative organizations in current social welfare systems, so as to enhance the internal coupling force and integrating power of the entire social welfare system and provide better social welfare for the people.

8.1.2.2

Integration in Provision Approaches

From the perspective of supply type, social welfare can take three forms, namely, “material goods”, “money” and “services”. When it comes to the demander of social welfare, these three supply methods can be further combined into “materialmoney” “material-service” “money-service” and “material-money-service”, etc.,

9

Source: Yu [7]. Zhou [8], p. 41, p. 139.

10

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which constitute a complete supply mode of social welfare and improve social benefits of the people. However, for a long time, too much importance has been attached to the unitary provision of social welfare, such as pure capital or pure material supply, which was not only insufficient in service supply, but also rarely integrated. For example, when it comes to social insurance, we often think of capital support and capital security, and usually explore such issues as the proportion of individual and enterprise contributions, individual benefits, capital preservation and appreciation as well as capital supervision. These problems are certainly very important, as they are the basis of the development of social security. However, mere solution of the funding problem cannot ensure good solution of the social security problem, nor can it necessarily bring welfare to the people. Because, for the demanders of service guarantee, no amount of insurance money alone with the absence of material and service assurance can help solve their daily life problems, which instead will lead to the decrease of marginal utility of funds guarantee at the same time. Likewise, while talking about social assistance provided to sufferers of earthquake, tsunami, nuclear radiation and other disasters, we tend to think of providing assistance in food, daily necessities and other materials, but may neglect social service programs such as psychological counseling, rehabilitation training, and hospice care. Therefore, the universal integration of social welfare system necessarily includes the integration of social welfare provision. To clarify the forms, programs and contents of the supply of various social welfare, and to carry out combined supply for various social welfare programs, is conducive to the mutual support of various provision types, the formation of the organic integration of the supply of funds, materials and services, and the promotion of the coordinated development of the three provision methods.

8.1.2.3

Integration of Various Social Institutions

Institutional Economics regards institutions as the key to economic performance and holds that a good institution can effectively reduce transaction costs. In the field of social welfare, institutional construction has always been the focus of people’s attention. Some scholars even equate the universal integration of social welfare system with the universal coverage and organic integration of welfare institutions. Social welfare institutions can generally be divided into six aspects: employment, life, health, education, housing and public welfare. Accordingly, the universal integration of social welfare system includes the universal integration among different parts inside the six institutions as well as among the six institutions. Since the reform and opening-up, the CPC and government have continuously strengthened the construction of the social welfare system, making efforts to expand the coverage and improve the integration of the system. Especially during the national “Two Sessions” held in 2011, unprecedented attention was drawn to the improvement of the people’s well-being with the social welfare system as the core and unanimous consensus was reached in terms of strengthening construction and improving the

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universality and integration of the social welfare system. In this case, the universal integration of social welfare system becomes increasingly important, which mainly includes the following three aspects. First, promote the integration between urban and rural areas. Urban -rural dual structure is a basic feature of China’s social welfare system and differences between urban and rural social welfare systems have existed ever since the founding of the PRC. For example, huge differences in treatment exist between the basic old-age insurance for urban enterprise employees and the piloting new rural social endowment insurance system and the social endowment insurance for urban residents. In some places, the rate of compensation under the medical insurance for urban residents is much higher than that under the new rural cooperative medical scheme. Governments at all levels have invested much in job training, employment assistance and unemployment insurance for urban residents, but little in job security for farmers and rural migrant workers. The provision of food, environment, disease prevention and control benefits in rural areas is much lower than that in urban areas. All these examples show that efforts must be made to explore the urban–rural integration of social welfare system. For some systems, such as public health, compulsory education, social assistance, work-related injury insurance, disease prevention and control, public security and other welfare systems, the boundaries between urban and rural areas can be broken directly to ensure unitary provision and implementation.11 For the pension and medical care systems for rural and non-working urban residents, basic integration can be carried out by breaking the boundary between urban and rural areas, allowing differentiated payment and treatment, thus providing a basis for system integration.12 Also, through the urban–rural integration, equal basic insurance benefits and differentiated personal accounts for old-age insurance can be set up to gradually bridge the gap of social welfare income between rural and non-working urban residents. Secondly, promote regional integration. The provision of social welfare is restricted by certain economic conditions. Due to imbalanced regional economic development, there is relatively significant difference in social welfare among different regions, which has become an obstacle to social mobility and social harmony. In some cities, the governments take advantage of the relatively developed economy to expand the scope of compulsory education, among which some have included high school education, and others have included pre-school education into compulsory education.13 However, some economically underdeveloped areas 11

For example, unified minimum living security line standards was implemented in all districts of Suzhou in Jiangsu Province in 2011. 12 For example, in Hangzhou, Zhejiang Province, a convertible basic medical insurance system for rural and non-working urban residents was implemented since 2009, during which two grades of insurance and premium was provided for participants to choose from. Xiamen and Kunshan in Suzhou City directly implemented the medical insurance system for rural and non-working urban residents, with all urban residents and farmers included. 13 For example, Ningbo in Zhejiang Province has extended compulsory education to senior secondary education, while the Xiang’an District of Xiamen in Fujian Province is piloting the inclusion of preschool education in compulsory education.

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are with poor conditions of funding, teachers, school buildings and other aspects of compulsory education, not to speak of including pre-school education and high school education into compulsory education. For example, according to the 2009 Statistical Announcement on the Implementation of National Education Funding, the per student education expenditure of ordinary primary school students in Shanghai in 2009 was 14,792.68 yuan, ranking first in China, while that in Henan province was 1,949 yuan, displaying a difference of 7.59 times. In the same year, the per student education budget of ordinary middle schools in Shanghai was 18,224.25 yuan, ranking first in China, while that of Guizhou was only 2,698.18 yuan, with a gap of 6.75 times. In 2009, the per student budget of an ordinary high school in Shanghai still ranked first, reaching 16,853.72 yuan, while that of Hubei Province was only 2,192.67 yuan, with a difference of 7.69 times.14 Regional differences are very significant. Therefore, it is necessary to strengthen the integrated construction of the social welfare system and gradually narrow the gap of welfare benefits between different regions, so that the provision of social welfare and the allocation of social welfare programs can enhance the coordinated development among different regions. Finally, the strata coordination of social welfare system. The urban–rural and interregional integration of the social welfare system is for the purpose of coordination and harmonious coexistence of different social strata. At present, the social welfare benefits of civil servants, government employees, enterprise employees, urban residents and farmers have a significant gap, which has become an important factor to solidify social strata and hinder the harmonious development of society. For example, employees of government bodies and public institutions enjoy pensions amounting 3 times15 that of enterprise employee with similar educational background, length of employment, professional title and length of retirement, and dozens or nearly hundred times that of rural and non-working urban residents. Therefore, it is a must to speed up the integration of basic life, old-age insurance and medical and public welfare system for rural and non-working urban residents, establish a welfare system of class coordination, implement the welfare construction concept of fiscal priority incline to the weak, so as to narrow the difference of social welfare treatment within the same class and the income gap between different classes, thus enabling the implementation of the social welfare system as a lubricant to enhance social solidarity and narrow the gap between the rich and the poor.

8.1.2.4

Integration of Supervision Agencies

Supervision is a part of management. The universal integration of social welfare system requires the universal integration of supervision agencies.

14

Source: 2009 Statistical Announcement on the Implementation of National Education Funding, Education of China, December 7, 2010. 15 CF. Huge gap exists in pensions of retirees from enterprises and Party and government organs and public institutions, People’s Daily, Dec. 18, 2006.

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First, it is a must to strengthen the internal integration of government agencies. As the critical subjects of benefits provision, the various government sectors have established their own monitoring bodies to ensure the efficient provision for social benefits. For example, the Ministry of Civil Affairs and the Ministry of Health have respectively set up the Discipline Inspection Team and Supervision Bureau and Bureau of Quality and Technical Supervision to supervise food safety environmental safety and medical services respectively. The establishment and operation of these supervisory bodies can guarantee the efficient operation of welfare provision inside these entities. However, the fragmentation of social welfare management institutions naturally leads to the fragmentation of supervision institutions, which may damage the capacity to deliver welfare benefits involving many sectors. Therefore, it is necessary to strengthen the integration of supervision agencies among various departments and improve the work efficiency of social welfare supervision agencies. Next, it is necessary to strengthen the integration of various supervision agencies. As the main subject of benefits provision, the government has set up internal supervision departments. In addition, businesses, social organizations and people are also subjects of benefits provision and need to be monitored. Some welfare programs involve multiple subjects of benefits provision, which, in turn, should have their own supervision agencies. For example, the health and welfare system involves the supervision agencies of the State Administration of Civil Service, the Ministry of Human Resources and Social Security, and the Ministry of Health and the Ministry of Civil Affairs, etc., which are responsible for the supervision of medical insurance for civil servants, medical insurance for employees, medical security for farmers and medical security for the poor respectively. In addition, some organizations supporting the development of charities also provide benefits for the public. They may have set up supervision bodies, the failure of integration of which may give rise to the Jocie Kok Event one after another. Therefore, it is a must to strengthen supervision cooperation and integration. Finally, it is necessary to integrate different supervisory methods. Current supervision mainly depends on formal institutions and organizations. For example, the relevant departments often take financial auditing, supervision over the use of materials, supervision over the supply of services and other methods to supervise benefits provision and the implementation of welfare programs at the provincial, municipal and county (district) level. Meanwhile, enterprises and social organizations have also creatively formed their own ways to supervise welfare funds in the process of benefits provision. For example, some foundations deposit all funds raised into the exclusive account of the Red Cross Society of China and the latter shall be responsible for monitoring, auditing and publicizing the funds and their use, to avoid direct contact or management of such funds themselves.16 Besides, the general public can also take advantage of the internet and other ways to monitor the welfare funds effectively.

16

CF. Ma [9].

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8.2 The Index of the Universally Integrated Social Welfare System In view of the current situation of China, the establishment of the social welfare system should be based on universal integration, without which the benefits provision and welfare demand will tend to be stratified and privileged, thus widening the gap of social welfare and running counter to the nature of justice pursued by social benefits.

8.2.1 Indicator Construction Indicator construction is the key link to measure and evaluate the universal integration of social welfare system. In order to analyze and evaluate the universal integration of social welfare system, quantitative description and analysis can be carried out in addition to qualitative description. In quantitative analysis, a number of operational indicators can be established to measure the construction of a country’s social welfare system and evaluate the level and development trend of the general integration of the social welfare system.

8.2.1.1

Connotation of Indicator Construction

The construction indicator of the universal integration of social welfare system is a measure of provision and coverage, distribution and reception of social welfare programs in a country or region. With the aid of a set of independent and interrelated indicator systems, it measures the country or region on the construction of social welfare system, judges the coverage and integration degree of the system and measures the extent to which the people enjoy the benefits, so as to accurately reveal the national or regional overall development of social welfare. The indicator construction of social welfare system integration does not focus on the evaluation of the past construction practice, but is dedicated to the improvement of the people’s well-being in terms of employment, social security, education, science and technology, culture, health and other relevant aspects. Therefore, the indicator system is put forward and measured with the purpose of improving people’s livelihood, enhancing people’s well-being, reduce social contradictions and conflicts, and promote social harmony. It pays more attention to the diversity, comprehensiveness, universality and sustainability of social welfare programs and strives to propel sharing of the development fruits among the people. The indicator construction of a universally integrated social welfare system is not a simple merge or combination. It involves the integration between the urban and rural areas, among different regions and strata, among social welfare administrations, inside different types of social welfare systems and among social welfare provision types, as well as the integration of social welfare implementation and social welfare

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supervision, etc. Applying indicators to analyze the universal integration will help us to conduct a more intuitive research on this matter, reduce the fragmentation of the system, and promote the construction of the system. Therefore, the indicator construction is to promote the fair development of social welfare system. As a secondary distribution of national income, social welfare aims to control the income gap among regions, between urban and rural areas and among different social strata within a reasonable range, so as to continuously promote the fair development of society on the basis of improving people’s welfare. Therefore, the indicator construction not only focuses on the universality of social welfare programs, the comprehensiveness of subjects covered by social welfare programs and the universality of social welfare programs, but also pays attention to the diversity of subjects of benefits provision and the integration and fairness of social welfare programs. That is to say, indicators of a universally integrated social welfare system focus on the improvement of the people’s well-being and the establishment of a more just and reasonable social order.

8.2.1.2

Basis of Indicator Construction

Indicator construction of a universally integrated social welfare system has enhanced the scientificity, fairness and sustainability of social benefits provision and constitutes the internal requirement of carrying out the Scientific Outlook on Development and building a harmonious socialist society in China. Since the reform and opening-up, with the establishment of the socialist market economy system, China has witnessed a rapid economic growth. By the end of the twentieth century, the GDP in China had quadrupled over 1978, and in 2010 it had reached 39.8 trillion yuan, more than doubling the 18.5 trillion yuan of 2005, making China the second largest economy in the world. Meanwhile, with GDP per capita rising from $1,730 in 2005 to $5,400 in 2011, China has become a middle-income country. This provides a strong economic foundation for the construction of a universally integrated social welfare system. The rapid development of Chinese economy has also brought about profound social changes, which have promoted the transformation of the whole society from an agricultural society to an industrial society and from a rural society to an urban society. As a result, the wealth gap between urban and rural areas and that among different regions and social strata has been increasingly widened, and the social differentiation has become increasingly obvious. The specialized and fragmented social welfare system originally set up for specific social strata has become increasingly inadequate to meet the needs of social development, which is not only unable to solve the problems of social poverty, income gap and social inequality, but has also become an important incentive to widen the gap between the rich and the poor. Therefore, appropriate indicators should be selected to evaluate the social welfare system, so as to promote the universal integration of the social welfare system. Since the twenty-first century, the construction of social welfare has become the core issue of improving the people’s well-being. The CPC and the government have attached great importance to this and have conducted repeated exploration which

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has continuously improved the system. In the report at the 16th National Congress of the CPC delivered in 2002, then-President Jiang Zemin proposed that we need to concentrate on building a well-off society of a higher standard in an all-round way to the benefit of over one billion people in this period and we will further develop the economy, improve democracy, advance science and education, enrich culture, foster social harmony and upgrade the texture of life for the people. The requirement for further development of science and education, culture, social harmony and texture of life is closely related to the construction of social welfare. During the 20th session of the Political Bureau of the CPC Central Committee in February 2005, then President Hu Jintao proposed to “strengthen theoretical research on major issues concerning the construction of a harmonious socialist society” and, in particular “deepen the regularity understanding of the construction of a harmonious socialist society”. On this basis, the 6th Plenary Session of the 6th Central Committee focused on the important issues of building a harmonious socialist society. The 17th National Congress of CPC proposed to “accelerate social development with the focus on improving the people’s well-being”. The 18th National Congress of CPC combined the improvement of the people’s well-being with social management and development, and put forward the need to “propose social development while improving the people’s well-being and innovating management” and expounded comprehensively tasks and objectives of social management and development including social welfare, which provided a basis for indicator construction of the universally integrated social welfare system. The indicator construction of the universally integrated social welfare system conforms to the reality of construction of a harmonious society in the country. To construct a harmonious society, it is necessary, to a great extent, to solve problems related to the most immediate concern and interests of the people, ease social contradictions and ensure social fairness and justice. However, some social welfare programs involving the interests of the masses are generally not integrated enough, among which some merely focus on urban areas while ignoring the rural population. Take work-related injury insurances for example. It is only for employees of enterprises and institutions with urban household registrations, and does not cover those with rural household registrations or employees in government organs. Another example is public security welfare system concerning drinking water, food and environment, which has basically been established in cities while not set up universally in the countryside. Some social welfare programs do not achieve full coverage of different classes. For example, the Regulations on Unemployment Insurance is only applicable to employees of urban enterprises, especially those in state-owned or collective enterprises, and does not cover civil servants, rural migrant workers and those in flexible employment. Some social welfare is not comprehensive enough in content, only involving a very limited area and scope. Some social welfare programs are extremely fragmented. For example, the endowment insurance system includes the new rural social endowment insurance, social endowment insurance for urban residents, retirement system and pension security for employees of Party and government organs and public institutions, and social endowment insurance for enterprise employees and other institutions. The system of medical insurance includes the new rural cooperative medical scheme, resident medical insurance, medical insurance for

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employees and free medical service and other types. The fragmented social insurance system is not conducive to social stability, social mobility and social justice, nor is it conducive to improving the efficiency of social security funds and the long-term construction of the social security system.17 Some scholars believe that the nonintegration of the social welfare system is not only reflected in the system itself, but also in the management institutions, the covered groups and the allocation and use of funds.18 All this requires us to establish indicators of the universally integrated social welfare system.

8.2.2 Indicator Composition Measurement and evaluation of a universally integrated social welfare system with indicators can enable us to study the structure relations and status quo of our welfare system more intuitively, put forward specific policy recommendations, reduce problems such as lack of impartiality and sustainability caused by narrow coverage and extreme fragmentation and so on, and promote the construction and development of the system. Indicators of a universal integration of social welfare system are systematic and structural in feature, reflecting the distinct hierarchical characteristics of the social welfare system. From the perspective of universal integration, indicators include two types: quantity indicator and quality indicator. The former reflects the coverage and cover range of the system and can be expressed in absolute numbers, while the latter reflects the level and fairness of system construction, which is often expressed in relative numbers. From the perspective of degree, indicators of social welfare system construction can be divided into three systems, namely, primary indicator, secondary indicator and tertiary indicator.

8.2.2.1

Primary Indicator

From the perspective of universal integration, the whole social welfare system can be divided into six sectors of employment, life, health, education, housing and public welfare, which together constitute the main content and primary indicators of the social welfare system. From the perspective of provision channels, social welfare mainly involves social insurance, social assistance, public welfare, social services and social mutual assistance. These six sectors are taken as primary indicators of the social welfare system for the following reasons.

17 18

Zheng [10]. Mi [11].

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First, what we mean by social welfare is not welfare in the civil sense. The social welfare of civil affairs departments mainly focuses on providing basic income and service to vulnerable groups such as lonely elderly, children, the disabled and entitled groups, so as to meet the basic needs of these groups. While the social welfare mentioned here is targeted at all social members. Such benefits cover not only assistance for daily living, but also for employment, pension, medical care, education, housing, subsistence allowance and other public welfare programs. Second, the social welfare mentioned here means general benefits instead of special ones. It is not a high-level welfare, but a welfare that aims to meet the basic needs of the people, provide complete programs, and involve all aspects of people’s basic life. Through the construction of social welfare, we aim at effective solution of people’s basic living needs and continuous improvement of people’s living standard as the economy develops. Third, among the six sectors included in social benefits, employment is crucial to the people’s well-being, and constitutes their most basic rights and interests. All governments give top priority to employment in social benefits provision regarding it as the key to solve the problem of the people’s well-being, and try the uttermost to implement policies to reduce unemployment. At present, China’s social welfare construction shall aim at solving the people’s basic life, and shall after satisfying the needs of employment and basic life, pay attention to basic medical needs, making clear the role of disease prevention in the public health security system, and shall strive to improve the public health by establishing the medical insurance system and perfecting the public health system, ensuring that “all the people enjoy their rights to medical care”. In the whole welfare system, education plays a fundamental role in improving the quality of human life and enhancing our ability to survive and develop in the society. All countries in the world take education as a basic national policy and a basic welfare program, define the scope of compulsory education and prescribe the government responsibility for education input. Therefore, education is included in the primary indicator. Meanwhile, housing, especially basic housing needs, is also a kind of welfare program, as all the people, regardless of their income, education, identity, status etc., shall enjoy the rights to habitation. In addition, public welfare, based on public facilities, public security and public services, plays an important role in human development and also becomes a basic component in the social welfare system. These six indicators are indispensable aspects of people’s daily life, constitute the basic items of social welfare, and are the primary indicators of the social welfare system.

8.2.2.2

Secondary Indicator

A universally integrated social welfare system requires secondary indicators to interpret each primary indicator. The secondary indicator is the interpretation and explanation, as well as the logical expansion of the primary indicator: it concretes the primary

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indicator into middle-level concepts to form the measurement of the primary ones. Meanwhile, the secondary indicator is also the governing factor and important basis for setting the tertiary indicator. Without the secondary indicator, the primary and the tertiary ones cannot be linked together. For example, as the foundation of people’s well-being and basis of social harmony, employment is an important indicator of a universally integrated social welfare system, as well as a base of other welfare programs. To provide employment benefits, the first step is to provide employment service, and make necessary employment placement for special groups or personnel, so as to ensure reliable employment income for all employees. At the same time, it is necessary to provide unemployment insurance for those unemployed to protect their basic living standard from excessive decline. For this purpose, the primary indicator of employment benefit can be decomposed into four secondary indicators, namely, employment service, employment placement, employment income and unemployment insurance. Health is the most important thing in our life. It is the precondition for people to survive in the society and carry out economic and social activities, without which, nothing can exist and all achievements we have made may vanish. Therefore, health is an extremely important factor in social benefits. When providing health benefits, the first step is to guarantee general public health by giving all people the same public health input. The second is to establish a medical insurance system to maximize the participation of all the people, so that those living in difficulties can receive medical assistance and everyone enjoys health care. At the same time, it is necessary to provide work-related injury insurance for all kinds of accidents occurred during the work period, and provide maternity insurance for women workers, thus guaranteeing their health benefits. Therefore, as a primary indicator, health welfare can be divided into five secondary indicators: public health, medical insurance, medical assistance, work-related injury insurance and maternity insurance. Basic living is the foothold of the whole social welfare system and as a primary indicator it should include the old-age insurance to ensure that all the people enjoy their rights to old-age care. At the same time, the old-age care also involves life care and spiritual comfort. Therefore, the old-age care shall be included in the basic living benefits. From the perspective of universal integration, basic living benefits also include items such as minimum living guarantees and living assistance for needy groups, as well as social benefits to specific groups to ensure that their basic lives are guaranteed. Therefore, basic living benefits include four secondary indicators, namely, endowment insurance, endowment service, minimum living security and social special care. Education is a guarantee for the improvement of personal ability and an important condition for individuals to obtain the right to development. Mincer holds that in the labor market, people with better education can have “higher income, stronger employment stability and more opportunities for advancement”, etc.19 Amartya Sen also regards education as a basic human right. For these reasons, we propose six

19

Mincer [12] 212.

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secondary indicators of education, namely, pre-school education elementary education higher education special education continuing education and vocational education. Among them, the first two are mainly aimed at children and teenagers, higher education and special education are mainly aimed at teenagers, and the last two are mainly aimed at adults in the society. These six indicators constitute a complete educational welfare system. Housing is also an important part of the universally integrated social welfare system. To ensure that all the people enjoy their rights to housing is the basic goal and requirement of housing benefits and an important condition for social harmony and stability. In essence, the problem of housing is about how to let those who cannot afford to buy houses have houses to live in and guide those who can afford to buy commodity houses to buy through the market. For this reason, we define secondary indicators of housing benefits into commercial housing affordable housing and rental housing. Public welfare refers to all kinds of public welfare facilities and related services provided to meet the living needs of social members. Among them, public security is the premise, without which other benefits items may lose their value. Public facilities provided by the government or other organizations for public use and improvement of people’s lives can meet people’s public needs, and thus are indispensable in the public welfare system. In addition, the provision of various public services enhances the well-being of the people. Therefore, public safety, public facilities, and public service constitute secondary indicators of public welfare.

8.2.2.3

Tertiary Indicator

The tertiary indicator is the expansion and refinement of the secondary indicator. It expresses secondary indicators by setting weights or directly assigning values. The primary, secondary and tertiary indicator form a relatively complete social welfare indicator system, which is used to measure the degree of universal integration of the social welfare system. For example, in the field of employment benefits, which tertiary indicators should be used to measure the universality and generalization of the secondary indicator of employment service. The comprehensiveness of employment consultation content, the universality of employment trainees, the comprehensiveness of types of work under employment training, as well as the development and progress of employment recommendation and vocational psychological guidance constitute the tertiary indicators of employment service. The secondary indicator of employment placement includes tertiary indicators of employment placement rates for special groups such as the disabled, military personnel and athlete, while the secondary indicator of unemployment insurance contain two tertiary indicators of participation rate of unemployment insurance and claim rate of unemployment insurance. In terms of basic living, for the four secondary indicators of endowment insurance, endowment services, minimum living security and social special care, there are tertiary indicators of institutional coverage of old-age insurance system, number of

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endowment insurance participants, endowment insurance rate, coverage of pension targets, standardization rate of pension service facilities, minimum living security standard, guaranteed coverage of minimum living security, coverage of special care, standard of special care and more. In the field of health welfare, the secondary indicator of medical insurance can be measured through a number of tertiary indicators like institutional coverage of medical insurance, number of participants, insurance rate, outpatient compensation rate, inpatient deductible, inpatient limit line, per capita outpatient expenses and so on. The secondary indicator of medical assistance can be measured via tertiary indicators such as medical assistance rate, proportion of medical assistance and others. The secondary indicator of public health can be measured with six tertiary indicators, including filing rate of residents’ health records, rate of children health care, health care rate for pregnant and postpartum women, vaccination rate, prevention and control rate of infectious diseases and management rate of severe psychosis. Secondary indicators like work-related injury insurance and maternity insurance and others can also be quantified for a number of tertiary indicators in the measurement. See Table 8.1 for details. For education welfare, the tertiary indicator system can be constructed from the perspective of enrollment (admission) rate and per student education funds. Housing benefits can be measured around the secondary indicator of commodity housing through three tertiary indicators including per capita construction area, per household ownership rate of commercial housing and per household sets of commercial housing. The indicator of affordable housing can be measured by tertiary indicators of number of registered families applying for affordable housing, number of affordable housing available and rate of affordable housing to be occupied. The secondary indicator of rental housing can be measured with tertiary indicators of number of households or people with application of registration, number of households or people to be approved and average rent of public housing. In the field of public welfare, the secondary indicator of public security can be measured by four tertiary indicators of number of criminal offences, criminal crime rate, crime detection rate and rate of increase in emergencies over the previous year.20 Public facilities involve culture, sports, health and other facilities, which pay attention to the coverage rate and availability. Although other indicators such as the number of primary and secondary schools and public toilets are also important aspects of measuring public facilities, they either overlap with educational welfare indicators or fail to accurately reflect the universal integration of public facilities. Therefore, we selected six indicators including coverage of street and town cultural stations, coverage of community health service centers, penetration of community sports venues, penetration of community police stations (stations), ownership rate of public vehicles and transfer rate of public transportation. Through the examples mentioned above, a three-level indicator system of the universally integrated social welfare system is established (see Table 8.1).

20

CF. Wu [13].

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Table 8.1 Composition of tertiary indicators of universally integrated social welfare system Primary indicator

Secondary indicator

Employment benefits Employment service

Employment placement

Basic living benefits

Health benefits

Tertiary indicator Comprehensiveness of employment consultation content, universality of employment trainees, comprehensiveness of types of work under employment training, development and progress of “employment recommendation”, rate of vocational psychological guidance Employment placement rate of the disabled, employment placement rate of military personnel, employment placement rate of athletes

Employment income

Minimum wage

Unemployment insurance

Participation rate of unemployment insurance, claim rate of unemployment insurance

Endowment insurance

Institutional coverage, number of endowment insurance participants, endowment insurance rate

Endowment services

Number of beds per thousand elderly people, standardization rate of pension service facilities, coverage of pension targets

Minimum living security

Minimum living security standard, life assistance rate, minimum living security access rate

Social special care

Coverage of special care, extent of special care, access of special care

Medical insurance

Institutional coverage of medical insurance system, number of medical insurance participants, medical insurance rate, outpatient compensation rate, inpatient deductible, inpatient limit line, per capita outpatient expenses

Medical assistance

Medical assistance rate, proportion of medical assistance

Work-related injury insurance Participation rate of work-related injury insurance, claim rate of work-related injury insurance, balance rate of work-related injury insurance Maternity insurance

Participation rate of maternity insurance, receiving rate of maternity insurance (continued)

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Table 8.1 (continued) Primary indicator

Education benefits

Housing benefits

Public benefits

Secondary indicator

Tertiary indicator

Public health

Filing rate of residents’ health records, rate of children health care, health care rate for pregnant and postpartum women, vaccination rate, prevention and control rate of infectious diseases, management rate of severe psychosis

Pre-school education

Admission rate, per child expense

Elementary education

Enrollment rate, per student expense

Higher education

Enrollment rate, per student expense

Special education

Coverage, per capita expense

Continuing education

Per capita expense

Vocational education

Per capita expense

commodity housing

Per capita construction area, per household ownership rate of commercial housing, per household sets of commercial housing

affordable housing

Number of registered families applying for affordable housing, the number of affordable housing available, rate of affordable housing to be occupied

rental housing

Number of households or people with application of registration, number of households or people to be approved, average rent of public housing

Public security

Number of criminal offences, criminal crime rate, crime detection rate, rate of increase in emergencies over the previous year

Public facility

Coverage of street and town cultural stations, coverage of community health service centers, penetration of community sports venues

Public service

Coverage of street and town cultural stations, coverage of community health service centers, penetration of community sports venues, penetration of community police stations (stations), ownership rate of public vehicles, transfer rate of public transportation

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8.3 The Realization of the Universally Integrated Social Welfare System Universal integration is the internal requirement of the construction of an organic and unified social welfare system and can propel the fairer development of the social welfare system.

8.3.1 Construction Goal As universal integration is the internal requirement of the social welfare system and an effective way to solve the specialization and fragmentation of the social welfare system, it has become the focus of the social welfare system construction in China.

8.3.1.1

Proposal of the Goal

As a social policy, social welfare emphasizes the universal provision of in-kind, money and service benefits aimed at ensuring a certain standard of living and improving the quality of life for all members of the society. This means that the provision and access of social welfare should be universal, while selectivity and particularity should be minimized, and programs for a social welfare item should be integrated and coordinated so that everyone has the right to it. At the same time, the provision of social benefits to the weak shall be prioritized. This is conducive to improving the lives of vulnerable groups and narrowing the income gap among different social strata, thus enhancing social justice, reducing social inequality and promoting harmonious coexistence of different social strata. For example, the Social Insurance Law on Diseases implemented in Germany in 1883 was originally aimed at workers in blast furnaces, mines, railways, salt mining and other industries. At that time, medical insurance benefits in Prussia, Austria and Germany were different. Later, with the unification of Germany, the fragmented medical insurance systems were gradually integrated as stipulated in the revised Social Insurance Law on Diseases. To build a universally integrated social welfare system is a realistic choice for Chinese social welfare. After the reform and opening-up, with the development of the socialist market economy, some social welfare programs have developed from scratch or improved which expanded the coverage of social benefits items and recipients to a great extent. Especially since the 17th National Congress of the CPC, the whole nation have paid more attention to ensuring and improving the people’s wellbeing and have attached greater importance to the social welfare construction. But, it is no denying that there obviously exist some shortcomings in the social welfare system in China: some social welfare programs lack adequate universality, some are extremely fragmented, and some are neither universal nor integrated enough. The

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shortage of welfare provision and lack of universality will certainly bring about many contradictions. If there is no scientific arrangement or rational planning, the welfare system will inevitably deviate from the right direction and subsequently restrict the sustainable development of China’s social welfare undertakings. Therefore, it is inevitable to build a universally integrated social welfare system. Building a universally integrated social welfare system in China is a rational choice after reflecting on foreign social welfare practice. After the nineteenth century, some Western countries entered the industrial society one after another. They established various modern social welfare systems with complete structure and projects as well as generous and shared-by-all benefits, covering everything from cradle to grave. However, faced with the contradiction between demand and the cyclical fluctuation of economic development, the opposition between the economic attribute and political value of welfare emerged. Some countries continuously increased the provision of social welfare, entailing huge payment crisis to the public finance, while in some other countries strikes, demonstrations and even egime change occurred due to cutting in welfare spending. We should take warning by their failure and shall not simply transplant foreign practice, or we will fall into the “welfare trap”.

8.3.1.2

Construction Content

Meeting the basic welfare needs of all people is the starting point of the universal integration of the social welfare system, which attempts to realize the goal of “ensuring that all the people enjoy their rights to education, their rights to assistance and their rights to security” through social benefits programs. By “ensuring that all the people enjoy their rights to education”, it means that the needs of education benefits should be provided to ensure that the people can have access to education universally. Around this goal, we should rationally adjust the fixed duration of compulsory education, sort out the inter-relation between pre-school education, elementary education, higher education and special education, explore the relation between vocational education and continuing education, scientifically explore the ratio of education expenses in the fiscal expenditure and measure the proportion of expenditures of various educational programs in the overall education funding to form a scientific and reasonable structure of expenditure. Therefore, we should integrate the existing educational resources to invest more in and effectively reverse the dual system of urban–rural and inter-regional allocation of educational resources. By “ensuring that all the people enjoy their rights to employment”, it means that we should try the uttermost to deliver better jobs, increase individual income and make sure that the people share the fruits of development. Therefore, it is necessary to seek the dynamic relationship between the income growth of labors and GDP, public finance growth and CPI, so that labors can share the fruits of economic development. At the same time, It is also necessary to coordinate people’s incomes and rationalize the income gap among different industries and regions, thus ensuring that “individual income increases in step with economic development and labor productivity growth

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synchronizes with improvement in labor productivity to increase the proportion of individual income in national income distribution and the proportion of work remuneration in primary distribution”.21 We should clarify the baseline of income gap and strive to narrow the income gap among industries, regions and strata, and universally protect the lawful rights and interests of labors, incorporate every employee in workrelated injury insurance, unemployment insurance, maternity insurance and related occupational pension to effectively narrow the income gap caused by inadequate universality of the insurance system. By “ensuring that all the people enjoy their rights to medical care”, it means to meet the health needs and protect the right to life and health of the people. We should improve health of the people through universally integrating medical insurance systems, public health services and medical and health management systems, changing the fragmentation of the current medical insurance systems and health management systems as well as the inadequate universality of public health services. First, we need to integrate existing programs such as free medical service, medical insurance for employees, medical insurance for residents, the new rural cooperative medical scheme and the medical insurance for rural migrant workers to reduce the treatment gap between medical insurance programs. Secondly, we should increase public health input in rural areas, especially in remote areas to coordinate the healthcare development between urban and rural areas, improve health monitoring, and do a good job in disease prevention and control. Third, we should intensify the reform of the medical and health management system. On the basis of extensive investigation and research, we should reasonably allocate the responsibilities between central hospitals and community hospitals, and propel the implementation of community medical doctors as gate-keepers and dual referral by strengthening the construction of community hospitals, so as to eradicate the problem of “difficult and expensive medical care service”, and improve health benefits of the people. By “ensuring that all the people enjoy their rights to old-age care”, we should make efforts to meet people’s needs for old-age care, so that the elderly can live a decent and dignified life and share the fruits of economic and social development. To this end, it is necessary to set up systems related to endowment insurance, pension service and life assistance for the poor elderly, and form an old-age service system with home-based care at the core combining social care, in order to guarantee the rights and interests of all the elderly. At the same time, it is inevitable to narrow down the inter-strata welfare gap among employees of Party and government bodies and public institutions, enterprise employees, urban residents and farmers, solve the problem of inadequate integration, and investigate the various types of retirement pension systems, so as to form an endowment insurance system with basic integration and more reasonable treatment differences. In addition, it is a must to promote the integration of endowment services on the basis of enhancing the universal construction of old-age services to include every household in the coverage of endowment service, and enhance the integration of endowment service items including elderly living, old-age care, rehabilitation therapy and elderly care, so that every member 21

Hu [14].

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of the society of all ranks and classes can enjoy convenient basic old-age insurance service and ensure that the elderly people will be properly cared for. By “ensuring that all the people enjoy their rights to housing”, it is necessary to meet the needs of rural and urban residents for basic housing benefits, and ensure that they enjoy basic residency rights. To this end, we should not only strengthen the universal construction of public housing, so that migrant workers in cities can enjoy equal housing treatment; strive to integrate the current housing security systems, such as low rent housing, public housing, government-subsidized commodity housing, affordable housing, relocation housing, price-limited housing, rural housing assistance, and other various types, to form a generally integrated housing security system; and seek for practicable solution to housing problems of the rural and urban residents and let all families incapable of purchasing commodity housing rent or buy security housing. In addition, it is necessary to prescribe limitations clearly concerning the floorage, property ownership, listed circulation and other aspects of security housing purchased. At the same time, we should guide those with purchasing power to buy commercial housing, so as to guarantee the circulation of affordable housing among the middle and low-income groups, effectively solving the problem of insufficient public housing construction and management. What’s more, it is important to expand the coverage of housing funds to cover all employees of enterprises and people of flexible employment, and thus enhance the universal coverage of the housing provident fund system. By “ensuring that all the weak enjoy their rights to be assisted”, it means to meet effectively the basic living of urban and rural vulnerable groups through the construction of basic living security for rural and urban residents. To this end, it is necessary to strengthen the universal construction of the minimum living allowance program, seek for scientific relations between urban and rural residents’ per capita net income, basic living expenses, and CPI and other variables, and optimize and appropriately raise the standard of minimum living security. We should also strengthen the integration of the minimum living allowance program, gradually integrate the minimum living allowance program, supporting systems for five guarantee households and medical aid systems set for urban residents, farmers and other special groups like rural five guarantee households; and explore the relationship between the minimum living allowance line, the minimum wage system and unemployment insurance, and form a universally integrated minimum living allowance system. The universally integrated social welfare system inherently contains public benefits including public security, public facilities and public services, among which public security is the fundamental guarantee to achieve the construction goal of the social welfare system. System security is indispensable to people’ rights to education, employment, medical and old-age care, housing and assistance. Food and drug safety, natural environment safety, social safety and public transportation safety are particularly important, as they are related to the survival and development of everyone. Therefore, it is a must to change the situation of inadequate integration exiting in the entire security benefits, promote the integration of food, drugs and others, and realize urban–rural universal integration of safety standardization and supervision about food and drugs, urban–rural integration of natural environmental security and

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social security as well as urban–rural integration of public transport safety, so as to improve the safety and welfare level of the whole society.

8.3.2 Conditions for Realizing Goal of Universally Integrated Social Welfare System After 40 years of social welfare construction, we have basically set up a social welfare system covering social insurance, social relief, social assistance, social special care, social services and public benefits and others, which to some extent, helps to solve the problem of public basic welfare, improve the social welfare level of the people, and create favorable conditions for economic and social sustainable development. But admittedly, the overall level of our social welfare construction is low, some social welfare programs are not universal enough, and some are too fragmented. All these have resulted in huge welfare gaps among different strata and groups, and some programs even worsen the gap in social income. It is necessary to create conditions proactively and build a universally integrated social welfare system to better protect the people’s well-being and benefits.

8.3.2.1

Economic Conditions

To build a universally integrated social welfare system, it is necessary to integrate current social benefits programs, organizations, and implementation and guarantee mechanisms on the basis of enhanced universality, and form a social welfare system that is more scientific and sustainable, so as to better improve people’s well-being, provide Chinese experience and contribute to the Chinese model for the construction and development of human social welfare. Economy is the foundation of the universal integration of the endowment insurance system. For example, when the United States established the “State Bureaucratic Discretion Social Welfare Program” in 1935, its GDP was $73.1 billion and per capita GDP was $575, which at constant prices of 1992, equals a GDP of $698.4 billion, and per capita GDP of merely $5,488.22 From this perspective, China’s economic development has maintained a good momentum since the reform and opening-up. In 2010, China’s economy was already the second largest in the world, growing at an average annual rate of more than 11% in constant prices during the 11th Five-year Plan period. In 2011, China’s GDP per capita reached $5,400, making it into the middle-income group country. Government revenue rose to 10.374 trillion yuan in 2010.23 From the perspective of industrial structure, the primary industry gradually declined to 10.2%, the secondary industry increased to 46.8%, and the tertiary industry rapidly developed 22 23

Quoted from Zheng and Qi [15]. Wen [16].

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181

to 43.0%.24 In other words, after 40 years of development, China has transformed from a backward agricultural country to a modern industrial country, from a poor country with a low per capita income to a middle-income country, and from an agricultural society in which rural population accounted for 80% to a modern industrial society in which urban population exceeds 50%. Economic development provides conditions for the construction and improvement of the social welfare system and promotes the popularization of social welfare programs and the further integration of the social welfare system.

8.3.2.2

Political Conditions

The universal integration of the social welfare system has always been attached great importance to by the CPC and government. As early as 2002, Jiang Zemin warned all comrades in the Party that the current well-off level in China was still “incomplete” “developed unevenly” and “at a low level”,. The 3rd Plenary Session of the 16th Central Committee of the CPC pointed out clearly the need for the coordinated planning for urban and rural development, regional development, and economic and social development, which provided political guarantee for the establishment of a universally integrated social welfare system. In the report of the 17th National Congress of the CPC in 2007, then President Hu Jintao pointed out that it is a must to “enhance social development and guarantee and improve people’s living to promote social fairness and justice and make efforts to ensure that all the people enjoy their rights to education, employment, medical and old-age care, and housing and promote the construction of a harmonious society”. On November 8, 2012, then President Hu pointed out that “we should seek more benefits for the people’s well-being, and address more concerns about the people’s livelihood, and solve the most direct and realistic interests of the people. Make progress to ensure that all people enjoy their rights of education, employment, medical and old-age care, and housing, and work hard to ensure a better life for the people”.25 This provides a good political foundation for the construction of a universally integrated social welfare system.

8.3.2.3

Social Foundation

The driving force for the universal integration of the social welfare system comes from social life and people’s expectation for fairer social welfare. The universal integration of the social welfare system is closely related to the process of urbanization, change of labor force structure and other factors. When a country is faced with multiple changes, such as transformation from an agricultural society to an industrial society, accelerating urbanization process, rising proportion of urban population in total population, and grwing elderly population, it will increasingly need universal coverage 24 25

National Bureau of Statistics of China [17]. Hu [14].

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and organic integration of the social welfare system. Take the American endowment insurance system for example. When the United States unified the endowment insurance system in 1935, the urbanization rate was about 55%, and the population aged over 65 was less than 7%.26 In China, the urbanization rate rose from 49.9% in 2010 to 51.27% in 2011. In addition, from 1982 to the end of 2011, the proportion of China’s rural population dropped from 78.87% to 48.73%, the proportion of the population employed in the primary industry dropped from 68.10% to below 35%, and the proportion of the population aged over 65 rose from 4.91% in 1982 to 9.1%.27 To adapt to these changes in the Chinese society, we should integrate the current social welfare system.

8.3.3 Ways to Achieve Goal of Universally Integrated Social Welfare System In order to build a universally integrated social welfare system at a moderate level with a reasonable structure, make the whole social welfare universally shared, and promote the sustainable development of the social welfare system, we need to focus on the following three aspects.

8.3.3.1

Explore Scientific Basis

To build a universally integrated social welfare system, we need to combine theory with practice and unify logic with the history to delve into problems restricting the construction and development of the social welfare system. It is not only necessary to reveal scientifically the relation between the social benefits with GDP and fiscal expenditure, but also to explore the proportion of expenditure of social welfare programs in the entire social welfare system and deal with properly the expenditure structure and expenditure of public finance among different internal components within each social welfare system. Take education benefits for example. To build a universally integrated education benefits system inherently requires us to make reasonable decision on the structure and proportion of education benefits programs in public finance expenditure and GDP, and make scientific planning of the expenditure structure and proportion of components within education benefits programs, including compulsory education, non-compulsory education, pre-school education, elementary education, higher education and special education as well as that between urban education and rural education, in order to make the education welfare system more perfect, the structure of education benefits more reasonable, and the education benefits provision much fairer. The same requirement and measures should be 26

Quoted from Zheng and Qi [15]. Complied in accordance with the report “The national economy continued to maintain steady and rapid development in 2011” and China Statistical Yearbook 2011 and other material.

27

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183

applicable for other social benefits programs as well, so as to form a universally integrated social welfare system with moderate fiscal input, moderate level and strong sustainability. It is noticeable that we reveal the scientific foundation of the universally integrated social welfare system not for simple denying of the current relatively small proportion of social benefits expenditure in the entire GDP, nor simply for increasing fiscal spending on social welfare, or put forward sloganeering of keeping proportions of full-caliber social benefits expenditure in GDP no less than 7%, 15% and 25% respectively in a certain year (e.g. 2012, 2020, 2049).28 Instead, our focus is on revealing the structural relationship between social welfare programs and public finance. As early as 2008, China’s total fiscal expenditure on education, science and technology, culture, sports and media, social security and employment, medical and health care, social affairs and other fields was about 2.68 trillion yuan, accounting for 8.9% of the year’s GDP,29 already exceeding the target of 7%. From this perspective, we need to explore relationships between variables and try to put our conclusions on a solid scientific basis.

8.3.3.2

Strengthen Institutional Construction

The provision level of social welfare defines the level of demand for social benefits. After solving the structural and proportional relationship between social welfare expenditure and GDP and public finance, it is naturally necessary to strengthen the construction and integration of social welfare systems, which play an important role in measuring the degree of universal integration of the social welfare system. First, we should improve the social welfare system, solve the inadequate universality of benefits provision, and at the same time realize universal integration of social welfare programs especially those provided by various provision agencies for the same type of groups.30 Second, we should realize the universal integration of social welfare institutions. In addition to increasing the benefits provision and increasing the universality, we should actively explore the way to integrate welfare institutions of the same social welfare item, and effectively solve the problem of fragmentation. Third, we should realize the integration of subjects of benefits provision like the government, market (businesses), charities (social groups), households, and individuals, and rationally determine the responsibility relationship and responsibility structure among them.

28

Zheng [18]. National Bureau of Statistics: China Statistical Yearbook 2009, http://www.stats.gov.cn/tjsj/ndsj/. 30 For example, there are many other social welfare programs introduced for low-income groups in addition to the monthly low security payment, such as fee waiver in water, electricity, gas, public transportation, shopping, school, and outpatient registration, among which some are even difficult to be counted accurately. 29

184

8.3.3.3

8 The Construction Goals of the Universally Integrated …

Conduct Mechanism Building

To achieve the construction goal of the universally integrated social welfare system, it is also necessary to strengthen the mechanism construction. On the one hand, we should strengthen the construction of the regulatory mechanism. It is necessary to strive to make rigid social welfare “equipped with flexible self-regulation capabilities”31 and achieve combination of firmness and flexibility in the regulatory mechanism to relieve contradictions or problems inherent in the rigid adjustment of social welfare through various channels, such as clarifying various social welfare responsibilities, demarcating the baseline, integrating the foundation, and encouraging innovation. On the other hand, we should solve the problem of “excessive universality” for some welfare programs and “insufficient universality” for some others in benefits provision, and establish a balance mechanism of supply and demand. In addition, we should make efforts to explore issues such as “insufficient integration” or “non-universality and non-integration” of some social welfare programs, and seek for an integration mechanism for social benefits. Meanwhile, we should strengthen the establishment of supervision mechanisms. The realization of the universally integrated social welfare system is a game process of various interest groups. Existing interest groups always want to maintain the welfare advantage of their own stratum, and will not proactively reduce their own benefits. This requires the government and all sectors of society to strengthen supervision of social welfare system construction through political, economic, legal and social means, improve social benefits programs, enrich social welfare types, and adjust social welfare treatments to ensure the smooth realization of the universally integrated social welfare system.

References 1. Wang, Z., He, P.: Establish a Social Security System Covering Rural and Non-Working Urban Residents. China Labor and Social Security Publishing House (2010) 2. Zhang, D.: On the urban–rural integration and urban–rural unification of social security. The World of Survey and Research, No. 2 (2004) 3. Liu, L.: Research on the Theory and Policy of the Urban–Rural Connection of Chinese Social Security System. Economic Science Press (2008) 4. Wang, Y., Zhang, S.: Suggestions on balancing the development of urban and rural social security system. China Econ. Trade Herald 1 (2008) 5. Wang, S.: Construction of appropriately universal-type social welfare system in China. J. Peking Univ. 3 (2009) 6. Bi, T.: On universally integrated social welfare system. Explor. Free Views 1 (2011) 7. Yu, I.: Department of Human Life Science in Jissen Women’s University, Department of Medicine in Juntendo University: Public health and health administration in Japan, Speech delivered in School of International and Public Affairs in Xiamen University on 8 Mar 2011 8. Zhou, H.: Illustrations of Social Security Institutions in 50 Countries (Regions). China Labor and Life Security Publishing House (2011) 31

Zheng [18].

References

185

9. Ma, X.: One foundation of Jet Lee: new sample of charity operation. CBN Daily, 23 May 2008 10. Zheng, B.: “On harm of China’s Fragmented Social Security System” and exploration of “Fragmentation Impulse”. Gansu Social Sci. 3 (2009) 11. Mi, H., et al.: Rural security, beware of fragmentation. China Social Secur. 4 (2008) 12. Mincer, J.: Education and Unemployment: Studies in Human Capital. Cambridge (1993) 13. Wu, D.: Need to establish indication system of social public security. Explor. Free Views 5 (1996) 14. Hu, J.: Firmly march on the path of socialism with Chinese characteristics and strive to complete the building of a moderately prosperous society in all respects. People’s Daily, 18 Nov 2012 15. Zheng, B., Qi, C.: The social security system has come to a crossroads: unity or fragmentation. China Secur. J., 22 Jan 2009 16. Wen, J.: Report on the work of the government at the 4th session of the 11th National People’s Congress in China. People’s Daily, 15 Mar 2011 17. National Bureau of Statistics of China: Statistical Bulletin of the People’s Republic of China on National Economic and Social Development. People’s Daily, 1 Mar 2011 18. Zheng, G.: 30 Years of Social Security in China, p. 59. People’s Publishing House (2008)

Chapter 9

The Universal Integration of Retirement Pension System

China’s retirement pension system mainly includes the retirement pension system for employees of government organs and public institutions, basic old-age insurance for employees of urban enterprises, old-age social insurance for urban residents, new rural social old-age insurance, rural five-guarantee support and old-age care services. It is also supplemented by the subsistence allowance system for urban and rural residents, enterprise annuities, old-age allowance, commercial pension insurance, charities and personal savings pension. The retirement pension system provides basic income and services for the elderly and improve the life quality of the elderly while ensuring their basic living. However, the current retirement pension still faces a series of problems, such as insufficient coverage, low level of integration and disparities in benefits. These problems affect the efficiency of the system. It is, therefore, necessary to accelerate the universal integration and promote the sustainable development of the retirement pension system.

9.1 The Problems of the Retirement Pension System Since the founding of the People’s Republic of China, the country’s retirement pension system has undergone an evolution from labor security to work-unit security and then to social insurance. Through continuous reform, the system has been constantly improving. However, currently, it still face a series of problems, especially in aspects of universality and integration.

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_9

187

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9 The Universal Integration of Retirement Pension System

9.1.1 Problems of Universality “Ensuring that all the people enjoy their rights to old-age care” and “completely building a social security system covering rural and urban residents” are the strategic goals and requirements put forward by the 18th National Congress of the CPC in order to provide all the elderly with the most basic material and service security. The actual situation, however, is that neither material security (mainly referring to various basic old-age insurances) nor service security (mainly refers to old-age care services) has covered all rural and urban residents. In terms of material security, China has established a retirement pension system for employees of government organs and public institutions, a basic old-age insurance system for employees of urban enterprises, a new rural social old-age insurance system, and an old-age insurance system for urban residents. However, the entire retirement pension system has not been able to cover all rural and urban population. The current retirement pension system for employees in government organs and public institutions and the basic old-age insurance system for employees in urban enterprises are targeted at those in the relationship of employment. The new rural social old-age insurance and the old-age insurance for urban residents were introduced relatively late and still at the pilot stage. A large number of rural and non-working urban residents have not been incorporated into the retirement pension system. According to the data in the Statistical Bulletin on the Development of Human Resources and Social Security Causes in 2009 issued by the Ministry of Human Resources and Social Security, as of the end of 2009, there were 311.2 million urban employees. The number of people covered by the basic urban old-age insurance was 235.5 million, among which, the number of insured employees was 177.43 million, and the number of the retired was 58.07 million. That is, the number of insured employees only accounted for 57% of the total employed.1 These insured included enterprise employees, individual business people, flexible employed personnel and employees of enterprises turned from public institutions. Most of the employees of government organs and public institutions had not been covered, even though they can obtain retirement benefits from other means. But even if the 39.4348 million staff of government agencies were taken into account, the percentage of insured employees would be about 75.7% of the total employed population in urban areas. This means that about 24.3% of the employed population were not covered by urban basic old-age insurance. At the end of 2011, the national urban employed population was 359.14 million. The number of people covered by the basic urban old-age insurance was 283.91 million, among which, on-the-job employees were 215.65 million and retired persons were 68.26 million. The total insured employees accounted for 60% of the whole employed population. Both the absolute number and the coverage increased, but there was still a considerable proportion of urban employed people who had not been covered by the basic old-age insurance. 1

Refer to the Statistical Bulletin on the Development of Human Resources and Social Security Causes in 2009, http://www.mohrss.gov.cn.

9.1 The Problems of the Retirement Pension System

189

Another example is the new rural social old-age insurance system that was piloted in 2009. The pilot counties accounted for 10% nationwide in 2009, and the rate grew to 23% at the end of 2010. At the end of 2011, there were 1914 counties (cities, districts, and banners) of 27 provinces and autonomous regions nationwide, and some districts (counties) in four municipalities directly under the Central Government launched the new rural social old-age insurance pilot program. The number of people insured in the pilot areas was 326.43 million and the actual number of people receiving benefits was 85.25 million. Also at the end of 2011, there were 1902 counties (cities, districts, and banners) in 27 provinces and autonomous regions nationwide, and some districts (counties) in 4 municipalities rolled out a pilot program of the social old-age insurance for urban residents. The number of people insured in the pilot areas was 5.39 million and the actual number of people receiving benefits was 2.35 million.2 Obviously, it will take a long time for the rural and urban basic old-age insurance to achieve comprehensive coverage and universal integration. Also, the coverage of enterprise annuities as a supplement to the basic old-age insurance of employees is still narrow. According to data released by the Ministry of Human Resources and Social Security, at the end of 2009, 33,500 enterprises across the country established enterprise annuities, with only 11.79 million employees participating, accounting for approximately 3.8% of the urban employment population. At the end of 2011, 44,900 enterprises established enterprise annuities, covering 15.77 million employees,3 accounting for about 4.4% of the urban employment population. In other words, although the current social old-age insurance system has covered most urban employees and some rural and non-working urban residents, many rural and non-working urban residents and flexible employment personnel have not been covered. Also, the vast majority of enterprises have not established enterprise annuities, which shows that the existing retirement pension system is not universal enough. Compared with material security, the universality of service security is even less satisfactory. According to the data from the 12th Five-Year Plan for the Social Oldage Service System issued by the Ministry of Civil Affairs, as of the end of 2009, there were 40,000 adoptive old-age nursing institutions nationwide, including welfare houses, nursing homes, veteran nursing institutions and apartments for the elderly with 2.89 million beds, that is, 173 beds per 10,000 aged. In addition, according to the data from the Research on National Urban and Rural Disabled Elderly issued by China National Committee on Aging, at the end of 2010, there were about 33 million partially and totally disabled elderly in urban and rural China, accounting for 19% of the total elderly population, of which 10.8 million were totally disabled, accounting for 6.23% of the total elderly. The per capita beds for disabled elderly people in urban and rural areas were 0.09, of which the per capita beds for totally elderly were only 0.27. As important carriers of service guarantee, old-age nursing institutions and

2 3

Ibid. Ibid.

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beds were in extreme shortage and could hardly meet the basic old-age care needs of the country. In brief, on the one hand, the basic old-age insurance has not yet achieved comprehensive coverage. On the other hand, the old-age nursing institutions and beds, as carriers of service security, cannot meet practical needs. It requires us to promote the universal coverage of the old-age insurance system and the old-aged service system.

9.1.2 Problems of System Integration China’s retirement pension system not only faces problems of universality, and has not really achieved the basic goal of “ensuring that all the people enjoy their rights to old-age care”. In addition, because the current retirement pension system (only referring to material security) is designed based on the needs of different occupations, it also faces problems of high fragmentation, great disparities in benefits, and low pooling levels. See Table 9.1. It can be seen from Table 9.1. that there are mainly six system arrangements for basic old-age insurance for the elderly. The first four systems are universal, constituting the basic part of the retirement pension system. The rural five-guarantee support system and the old-age allowance system are special. The former provides basic material and service security only for rural elders with no family. The latter serves as both basic material security and commendation for the older age. Our focus is on the first four systems. In comparison, the retirement system for employees of government organs and public institutions, the basic old-age insurance for employees of urban enterprises, the social old-age insurance for urban residents, and the new rural social old-age insurance are all aimed at ensuring people’s rights to old-age care. But differences between them are obvious. First, the target groups are different. The target group of the first two are urban employees. Among them, the target group of the first are staff of Party and government organs, people’s organizations, people’s congresses, CPPCC organs, democratic party organs and employees with budgeted posts of public institutions. Employees without budgeted posts or contract employees are not covered by this system. The target group of the latter are urban enterprise employees, employees of social organizations, individual business people, flexible employees, etc. The target group of the social old-age insurance for urban residents are urban non-working residents and some urban retirees who are not insured. The target group of the new rural social old-age insurance are rural residents. Second, funding sources are different. Funding for the retirement system is from government finances at all levels, and employees under this system need not to pay the premium. The basic old-age insurance for employees of urban enterprises is mainly funded by corporate and employee contributions, while government financial subsidies are provided to make up for historical arrears. And the funding for the social old-age insurance for urban residents and new rural social old-age insurance mainly

9.1 The Problems of the Retirement Pension System

191

Table 9.1 Current retirement pension systems in China Type of system

Covered population

Funding source

Conditions for benefits

Competent authority

Retirement system for employees of government organs and public institutions

Employees on the payroll of party and government organs, social organizations and public institutions

Government finance

Seniority, position, State title, and salary Administration before retirement of civil service

Basic old-age insurance for employees of urban enterprises

Urban enterprise employees, individual business people people, flexible employment personnel

Enterprises payment, employee payment

Payment years, payment amount

Social security department

Social old-age Urban residents insurance for urban residents

Individual Payment years, payment, payment amount fiscal subsidy

Social security department

New rural social old-age insurance

Rural residents

Individual Payment years, payment, payment amount fiscal subsidy

Social security department

Rural Five-Guarantee support

Rural old people that need Five-Guarantee support

Fiscal subsidy

Civil service department

Old-age allowance

Urban and rural elderly aged over 80

Fiscal subsidy Age

Civil service department

comes from individual contributions as well as government subsidies. But, the basic old-age pension part of these two systems is completely sourced from financial subsidies. Finally, the conditions for deciding on benefit are different. The pension benefit standards for employees of government organs and public institutions are mainly determined based on the post, title, seniority, and salary before retirement, and the post and title are the most important. For the pension system for urban enterprise employees, the basic pension part is tied to the average salary upon retirement, while the personal account part is related to the payment years and payment amount. The pension benefits of social old-age insurance for urban residents and new rural social old-age insurance also comprises two parts, with the basic pension part being determined by local government, and personal accounts for old-age insurance being tied to the payment period and the amount of rural and non-working urban residents. Generally speaking, the differences between these four systems are huge. On-thepayroll employees of government organs and public institutions with budgeted posts can enjoy pension benefits without any contribution, and their retirement benefits

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are fully supported by public finances. Urban enterprise employees can only enjoy basic old-age insurance benefits after paying their own contributions, and the level of benefits mainly depends on payment. Although urban and rural residents also need to pay before enjoying basic benefits, the government finances bear their basic pension part and grant them payment subsidies. It can be seen that on-the-payroll employees of government organs and public institutions with budgeted posts as well as rural and non-working urban residents can receive subsidies from public finances for basic old-age insurance benefits. Contributory pensions of urban enterprise employees are rarely funded from government finances. In addition, so far, the per capita pension insurance benefits for employees of urban enterprises are only about 1300 yuan per month, while the retirement benefits of staff of government organs and public institutions can generally reach more than 4000 yuan per month, which is over three times of the former (Table 9.2).4 Another problem in the integration of the retirement pension system is the low pooling level, which is reflected in the basic old-age insurance for urban enterprise employees, the social old-age insurance for urban residents and the new rural social old-age insurance. Currently, these three types of insurance are basically pooled at the prefecture-level and municipal level, and in some places, even at the county level. Some scholars pointed out “There are more than 600 regions with the oldage insurance funds being raised nominally at the prefecture or municipal level or above, but among them, over 90% are actually based on county-level (prefecturelevel) pooling.”5 Low pooling levels reduce the ability of basic old-age insurance to combat risks, which is not conducive to the rational flow of labor. They will also lead to regional disparities, especially in standards of funding and benefits, triggering new social injustices. This requires us to deepen reforms, carry out necessary integration of current fragmented pension insurance systems, and appropriately increase pooling levels, in a bid to improve the entire pension security system.

9.1.3 Necessity of Universal Integration So far, China’s retirement pension system has neither achieved full coverage (including material and service security), nor effectively achieved system integration and overall planning. The degree of fragmentation is serious. The universal integration of the retirement pension system is urgently needed to promote a fairer development of the retirement pension system. First, the right to old-age care represents the basic right of citizens and a social function promised by governments since the industrial society. In a modern society, the acceleration of industrialization and urbanization has led to the miniaturization 4 5

Yang [1]. China Development Research Foundation [2], p. 70.

6.0

45

41

Xiamen

Suzhou

41

57

57

31

6.2

8.2

11.4

11.4 198

190

95

118

39.6

38.0

19.0

23.6

78

62

57

87

Ratio Number

15.6

12.4

11.4

17.4

70

84

74

139

14.0

16.8

14.8

27.8

38

4

6

12

7.6

0.8

1.2

2.4

4

70

5

9

0.8

14.0

1.0

1.8

Ratio

Old-age insurance for rural migrant workers Ratio Number

Old-age insurance for landless farmers

Ratio Number

New rural social old-age insurance

Ratio Number

Basic old-age Social old-age insurance of urban insurance for enterprise urban residents employees

Ratio Number

Note The number of samples in each region is 500

8.2

9.0

7.4

3.0

Ratio Number

Honghe

Number

Retirement pension Retirement pension of civil servants of government organs

Chongqing 37

Region

Table 9.2 Existing old-age pension insurance types (Unit: person %)

9.1 The Problems of the Retirement Pension System 193

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9 The Universal Integration of Retirement Pension System

Table 9.3 United Nations forecast of China’s population (Quoted from Zheng [5], p. 78) (Medium Plan, 2005–2050) (Unit: 1000 person %) Year

Total population

Population aged over 65

Rate of population aged over 65

2005

1,312,979

100,464

7.7

2010

1,351,512

112,941

8.4

2015

1,388,600

133,902

9.6

2020

1,421,260

169,567

11.9

2025

1,445,782

197,382

13.7

2030

1,458,421

236,414

16.2

2035

1,458,292

285,868

19.6

2040

1,448,355

321,762

22.2

2045

1,431,448

328,493

22.9

of family size and the kernelization of the family structure. The ability of families and individuals to provide for the elderly, especially the ability to provide services for the elderly, has weakened. Socialized institutional arrangements, therefore, are in urgent need to make up for the lack of family and individual old-age care functions. Corresponding to this, ensuring that all the people enjoy their rights to old-age care has become the responsibility of the government and constitutes an important part of the public services provided by the government to the people. And the government has gradually taken the responsibility of establishing an universally integrated retirement pension system covering all urban and rural population. Second, there is the challenge of catering to the increasingly urgent needs of addressing population aging. Since China entered the aging society in 1999, the aging process has accelerated, and the population base of the elderly is large and ever growing rapidly. The trend of aging and empty nesting of the population is obvious, and the number of elderly people with disability and semi-disability requiring care has skyrocketed. By the end of 2011, China had 185 million people aged 60 and beyond, accounting for 13.7% of the total population, and 123 million people aged 65 and beyond, accounting for 9.1% of the total population.6 China is the only country in the world with an aging population of over 100 million and growing rapidly at a rate of more than 3% per year, which is over five times the population growth rate during the same period. By the end of the 12th Five-Year Plan period, China’s aging population is estimated to reach 221 million, accounting for about 15% of the total population. By then, there will be 24 million elderly people aged 80 and beyond, and more than 51 million people over 65 suffering from empty nest. Table 9.3 shows the United Nations projections for China’s population. Unlike developed countries, rural population in China have always been relying on family supporting. The aging level of the rural population is higher than that of cities and towns. With the emergence of “4–2-1” family structures in rural areas and the rural young labor force going to cities to work, the number of rural empty nesters 6

Li [3].

9.1 The Problems of the Retirement Pension System

195

keeps increasing, the problem of old-age care in rural areas are becoming more serious. At present, the average household size in China is 3.16, a decrease of 31.5% compared with 4.61 at the beginning of reform and opening-up.7 The proportion of elderly empty-nest households in urban and rural areas has continued to rise. The proportion of elderly empty-nest households in urban areas has reached 49.7%, and in rural areas it has reached 38.3%. The shrinking family size and structural changes have weakened the old-age care function of families, and the demand for specialized old-age care institutions and community old-age care services has been increasing, which requires the establishment of a universally integrated retirement pension system. Third, there is the need to change the fragementation of retirement pension systems. The current four types of old-age insurance systems, that is, the retirement system for employees of government organs and public institutions, the basic oldage insurance system for employees of urban enterprises, social old-age insurance for urban residents, and new rural social old-age insurance, have major differences in terms of payment and management. The differences in the level of benefits are huge producing serious social injustice. It requires reforming and innovating the existing retirement pension system through universal integration and promoting the just development of the retirement pension system. All these show that the universal integration of the retirement pension system is an inevitable trend and objective choice, and also a will of the people. The top-level design of the retirement pension system needs to be in place.

9.2 The Principles and Goals of the Universal Integration of Retirement Pension System The goal of the universal integration of the retirement pension system is to establish a socialized retirement pension system with comprehensive coverage, relative uniformity, mutual connection, and appropriate level. To achieve this goal, the system needs continuous reform and innovation based on a series of principles.

9.2.1 Principles First, the principle of universality. The universal integration of the retirement pension system shall first achieve universal coverage. Universality is manifested in two aspects. The first is that all the people with citizenship shall be non-commercially covered by the pension system; the second is that all the people shall receive basic 7

Wu [4].

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9 The Universal Integration of Retirement Pension System

old-age security benefits, and can enjoy certain material and service security in order to ensure their living standards in their later years, improve their quality of life, enhance their happiness and satisfaction, and let them share economic and social development results. Second, the principle of comprehensiveness. Comprehensiveness is an inevitable requirement of universality. Adhering to universality requires focusing on comprehensiveness and recognizing universality is a must to emphasize comprehensiveness. The comprehensiveness of the universally integrated retirement pension system includes two aspects. First, the comprehensiveness of the content. The retirement pension system shall include not only material security but also service security. Second, the comprehensiveness of the mechanism. The retirement pension system shall not only the supply and responsibility mechanisms not only for the government but also for non-governmental forces, for example the government’s provision of basic old-age insurance and basic old-age services, employers’ provision of occupational annuities and enterprise annuities, viz., supplementary old-age insurance, labor unions’ provision of mutual assistance old-age insurance, commercial insurance companies’ provision of old-age insurance, and social organization’ provision of old-age assistance and services. Third, the principle of coordination. The universally integrated retirement pension system no longer emphasizes urban–rural differences, status differences, or occupational differences. It makes system design based on the principle of “integrating personal accounts with social polling” in areas like supply concepts and principles, money raising methods and standards, benefits level, and management method. To this end, it is necessary to promote integration of fragmented pension insurance systems and various elderly services, and enhance the scientificity and sustainability of the retirement pension system. Fourth, the principle of difference. Coordination and difference are interdependent, emphasizing coordination is not to negate difference, and admitting difference is not to abandon coordination. Our emphasis of the coordination of the retirement pension system is relative. It is about adopting a unified design principle rather than building a unified national retirement pension system without any difference. Due to the large population and complex social structure of our country, the formation of a unified national security system for the elderly is not practical. Differences shall be allowed in the personal accounts and payment standards, but we should not allow some strata to receive rich pension benefits without contributing to pension insurance. Fifth, the principle of socialization. The establishment and improvement of a universally integrated retirement pension system shall be government-led, but the government cannot be regarded as the sole subject of benefits provision. It requires the cooperation of the market, society, and families (individuals) to form a joint force of old-age security supply. For example, in terms of material security, the government needs to provide the basic old-age insurance, companies need to provide supplementary old-age insurance, that is, enterprise annuities, and individuals need to make necessary savings and even purchase some commercial old-age insurance in order to improve their own pension benefits. As for service security, the government needs to provide basic old-age services, especially for disabled and demented elderly

9.2 The Principles and Goals of the Universal Integration …

197

people, and social charity funds shall be mobilized to invest in old-age care services. Moreover, the government needs to build a certain scale of nursing homes to provide social old-age care for the people and at the meantime community old-age care and home care services should be improved to supplement. Sixth, the principle of appropriate level. The rigid old-age security benefits demand may not be completely consistent with the flexible economic development speed and level. The former presents a linear growth, while the latter can be fluctuated and sometimes even decline. This requires us to learn from the lessons of other countries, especially welfare states, and build an appropriate-level retirement pension system based on the basic needs of the people rather than non-basic needs. In this way, the level of old-age security will not be too high to become a burden on economic and social development, nor will it lag behind economic development and fail to meet the people’s growing multi-level and diverse needs.

9.2.2 Goals Following the above principles, the goal of the universal integration of the retirement pension system is to establish a socialized retirement pension system with full coverage, relative uniformity, mutual connection and appropriate level. The retirement pension system consists of two parts, viz. material security and service security. Service security is based on the government-provided institutional old-aged care services, community-based old-aged care services, and home-based care for the aged. At the same time, it is supplemented by old-age services provided by social organizations. Material security is based on the basic pension provided by the government, supported by the pension insurance contributed by the individual, and supplemented by the supplementary pension insurance provided by the employer, forming an old-age insurance system combining personal account and social polling. Among them, the basic old-age insurance provided by the government consists of two specific systems: The first is the basic old-age insurance for urban employees. Participants are employees on government payroll, enterprise employees, individual business people, flexible employees, etc. This is a compulsory insurance. In this type of insurance, both employers and individual employees must pay premiums (payments for individual business people and flexible employees are fully borne by the individual, while some financial subsidies are granted). It integrates personal accounts with social pooling. Payments contributed by employers shall be partly included into the social pooling account and partly into personal accounts, and all personal contributions shall be included in personal accounts. The social pooling account is coordinated at the national level. It is mainly used to pay basic pensions, pensions that will continue to be paid after the individual account savings are paid out, as well as the additional amount based on normal adjustment of pensions according to regulations, etc. Personal accounts are managed at the provincial level and used to grant personal account pensions. The old-age insurance pension consists of basic pensions, social

198

9 The Universal Integration of Retirement Pension System

Fig. 9.1 The framework of basic old-age insurance of urban employees

pooling pensions and personal accounts. The government provides basic pensions for insured employees, and employers must provide occupational or enterprise annuities for their employees as a supplement. See Fig. 9.1 for details. The second is the basic old-age insurance for rural and non-working urban residents. It also adopt the social polling and personal account integration mode. Residents pay premiums and the government provides payment subsidies. Residents’ individual contributions are included in personal accounts. Part of the government subsidies is counted into personal accounts and the other part is included in the social pooling accounts. It also consists of basic old-age pension and personal account pension. Basic old-age pension is borne by government finance, and personal account pensions comprise of individual contributions and government subsidies. And personal accounts are managed at the provincial level. See Fig. 9.2 for details. Centering on the above goals, the following three aspects of reform are needed. First, basic pensions must be granted to all insured persons. This is because the basic pension for the pilot social old-age insurance for urban residents and new rural social old-age insurance are stipulated to adopt the principle of baseline equality,

Fig. 9.2 The framework of basic old-age insurance of rural and non-working urban residents

9.2 The Principles and Goals of the Universal Integration …

199

that is the basic pension part is universally and equally shared and guarantees basic life, while personal accounts can embody differences. At the same time, the grant of basic pensions can adjust the income gap, especially narrowing the gap in pension benefits. Second, part of the government or business subsidies or payment must be included in personal accounts for old-age insurance. 3% of enterprise contributions of basic old-age insurance of enterprise employees are included in personal accounts, and the remaining 11% shall be into the social pooling account for retired employees. The social old-age insurance for urban residents and new rural social old-age insurance that are being piloted enjoy financial subsidies as well. Therefore, for the old-age insurance for the employees of government organs and public institutions, the combination of personal contributions and government subsidies should be adopted, thus enhancing the universal integration of all old-age insurance systems in terms of payment principles, account setting and payment division. Of course, in order to reduce the burden on enterprises, the proportion of enterprise contributions can be appropriately reduced. Finally, the social pooling should be adopted for social old-age insurance for rural and urban residents. Although the social old-age insurance for urban residents and new rural social old-age insurance that are being piloted stipulate that a social pooling account integration model is required, the source of funds for social pooling is not clearly specified, which makes the current social pooling an empty account. There will be “no money” for pensions after the individual account pensions are paid out. To this end, measures should be taken to force a part of the government contribution subsidies into the social pooling account to prevent the occurrence of the aforementioned situation. In terms of service security, it is necessary to establish an old-age service system covering the urban and rural areas, and complete with projects and content. As far as the government is concerned, it shall establish adoptive nursing institutions (mainly to adopt the disabled and demented elderly), improve the community old-age service system, and provide daily care, medical care, rehabilitation care, cultural and sports services for the elderly. Policies shall be introduced to attract social organizations to participate in the construction of old-age care system, such as encouraging social funds to set up adoptive nursing institutions and providing personalized and professional old-age care services.

9.3 The Ways of the Universal Integration of Retirement Pension System Building a universally integrated retirement pension system requires the promotion of the retirement pension system reform and the enhancement of the universality and integration of the retirement pension system.

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9.3.1 Retirement System Reform for Staff of Government Organs and Public Institutions No reform has been made on the retirement system for staff of government organs and public institutions since its establishment in the 1950s. In the mid-1990s, the focus of the government’s work was on “supporting the reform of state-owned enterprises”. The government only reformed the retirement pension system for corporate employees and established a basic old-age insurance system for employees of urban enterprises, while the retirement system for employees of government organs and public institutions remained intact. As a result, a dual-track old-age insurance system was formed.8 For example, the current retirement age and retirement conditions for personnel in government organs and public institutions are still based on the document of On the Interim Measures of the State Council for the Placement of the Elderly, Weak, Sick and Disabled Cadres and the State Council’s Interim Measures on the Resigning and Retirement of Workers promulgated in 1978, requiring 60 years old for male, 55 years old for female cadres, and 50 years old for female workers. Provisional Regulations for the National Civil Servants, issued by the State Council in 1993, stipulated that males at the age of 60, females at the age of 55 or disabled civil servants can retire. This requirement is basically consistent with that of the 1978 document. The calculation and provision means of retirement benefits basically follow the 1978 document because few reforms were carried out in this regard. The reform of the old-age insurance system for personnel of government organs and public institutions is, therefore, in urgent need. To this end, the State Council decided to choose Shanxi Province, Shanghai, Zhejiang Province, Guangdong Province, and Chongqing to start pilot reforms in 2008. The exclusion of state organ staff from the reform sparked huge controversy and retarded the progress of the reform to a certain extent. From the perspective of universal integration, the reform of the old-age insurance system for employees of government organs and public institutions should center on four aspects. First, speed up the function-based reform of public institutions. China’s public institutions are mainly divided into institutions that are fully funded by the government, institutions with balance allocation from the government, and institutions with independent revenue and expenditure. The function-based reform is to turn the last type into state-owned or collective enterprises, and to change the government’s balance allocation to the second type to government payments for the purchase of service. These two types of institutions, therefore, are excluded from public institutions. Employees of them pay contributions and obtain corresponding pension benefits, thereby reducing the resistance to reform of old-age insurance for public institutions. 8

At present, most regions of the country have only implemented reforms in the socialized grant of retirement pensions for staff of government organs and public institutions.

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Second, the reform of old-age insurance for personnel of government organs and public institutions shall be carried out with the principle of new methods for new people and old methods for old people. For those who entered the institution after July 1, 2003, especially new comers participate the social old-age insurance system integrating social pooling with personal accounts, through the combination of individual contributions and fiscal subsidies. The contribution base can be 100– 150% of the local average wage in the previous year. Those who entered the institution before July 1, 2003, can continue to follow the current retirement system, or choose to be covered by the basic old-age insurance system for enterprise employees. Part of the employer’s payment is included in the social pooling account, the other part is included in the personal account, and the employee’s contributions are fully included in the personal account. Third, establish a compulsory occupational annuity system. In order to speed up the reform of the old-age insurance for employees of government organs and public institutions, to reduce resistance to reform and ensure that the level of oldage insurance in these institutions will not decrease after the reform, it is necessary to establish and implement a system of occupational annuity. In view of the problems in the implementation of the current voluntary enterprise annuity system, occupational annuities must be compulsory. Occupational annuities are jointly paid by the employer and individual employees, fully included in the personal account and paid to the employees in a lump sum upon retirement. As there is a long period of time between the first contribution and benefits, occupational annuities need to be managed to preserve and increase in value. It is recommended that the National Council for Social Security Fund manage and operate the occupational annuity since it has gained management and operation experience of pension funds. In addition, in order to ensure the smooth implementation of the occupational annuity system, it is recommended that the State Council formulate a unified National Occupational Annuity Regulation. Fourth, according to the design principle of the basic old-age insurance system for urban enterprise employees, benefits for those who started work after the establishment of the unified basic pension insurance system for enterprise employees consists of basic pension and personal account pension. Funds required for basic pension are borne by the social pooling and the standard can be about 20% of the local monthly average salary of the year before the employee retires. Personal accounts for old-age insurance pensions are made up of employers’ and employees’ contributions, and the standard can be determined in accordance with the calculation method of personal accounts for old-age insurance pensions of enterprise employees. As a result, the basic old-age insurance system for urban enterprise employees and for staff of government organs and public institutions is finally integrated, forming a universally integrated basic old-age insurance system for urban employees.

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9.3.2 Reform of Basic Old-Age Insurance System for Enterprise Employees To establish a unified basic old-age insurance system for urban employees (including for personnel in government organs and public institutions) also needs to reform the existing basic old-age insurance for enterprise employees. First, expand the coverage of the basic old-age insurance system for enterprise employees, include employees in small and medium-sized enterprises and have not yet participated in the basic old-age insurance system, and strive to cover all enterprise employees in this system. To this end, the national human resources and social security departments should pay close attention to the implementation of the Social Insurance Law, the Labor Law and the Labor Contract Law, and competent authorities at all levels should enhance labor inspection and labor law enforcement, constantly expand the coverage of the basic old-age insurance to more than 90% by the end of the 12th Five-Year Plan period. Secondly, continue the reform to include enterprise contributions into personal accounts while finding means to reduce the contribution burden of enterprises. On the one hand, it is necessary to appropriately reduce the contribution proportion of enterprises from the original 14% to about 10%. Judging from international experience and existing research results in academia, 10% contribution of enterprises can effectively ensure the basic pension benefits for employees. On the other hand, the method of appropriately transferring part of enterprise contributions into the personal account shall continue to be implemented. Actually, at the beginning of the establishment of the basic old-age insurance system for enterprise employees, it was stipulated that 11% of enterprise contributions were included in social pooling accounts, and the other 3% were included in personal accounts. In 2000, the State Council stipulated in the Pilot Scheme on Improving the Urban Social Security System that all enterprise contributions should be included in the social pooling fund without being transferred to personal accounts. In 2005, the State Council declared that starting from January 1, 2006, the scale of an employee’s personal accounts should be reduced from 11 to 8% of his or her wage, and personal account funds all sourced from individual contributions. At the same time, it stipulated that the basic pensions of employees were composed of basic pension and personal account pension. The monthly standard of basic pension upon retirement was based on the average monthly salary of on-post staff in the previous year and the indexed monthly average salary of the employee and 1% of the basic pension account sum will be granted for one full year of contributions. The monthly standard for personal accounts is based on the personal account deposit amount divided by devisor factor while the latter is determined by the average life expectancy of the urban population, the retirement age, bank interest, etc. This provision makes the basic pension income of enterprise employees completely borne by individual employees, which is not conducive to encouraging employees participation and also inconsistent with regulations of the social insurance system for rural

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and non-working urban residents. Therefore, in order to improve the efficiency and encourage participation part of enterprises’ contributions should be included in the employee’s personal accounts. Third, speed up the implementation of personal accounts for old-age insurance. The personal account for old-age insurance represents an important basis for the basic old-age insurance for various types of employees, including personnel of government organs and public institutions. It directly affects the pension income after retirement. Therefore, it requires safe funds as well as preservation and increase in value. According to the data provided by the Ministry of Human Resources and Social Security, by the end of 2009, the accumulated fund for personal accounts for basic old-age insurance of enterprise employees in 13 pilot provinces, including Liaoning, Jilin, Heilongjiang, Tianjin, Shanxi, Shanghai, Jiangsu, Zhejiang, Shandong, Henan, Hubei, Hunan, Xinjiang, etc. stood at 156.9 billion yuan.9 Some scholars estimated that by the end of 2005, the number of empty accounts of China’s pension personal accounts had exceed 800 billion yuan, and was growing at a rate of about 100 billion yuan per year. If the personal account is not to be made active, the number will reach 6200 billion yuan in 30 years.10 Therefore, it is necessary to establish personal accounts for employees, to ensure that all personal contributions are transferred to personal accounts, and that personal accounts will not be misappropriated. At the same time, it is necessary to increase financial subsidies, for example by transferring state-owned enterprise dividends and reducing state-owned shares to supplement personal accounts. Fourth, speed up the construction of the enterprise annuity system. By the end of 2009, 33,500 enterprises across the country had established enterprise annuities, and the number of participating employees was 11.79 million. At the end of the year, the enterprise annuity fund had a cumulative balance of 253.3 billion yuan, and the number of employees participating enterprise annuities accounted for about 5% of total employment. By the end of 2011, 44,900 enterprises across the country had established enterprise annuities, involving 15.77 million employees. At the end of the year, the enterprise annuity fund had a cumulative balance of 357 billion yuan, and the proportion of participants remained at about 5% of total employment. This means that most employees do not participate in the enterprise annuity. To this end, the government is required to formulate more preferential policies, such as tax policies, and reduce the enterprise contribution in pension insurance, in order to encourage enterprises to establish enterprise annuities.

9

See 2009 Statistical Bulletin on the Development of Human Resources and Social Security Causes by the Ministry of Human Resources and Social Security, http://www.mohrss.gov.cn. 10 Dong [6].

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9.3.3 Universal Integration of Social Old-Age Insurance System for Rural and Non-working Urban Residents In 2009 and 2011, China successively piloted the new rural social old-age insurance system and the social old-age insurance system for urban residents. It is expected that by the end of the 12th Five-Year Plan period, 90% of counties will establish the social old-age insurance system for rural and non-working urban residents. However, our research found that there were still six problems to be resolved during the pilot process.11 The first is how to ensure the collectively pooled subsidies. Both the new rural social old-age insurance and the old-age insurance for non-working urban residents are paid by beneficiaries themselves as well as collective and government subsidies, as stated in the policy. The contributions by beneficiaries and governments are explicitly stipulated, while for collectively pooled subsidies, blurred expressions like “encourage” and “for areas with conditions” are used. The consideration maybe that it is hard to make uniform requirements in this regard due to great gaps in economic development in different places. In reality, there are two determinants for realizing collective subsidies: whether the collective is financially capable, and whether it is willing to, that is, the decision is made within it. As a result, collective subsidies are not universally practiced. In places where the collective does not play an effective role, the old-age insurance for rural and non-working urban residents mainly comes from individual contributions and government subsidies. The policy of collective subsidy only rings hollow. The second is how to reflect social pooling. The pilot new rural social oldage insurance and social old-age insurance for urban residents implement a model combining social pooling with personal accounts. However, this combination model is completely different from that of the basic old-age insurance for enterprise employees. In the pilot schemes, individual contributions, subsidies from local governments, and subsidies provided by other economic organizations or individuals for insured persons are all included in personal accounts. No contributions in fact are drawn into the social pooling account. Therefore, the social pooling implemented by the pilot schemes, does not refer to social pooling accounts. It is actually the baseline guarantee by local governments. This brings up a problem: how to implement the social pooling? The answer to this question needs to be further clarified. The thrid is how to alleviate the payment pressure of local governments. In view of the minimum standard set by the central government, the new rural social old-age insurance and social old-age insurance for urban residents have brought considerable financial pressure on local governments. The eastern region governments must bear 50% of the basic pension, and at the same time, they must bear a subsidy of 30 yuan for every person per year; the western region governments must pay a subsidy of 30 yuan for every person per year. The new rural social old-age insurance and social old-age insurance for urban residents, together with subsistence allowance, the 11

Cui and Li [7].

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new rural cooperative medical scheme, and medical insurance for urban residents, have become financial pressure of local governments, with fiscal pressure in regions with large rural population and underdeveloped economy being particularly severe. Although the central government subsidized the central and western regions through transfer payments, it is still an urgent issue as how to alleviate local fiscal pressure. The fourth is how to ensure the security of personal accounts. On the one hand, with the increase in the number of the insured and accumulation of money, the scale of personal account funds will become larger. This will not only cause management difficulties, but also bring the pressure on how to preserve and increase the value of funds. The current method is only to calculate interest annually with reference to the one-year RMB deposit rate of financial institutions announced by the People’s Bank of China, which is unable to preserve the value of the fund. On the other hand, the current pilot schemes stipulate that the monthly benefits of personal accounts are the personal account sum amount divided by 139, which means a participant who began to receive personal account pension at the age of 60 will exhaust all the savings in the personal account in 11 years and 7 months. Then, how will the personal account pension be paid after that? The answer to this question requires further research. The fifth is how to like and integrate various pension insurance systems. One is how to link up the new and old types of rural social old-age insurance. The former type of rural social old-age insurance was a system instituted by various localities in the late 1980s and early 1990s. Both individual contributions and government subsidies witnessed huge differences among various localities. Therefore, how to integrate the former system into the new one is essential for protecting the rights and interests of the insured individuals, maintaining social stability, and promoting social harmony. The second is how to integrate the new rural social old-age insurance with the social old-age insurance for urban residents. These two systems were originally meant to solve the problem of old-age insurance for non-employed urban and rural population. But in many places, the two system co-existed to suit the different living standards in urban and rural areas. Suzhou and Xiamen have unified the personal contributions, government compensation, and access to benefits of the two systems. The third is how to link up the new rural social old-age insurance with the minimum living allowance program for farmers and the five-guarantee support system in rural areas. The fourth is how to integrate the aforementioned systems with the old-age insurance system for employees of urban enterprises and the staff of government organs and public institutions. The sixth is what type of old-age insurance should rural migrant workers be covered by? In some places, rural migrant workers are asked to participate in the social old-age insurance for urban residents, while in some other places, they have the choice as to join the social old-age insurance for urban residents or the new rural social old-age insurance. There are also places who set up separate old-age insurance system for migrant workers. Hence, the establishment of the new rural social old-age insurance did not integrate the old-age insurance for migrant workers, and to make things worse, it might lead up to new issues of insurance cancellation and more.

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In light of these problems encountered by the new rural social old-age insurance and social old-age insurance for urban residents, four suggestions are proposed here. First, speed up the pilot process and achieve full coverage as soon as possible. The pilot scheme of the new rural social old-age insurance was designed to cover 10% of the counties (cities, districts, and flags) in 2009, and basically achieve full coverage of rural residents in 2020. In 2011, the number of people covered by it reached 326 million, and it is expected to reach full coverage by the end of the 12th Five-Year Plan period. The number of people covered by the social old-age insurance for urban residents reached 5.39 million in 2011, and it is expected to reach full coverage by the end of the 13th Five-Year Plan period. Second, specific measures for collective subsidies shall be introduced. The minimum percentage or amount of subsidies for the new rural social old-age insurance and the social old-age insurance for urban residents in the collective economic income shall be stipulated in order to make the collective subsidy policy operational. To this end, part of the financial subsidies shall be stipulated to be included in personal accounts, and the other part shall be included in social pooling accounts, so as to give full play to the role of social pooling accounts. Furthermore, it should be made clear that in case of the death of the insured, the balance of funds in personal accounts can be inherited according to law, which can not only improve the welfare level of the insured, but also simplify the work process. Third, speed up the integration of old-age insurance system for rural migrant workers. On the one hand, it shall be confirmed that migrant workers will only need to transfer the organizational affiliation of pension insurance rather than withdraw from the insurance when changing their working place. On the other hand, the separate pension insurance scheme for rural migrant workers shall be cancelled and incorporated into the basic old-age insurance for employees of urban enterprises, the new rural social old-age insurance or the social old-age insurance for urban residents. Meanwhile, rural migrant workers should have the right to choose which of the three schemes to participate. Fourth, raise the pooling level and promote the integration of the old-age insurance system. The policies of the relevant national ministries shall be meticulously implemented to raise the current prefecture-level pooling to provincial pooling, which is not only in line with the general principles of social insurance and the wishes of the people, but also conducive to social insurance management. Meanwhile, relevant state departments shall introduce measures link and integrate the basic old-age insurance for employees of government organs and public institutions, the basic oldage insurance for enterprise employees, the new rural social old-age insurance and the social old-age insurance for urban residents to avoid inter-system fragmentation, laying the foundation for the eventual universal integration of the pension system.

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9.3.4 Approaches for Universal Integration of Old-Age Service System The old-age service system is an important component of the retirement pension system, and its universal integration is indispensable to the universal integration of the latter. The universal integration of the old-age service system can be carried out in three approaches. First, the central government should improve related policies and regulations and incorporate the old-age service system construction into the regular work of local governments. It should also design a system for the scientific planning, implementation and evaluation, and put forward policies for fund-raising, management and supervision of the work. It should clarify the construction goals and requirements of old-age nursing institutions and community-based old-age care facilities, urge local governments to formulate and implement plans for the building of old-age services in accordance with local conditions, and formulate codes of practice for the old-age service industry to better regulate old-age service institutions and personnel. Various modes for old-age service and institution construction should be adopted to improve the level and quality of old-age services, such as the integration of public construction and private operation, private institutions subsidized by public funds, and the government purchase of services. Second, it is necessary to establish professional old-age service institutions, improve the home-based old-age care and community-based old-age service networks, and focus on building old-age nursing institutions such as social welfare homes, nursing homes, homes and apartments for the elderly, invalides, etc. The number of old-age beds for every 1000 elderly people shall meet national minimum standards.12 The basic old-age service needs of the elderly people without working ability, source of living, dependent or supporter, the elderly advanced in age, the entitled or disabled elderly old groups, the elderly living alone, the elderly from fiveguarantee households, etc., shall be given priority. We should strive to cover all these people by the end of the 12th Five Year Plan period. To this end, it is necessary to set up old-age service projects and standards in a scientific and standardized way and build standardized community daycare centers for the elderly in every urban community and at least half of rural communities. At the same time, the home barrier-free facilities upgrades shall be implemented, to facilitate the elderly to take a bath, use the toilet, cook, and do indoor activities. Third, it is necessary to encourage nongovernmental entities to set up old-age nursing institutions, and allow social funds and charities to engage in the social oldage service system construction, to provide more convenient old-age care services. We should on the one hand give full play to the role of family supporting, and on the 12

According to the plan of the Ministry of Civil Affairs, by the end of the 12th Five-Year Plan period, there will be 30 old-age beds per 1000 elderly people.

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other hand strengthen the informatization construction of home-based, communitybased and institutional old-age care to mobilize other parties to participate in providing old-age care services, such as neighbors and charities. We should also encourage healthy and younger elderly to serve the advanced aged and guide enterprises, charitable organizations and other nongovernmental entities to fund or invest in the construction of high-end or ordinary old-age service institutions or facilities.

9.3.5 Conditions for Universal Integration of Retirement Pension System To achieve the universal integration of the retirement pension system, it is necessary to increase financial investment and optimize the investment structure. First, the government should solve the problem of historical debts. During the period of work-unit based insurance, employees did not pay contributions and their pensions were still paid with the original method. During the transition to the social old-age insurance, pensions of those people were not explicitly stipulated to be borne by the government. Then the responsibility naturally fell on enterprises, which is unfair. Therefore, the government shall seek to reduce the contribution rates of enterprises and bear this part of the expenses step-by-step. Second, the government should bear the cost of basic pension for the insured. In order to ensure that the fruits of economic and social development shared by all and that all the people enjoy their rights to old-age care, the government shall assume the responsibility of basic old-age insurance. Besides, the government should subsidizes the new rural social old-age insurance and social old-age insurance for urban residents, to maximize the universal coverage of the two schemes. Third, the government should pay part of the occupational annuity for personnel of government organs and public institutions. It is a historical necessity to accelerate the reform of the old-age insurance for employees in government agencies and public institutions, and ultimately establish a unified basic old-age insurance for urban employees. In the course of this reform, it is an effective measure to establish occupational annuities that are contributed by individual employees and employers in order to reduce the resistance to the reform, but public finance should also bear some responsibility in occupational annuity. Fourth, the government should make full personal accounts for old-age insurance of enterprise employees. The problem of empty personal accounts for the old-age insurance of employees is relatively serious. If these accounts are not fully filled in time, the risk of old-age insurance will be increased. Although some provinces and municipalities have begun this work, the number of empty accounts is still relatively large. The government, therefore, should use public funds to fill personal accounts for the old-age insurance of enterprise employees as soon as possible.

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References 1. Yang, W.: How big is the Pension Gap, Integration is Inevitable, People. cn, 30 Oct 2012 2. China Development Research Foundation: Constructing a Social Welfare System for All in China. China Development Press (2009) 3. Li, L.: Speech at the 2012 National Working Conference on Aging, China Society News, 6 Mar 2012 4. Wu, P.: Urban elderly empty-nesters nudging half, experts say government responsibilities should be defined. The Beijing News, 14 Feb 2011 5. Zheng, G.: 30 Years of Social Security in China. People’s Publishing House (2008) 6. Dong, K.: 30 Years of China’s Economic Reform: Social Security Volume, pp. 37–38. Chongqing Publishing Group (2008). 7. Cui, F., Li, H.: Major problems and policy recommendations that new type of rural social endowment insurance may face. Northwest Popul. J. (2011)

Chapter 10

The Universal Integration of Medical Insurance System

Medical insurance is an important part of the social welfare system, so the universal integration of the medical insurance system is indispensable to the universal integration of the social welfare system. The universal integration of the medical insurance system is a tough task since it covers a lot of areas.

10.1 The Operation and Problems of Medical Insurance System The overall medical insurance system is composed of medical insurance institutions, the medical insurance management system and the basic medical and health service system. Medical insurance institutions includes medical insurance programs and medical assistance systems for staff from government bodies and public institutions, enterprise employees, urban residents, farmers, rural migrant workers and so on. The basic medical management system involves the management of all the medical insurance institutions, while the basic medical and health service system focuses on the accessibility of medical services.

10.1.1 Operation of Medical Insurance System After the foundation of the People’s Republic of China, under the concept of workunit based welfare system, China has successively established the labor insurance system and public medical system, and subsequently tried out the rural cooperative medical scheme. After the 1980s, with the transition to the economy system and the establishment of a modern enterprise system, the medical insurance system for employees with work units being the major welfare provider was increasingly unable to meet the needs of the market economy system. Also, the rural cooperative © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_10

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medical scheme based on the collective economy tended to disintegrate. Therefore, since the 1990s, the medical insurance system reform began throughout the country. A medical insurance system combining personal accounts with social pooling has gradually taken shape, realizing the full coverage of the system. At the same time, the government has deepened the reform of public hospitals and explored a multi-level medical service system. All of these provide the basis for exploring the universal integration of the medical insurance system.

10.1.1.1

Universal Establishment of Medical Insurance System

China’s public medical system began in 1952. However, since the 1990s, the original public medical system had become increasingly unsuited to the development of the socialist market economy. Under such circumstances, in January 1997, the Central Committee of the CPC and the State Council issued the Decision on Health Reform and Development, to replace the public medical care and labor insurance medical systems step by step. In December 1998, the Decision on Establishing a Basic Medical Insurance System for Urban Employees issued by the State Council stipulated that government bodies and public institutions, social organizations, and private non-enterprise units, and their employees must participate in the basic medical insurance. The public medical system across the country would gradually merge with the medical insurance system for urban employees, except for institutions directly under the central government, institutions in Guangdong Province, and a few other provincial organizations.1 In the early 1990s, the Ministry of Health chose Zhenjiang, Jiangsu Province, and Jiujiang, Jiangxi Province to carry out the pilot reform of the basic medical insurance system for urban employees, and issued the Decision on Establishing Basic Medica Insurance System for Urban Employees, which stipulated that work units and individuals should pay the medical insurance together, and that the paying rate of a work unit should be controlled around 6% of the worker’s total wage, and an individual worker should pay 2% of his or her salary income.2 In addition, the total amount paid by individuals and 70% of the amount paid by work units go to personal accounts of medical insurance. At present, the basic medical insurance for employees, combining personal account and social pooling, has spread to many government bodies and public institutions, as well as enterprises. The coverage has expanded to employees from private enterprises, Chinese employees from foreignfunded enterprises,3 contract workers, temporary workers, township-level enterprise

1

See Decision on Health Reform and Development by State Council, [1998] No. 44 of the State Council. 2 Ibid. 3 Now foreign workers in China can also participate in the basic medical insurance system.

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workers, self-employed people and people without fixed employment. In 2011, the number of insured people nationwide reached 252 million.4 In rural areas, many farmers are reduced or fall back to poverty because of illness. In order to solve the problem and improve their health, in 2003, the central government piloted the new rural cooperative medical scheme in some parts of the country, which required contribution by individuals, support from the rural collective economy and financial support by the central and local governments. By the end of 2011, the new rural cooperative medical scheme had been implemented in 2,637 counties (districts and cities), covering 832 million people, which accounted for 97.5% of the total population in these areas. The funds raised by the scheme amounted to 204.76 billion yuan, with per capita funding of 246.2 yuan.5 In order to expand the coverage of the medical insurance system, and solve the problems in medical security for urban residents, as early as 2007, the State Council issued the Guiding Opinions on the Pilot Program of Basic Medical Insurance for Urban Residents to try out the basic medical insurance system for urban residents, which included the unemployed people in cities and towns, agricultural people who are given non-agricultural status, urban people without formal employment or a stable source of income, as well as urban elderly people and people under 18 years old without medical security. Some cities simply included all people who were not covered by any kind of social medical insurance system. For instance, as early as 2006, Xiamen stipulated that among the people who had registered permanent residence but have not participated in the basic medical insurance for urban employees or the new rural cooperative medical scheme, disabled persons, persons living on minimum subsistence allowance, persons over 16 years old without medical treatment and the elderly should all be included in the basic medical insurance system for urban residents.6 By the end of 2011, 221 million people had participated in the basic medical insurance system for urban residents nationwide7 and a total of 1.305 billion people had participated in various types of medical insurance institutions, enhancing the universality of the medical insurance system.8

4

Ministry of Human Resources and Social Security, Statistical Bulletin on Human Resources and Social Security Development in 2011. 5 Statistical Bulletin of China’s Health Care Development in 2011, http://www.moh.gov.cn/public files/business/htmlfiles/mohwsbwstjxxzx/s7967/201204/54532.htm. 6 See Interim Measures on Medical Insurance for Urban Residents in Xiamen, [2006] No. 281 of the General Office of Xiamen Municipal people’s Government Office. Since 2009 students have been included. 7 Source of data: Ministry of Human Resources and Social Security, Statistical Bulletin on Human Resources and Social Security Development in 2011. 8 People from Hong Kong, China, Macao, China and Taiwan, China who do business and live in the city are allowed and encouraged to participate in the basic medical insurance system in Xiamen, Dongguan and other cities.

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Universal Establishment of Medical Assistance System

The medical assistance system is a government or society’s assistance system providing free medical assistance for certain people who cannot afford medical treatment. Since the reform and opening-up, the whole society has been paying great attention to the establishment of the basic medical insurance system, but little attention was paid to medical assistance. Only a few regions carried out the institutionalized medical assistance work. According to the existing data, with the deepening of the reform of state-owned enterprises and the increase of laid-off workers in the 1990s, Shanghai started to provide medical assistance for poor urban residents as early as 1990. In 1997, in order to support the minimum living security system for urban people, Beijing introduced a preferential medical fee system for the poor.9 At the same time, Dalian, Wuhan, Xiamen, Qingdao and other cities implemented polices to reduce or exempt medical expenses for poor residents. However, the medical assistance at that time was not universal enough, and the assistance system and methods were not institutionalized, systematized and normalized, and it was frequent seen that many people were reduced or fell back to poverty due to illness. In 2001, the General Office of the State Council notified local governments to earnestly implement the medical assistance policies for recipients of subsistence allowances. As a result, some local governments revised or issued relevant policies in line with the idea of “government payment”. For example, Dalian issued Interim Measures on Medical Assistance to Poor Residents with Major and Very Serious Disease and its Detailed Rules for Implementation, which required “the government to provide emergent financial support to alleviate poor residents’ difficulties in medical care.”10 In October 2002, the Central Committee of the CPC and the State Council issued Decisions on Further Strengthening Rural Health Work which for the first time proposed to establish a rural medical assistance system to solve the difficulties in medical treatment of “Five Guarantees Households and poor peasant families”. In 2003, the Ministry of Civil Affairs and other ministries jointly issued Opinions on the Implementation of Rural Medical Assistance, clarifying the recipients, scope, organization and implementation of rural medical assistance. In 2005, the Ministry of Civil Affairs and others issued Opinions on the Pilot Work of Establishing Urban Medical Assistance System, proposing to establish a nationwide urban medical assistance system with institutionalized management and standardized operation within about five years. In accordance with national policies and in light of their own actual conditions, all parts of the country had put in place corresponding implementation suggestions, making the medical assistance system for rural and non-working urban residents universal.

9

Li [1], p. 123. Dalian Civil Affairs Bureau, Work Manual of Urban Residents’ Minimum Living Security in Dalian, 2004.

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10.1.1.3

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Universal Establishment of Medical Security Management System

The establishment of the basic medical insurance system requires effective management of diversified institutions. In order to deepen the medical insurance system reform and accomplish the transition from public medical care to social medical insurance as soon as possible, based on their own public medical care management offices, some local governments issued detailed rules for implementing public medical care by combining the State’s document of Management Measures for Public Medical Care with local conditions, to gradually reduce the number of beneficiaries of the public medical care and unify the standards of public expenses for medical treatment. For example, Beijing adopted a classified management approach, classifying those who enjoyed public medical treatment into 12 kinds, such as employees from all levels of state institutions, parties and people’s organizations whose salaries are paid by the state budget. Other groups who had previously enjoyed public medical care would cease to enjoy it, such as employees from all kinds and levels of associations, societies, research institutions and foundations which take charge of their own funds or receive differential subsidies, and employees from public institutions which take a differential budget management approach (excluding hospitals under ownership of the whole people) or which manage their own income and expenses.11 Through such reform, both the number of people who enjoyed public medical care and the resistance to the reform of public medical system had been reduced. In the management of public medical reimbursement, in order to adapt to the integration of public medical system and the basic medical insurance system for employees, Beijing, Guangdong and other places took into account the original public medical care and the current basic medical operation of employees, and formulated regulations on the scope of reimbursement. The regulation also pointed out clearly which kind of expenses could not apply for reimbursement. In addition, Guangdong Province also issued a reimbursement catalogue, listing 585 kinds of drugs that could be paid by public fund, laying the foundation for the national basic drug system coming later.12 At the same time, regulations were made in the aspects of budget, supervision, inspection and assessment of the public medical care. The transition from the public medical care to social medical care required the establishment of a management system suitable, which constituted an important part of the medical insurance management system. For this reason, as early as 1998, the Decision on Establishing a Basic Medical Insurance System for Urban Employees issued by the State Council made clear regulations on the management mode, items, and contents of the basic medical insurance for urban employees. Based on this, social security departments (bureaus) and social insurance management centers had been set up all over the country to be responsible for the raising, use and supervision 11

See Management Measures for Public Medical Care in Beijing, February 24, 1990, [1990] No. 100 of the Beijing Municipal Bureau of Health. 12 See Reimbursement Range for Public Medical Expenses in Guangdong Province, [1998] No. 232 of the Health Commission of Guangdong Province.

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of basic medical insurance funds for employees, and to regulate the management of the system. Moreover, local governments had expanded the coverage of the basic medical insurance system, adjusted the proportion of work unit payment to individual contribution, increased the scope of medical examinations, treatments and drug reimbursement as well as the compensation ratio and the amount of compensation, and raised the insured people’ approval rate of the system. Furthermore, reform had been carried out in systems such as the new rural cooperative medical scheme, which was previously under the supervision of the health departments; the basic medical care system for urban residents, which was under the supervision of the departments of human resources and social security; and the medical assistance system for rural and non-working urban residents, which was under the supervision of the civil affairs departments. Some management systems were also reformed. The new rural cooperative medical scheme and the basic medical insurance system for urban residents, which were originally managed by the health bureau, are now under the management of the bureau of human resources and social security. In this way, the integration of the management of the basic medical insurance system for rural and non-working urban residents was realized. Some other local governments attempted to set up the separate department for coordinating the management of medical assistance and other basic medical insurance systems.

10.1.1.4

Improving Public Health Service System

In the late 1970s and early 1980s, the central government promulgated systems such as the Regulations on the Management of Acute Infectious Diseases and the Regulations on the Work of the Country’s Sanitation and Anti-epidemic Stations, which played a good role in promoting the restoration, establishment and development of China’s health and epidemic prevention system. Later, the government promulgated and implemented policies such as the Law on Food Hygiene, Regulations on the Prevention and Control of Pneumoconiosis and Regulations on the Supervision of Hygiene in Public Places, which effectively improved the production environment and living environment of the people and improved their health. During the reform of the market economy system, China’s medical and health sector has also undergone market-oriented reform, which has improved the efficiency of public health services but also has brought about many problems. The occurrence of SARS and other public health events can serve as a lesson. Therefore, it has become a general consensus that we should deepen the reform of the public health service system, strengthen the prevention and control of infectious diseases, especially epidemic infectious diseases, and promote the development of the public health service system. On the one hand, the government has developed the functions of community health service institutions, explored two-way referrals between community hospitals and large hospitals, set up community health service centers or stations, standardized various vaccination services, strengthened the construction of facilities for

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disease prevention and control institutions, and enhanced the training of professional and technical personnel. It has launched the “National Training Program for Field Epidemiology Personnel” and the “National Information System to Report and Manage Infectious Diseases and Sudden Public Health Events” to strengthen its response capability of sudden public health events. On the other hand, the construction of public health service regulations has been strengthened. In 2001, the Drug Administration Law and the Law on Prevention and Control of Occupational Diseases were revised, and the Law on Prevention and Control of Infectious Diseases was revised in 2003. Meanwhile, the supervision of the environment, food hygiene and other fields was attached great importance. In 2009, the Food Safety Law was implemented. In 2010, “Malaria Eradication Action Plan” was announced to the world, and The Action Plan for National Urban and Rural Environmental Sanitation and Cleanness was put forward. All these have effectively promoted the establishment and improvement of the urban and rural public health service system.

10.1.2 Main Problems in Medical Insurance System We have basically established a medical insurance system that is compatible with the socialist market economy and covers all the citizens, and have transformed the medical insurance system funding from work units to social medical insurance system. However, there are still many deficiencies in China’s current medical insurance system. For example, it is still hard and expensive for some people to get medical care. Problems like this have not been fundamentally solved.

10.1.2.1

Narrow Coverage

There are still problems concerning the universality of China’s medical insurance system, such as the lack of universality in medical assistance and public health, which restricts the sustainable development of the system. The medical insurance system is not universal in two aspects. First, recipients of medical assistance are not universal enough, and many people who should have been helped were not helped. Local medical assistance policies have imposed strict restrictions on the recipients. For example, the Opinions on the Implementation of Rural Medical Assistance issued by the Ministry of Civil Affairs stipulates that recipients of rural medical assistance should only be “Five Guarantee Households, poor households and other poor peasants eligible for local governments’ regulations” and recipients of medical assistance for urban residents are only limited to “persons living on minimum subsistence allowance” “persons who enjoy preferential treatment” and persons whose average per capita living standard of households is below the minimum standard due to unexpected events. There is no doubt that these people need medical assistance when they are sick, but the problem is that people whose income level is slightly higher than the minimum level of living

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security cannot afford high medical costs when they are sick. Not covering those people who should have been covered, a large amount of medical assistance funds is unused. In addition, the compensation for medical assistance is not universal enough. Medical assistance for rural and non-working urban residents across the country is often limited to hospitalization compensation, especially for those who have major and very serious diseases. The compensation for diseases does not cover outpatient service, which makes the current compensation scope not universal enough and even induces various opportunistic behaviors. Second, the disease-prevention-oriented public health services are not universal enough. There is a rural–urban imbalance in China’s public health services. The government has devoted most of its financial resources to urban medical and health services, but has not invested enough in the prevention, control and treatment of infectious diseases in rural areas. The current health funding is determined according to the number of hospital beds. The rural population is large, but because the number of hospital beds is relatively smaller than in urban areas, the funds for medical treatment and prevention are less accordingly. In addition, the investment in rural public health infrastructure, especially for food safety, drug safety, water improvement, toilet improvement, etc., is relatively small. The three-tier rural medical and health service network has not yet been fully established, and it is difficult for rural population to obtain equal medical resources as urban population. At the same time, the service capacity of rural community medical service institutions can not universally meet the needs of farmers. All these mean that public health services in China’s urban and rural areas are not universal enough.

10.1.2.2

Serious Fragmentation

The current medical insurance system is basically set up according to occupation type and household registration status, and the integration degree of various medical insurance institutions is low while fragmentation is very obvious. The first is the fragmentation in terms of identity and occupation. Some government employees still enjoy almost free medical treatment at public expense, and employees of urban enterprises receive social medical insurance benefits by paying their contributions, while people without fixed employment, farmers and residents who do not have employers can only get low medical security benefits of compensation for very serious diseases. Thus, diversified medical insurance institutions have been formed for different occupations, different classes or different household registration status, making the benefits of the insured different. The institutional separation has gradually evolved into a “game” between the strong group and the weak group. In other words, even though the current medical insurance system has reached full coverage, it is actually a hierarchical “full coverage”, which will only aggravate the fragmentation of the medical insurance system. The main reason for this, of course,

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219

is that the system design is “still in a fragmented and stopgap way, with neither a model to pursue nor short-term, medium-term or long-term plans”.13 Second, the various medical insurance institutions are fragmented in aspects such as security objects, contribution standard and compensation ratio. There are differences in above aspects between public medical care and social medical care, and between employees’ medical care and resident’ medical care. For instance, public medical care is mainly provided to civil servants, while medical insurance for employees is provided to enterprise employees. The medical insurance for rural and non-working urban residents has its own objects. Those insured have no chance of participating other medical insurance institutions with higher compensation. In terms of contribution standard, the civil servants enjoy free medical treatment, employees of enterprises can set up personal accounts by paying about 2% of total personal wages, urban residents pay at 0.7% of the per capita net income of residents in the previous year, while farmers pay a fixed amount to participate in the new rural cooperative medical scheme (such as 50 yuan per person per year). In terms of payment way, farmers’ payment takes a household as the unit, and enterprise employees and urban residents pay the fee individually, while civil servants pay no money. Moreover, the fragmentation problem within the same medical insurance institution is also prominent. For example, the basic medical insurance system for urban workers across the country has different contribution standards and pooling levels, and there are huge gaps between compensation ratios within the system. The new rural cooperative medical scheme and its compensation ratios are even more fragmented in this regard. The third is the fragmentation of medical and health management and services. Management methods are different for projects and systems. To adapt to fragmented medical insurance institutions, China has gradually established a corresponding medical security management systems. Throughout the country, the public medical system is affiliated with the public medical management office of the Civil Service Bureau (Personnel Bureau), and the basic medical insurance for employees and the basic medical insurance for urban residents are managed by the management centers of social insurance or medical insurance which belongs to local human resources and social security bureaus. The new rural cooperative medical scheme in many places is attached to the department of health and maternal and child health, which is under local health bureau. In some places, it is managed by the relevant departments of agricultural (forestry) bureau, and in some places, it is managed by the relevant departments under human resources and social security bureau. In addition, medical assistance of rural and non-working urban residents in various places is administered by the civil affairs departments. Lack of integration and the diversity of management departments have led to the fragmentation of the entire medical security management system.

13

Zheng [2].

220

10.1.2.3

10 The Universal Integration of Medical Insurance System

Inaccurate Responsibility Positioning

It is the requirement of the medical insurance system to reasonably and clearly the responsibilities of basic medical care and serious disease medical care. However, the responsibilities set by China’s current medical insurance system are not clear enough. On the one hand, the responsibilities and functions carried by various medical insurance institutions are not consistent. Some institutions mainly take charge of medical care for serious diseases, such as the new rural cooperative medical scheme and the basic medical insurance for urban residents, which have inadequate functions in outpatient service compensation.14 Some institutions like the public medical care system include both basic medical care and medical care for serious diseases. The medical insurance system for employees focuses on the treatment of serious diseases but also covers basic medical care. That is to say, the existing four types of medical insurance institutions have different responsibilities and requirements in the process of implementation, which makes the whole medical insurance system fragmentary in responsibility positioning and function setting. The insured people have no other choice for medical insurance institutions, so the fragmentation prevents them from enjoying equal medical security treatment. On the other hand, the above four medical insurance institutions all focus on disease treatment and generally lack disease prevention functions, and that’s because the medical insurance system does not male clear the relations among disease treatment, disease prevention and public health as well as responsibilities born by each institution. From a functional point of view, disease treatment is not the most important factor in the decline in mortality and the increase in life expectancy.15 Compared with health care, disease treatment is a costly remedy with limited effects. Countries with higher average life expectancy pay more attention to disease prevention and public health. For example, Japan invests more funds in public health work and carries out regular physical examination and rehabilitation nursing evaluation for its people, especially the elderly, making it one of the countries with the longest average life expectancy in the world. Therefore, the improvement of the medical insurance system should not only for disease treatment, but also for everyone’s access to basic health care, which depends on a sound basic medical insurance system and health security system. Therefore, if the responsibilities are not clear, even a perfect medical insurance system can only achieve half the result.

14

In some places, the amount paid by individuals are directly credited into personal accounts for old-age insurance and used as compensation for outpatient services. 15 Hertzman and Keating [3].

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10.1.3 Urgency of Universal Integration of Medical Insurance System As mentioned above, China’s current medical insurance system still has many problems such as lack of universality, serious fragmentation and unscientific responsibility division. It is urgent to accelerate the universal integration and reform of the medical reform system to solve these problems.

10.1.3.1

Objective Requirement of Medical Insurance for the People

The people are the ultimate beneficiaries of the medical insurance system and the testers of its effectiveness. Their opinions and attitudes towards the system are a powerful driving force for system reform. Our survey in Suzhou in February 2012 found that 82.3% of professionals agreed that the management of the new rural cooperative medical scheme should be transferred to the departments of human resources and social security. 70% of the common people thought that the merger of the new rural cooperative medical scheme with the medical insurance for urban residents was “very necessary” or “necessary”, while only 17.6% considered it “not necessary”. 74% of professionals believed it was “feasible” or “very feasible” to merge the two. And 79.6% of the professionals considered the merger of the information system of the new rural cooperative medical scheme and the information system of basic medical insurance for urban residents “very feasible” or “quite feasible”. This suggests that the integration of the medical insurance system reflects the will of the people.

10.1.3.2

Objective Requirement of Sustainable Development of Medical Insurance

Since 2009, China’s medical and health services have entered a new historical stage of development. On March 17, 2009, the State Council issued the Opinions on Deepening the Reform of the Medical and Health System, which proposed to build the “public health service system, medical service system, medical insurance system and drug supply guarantee system covering rural and urban residents” to form a “fourin-one” basic medical and health care system.16 However, there is still a long way to go in the construction of China’s medical insurance system. Many old problems have not yet been completely resolved, while new ones appear one after another. For instance, how to truly change the emphasis on treatment of diseases to prevention of diseases? How to give people more choices on medical institutions on the basis of the universal coverage and improve the integration of various fragmented medical insurance institutions? How to realize the universal integration of medical assistance 16

Opinions on Deepening the Reform of the Medical and Health System, People’s Daily, April 7, 2009.

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system for rural and urban residents? How to realize the integration of disease prevention, treatment and rehabilitation? In order to improve the fair allocation of medical resources, how to guide people choose hospitals in a rational way, for example those with minor diseases going to community hospitals and those with major and very serious diseases going to large hospitals? All these questions are major issues in the current medical insurance system construction and must be correctly understood and scientifically solved.

10.1.3.3

Requirement of Deepening Medical and Health Insurance Reform

In recent years, the government has deepened the reform of medical and health undertaking by expanding the coverage of the medical insurance system, improving the national system of essential drugs, and accelerating the pilot reform of public hospitals. However, there are still unsolved problems such as the unbalanced development of medical and health services between urban and rural areas and among regions, unreasonable allocation of medical and health resources, and fragmentation of medical insurance institutions. And some people still find it hard and expensive to get medical care. According to the Ministry of Health’s Statistical Bulletin on the Development of China’s Health Care Services in 2011, there were 6.27 people going for consultations in China’s medical institutions in 2011, among whom 2.26 billion, or 36%, went to hospitals and 3.81 billion, or 60.8% went to medical and health institutions at the community level. But, the total number of health personnel in the hospitals was 4.527 million, while it was 3.375 million in medical and health institutions at the community level,17 a quite imbalanced structure of health personnel. In terms of hospital beds, the occupancy rate at all levels across the country was also unbalanced: the occupancy rate of beds in public hospitals reached 92%, in tertiary public hospitals it reached 104.2%, and in primary public hospitals it was only 58.9% which is slightly lower than 62.3% of private hospitals.18 Therefore, it is urgent to accelerate the universal integration of medical and health resources, reasonable allocate medical and health resources, and guide the people choose hospitals in a rational way. Otherwise, no matter how much we invest, the problems in medical care will not be fundamentally solved.

17

Statistical Bulletin on the Development of China’s Health Care Services in 2011 by the Statistical Information Center, the Ministry of Health, April 25, 2012. 18 Ibid.

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223

10.2 The Design and Validation of the Universal Integration of Medical Insurance System When exploring the universal integration of medical insurance system, we should focus on core issues of system design, modal selection and modal verification.

10.2.1 System Design for Medical Insurance System Universal Integration In terms of system design, the universally integrated medical insurance system should give more consideration to the employment status of the insured. Correspondingly, we divide the medical insurance system into “basic medical insurance system for employees” and “basic medical insurance system for individuals not in employment”. And we allow participants to switch between the two systems according to their employment status. The basic medical insurance system for employees applies to all the people employed by various work units, including civil servants; employees of government organs, political parties, and people’s organizations; employees of state-owned, collective, foreign-funded and private enterprises and enterprises under other types of ownership, and employees of private non-enterprise units. The employees who work in government organs and institutions but whose salaries are not paid by state budget are also included. In this way, it covers the current medical insurance institutions of public medical care, social medical care for employees and medical security for rural migrant workers employed by enterprises, etc. On the contrary, the basic medical insurance system for individuals not in employment is targeted at self-employed individuals and unemployed natural persons including farmers, urban residents, freelancers and other people without fixed employment, so it covers the current various medical insurance systems such as the medical insurance system for urban residents, and the new rural cooperative medical scheme, the medical insurance system for people under 18 years old, and the medical insurance system for rural migrant workers which is still implemented in several regions. The two types of system have the same principle of payment. The basic medical insurance for employees requires the payment of employers and individuals, while the basic medical insurance system for individuals requires the payment of the government and individuals. For persons living on minimum subsistence allowance, rural Five Guarantee Households and other needy people, a unified policy is adopted to reduce or exempt certain expenses. In this way, a basic medical insurance system which combines accumulation-based personal accounts and social pooling for major and very serious diseases can be established, and the interconnection and conversion of the two types of basic medical insurance system can be realized, which makes it possible for individuals to choose or switch between different systems when their employment status changes.

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10 The Universal Integration of Medical Insurance System

In terms of the pooling level, the amount of money to be paid for the basic medical insurance for employees is 10% of the average monthly salary of the city’s urban workers in the previous year. The contribution paid by employees can be raised from the current proportion of 2–4%, while the contribution by employers can be decreased from the current 8–6%. The contribution paid by employees all goes to personal account, while a proportion of employers’ contribution goes to personal accounts, and the proportion can be 2%, or 3%, or 5% based on the age of employees. Similarly, the pooling level for the “basic medical insurance for individuals” is 2% of the per capita net income of rural and urban residents in the previous year, and the local governments provide a subsidy equal to 5% of the per capita net income of rural and urban residents in the previous year. According to ages of individuals, 1%, or 2% or 3% in the 5% of the government subsidy goes to personal accounts respectively. Thus, the basic medical insurance for individuals has achieved combination of personal accounts with social pooling. The two types of medical insurance systems have realized organic integration in fund-raising, which makes personal accounts real and effective. In terms of compensation, the two medical insurance systems have four compensation models after integration: disease prevention, outpatient service, hospitalization, and assistance for serious diseases. The two systems can adopt unified policy in disease prevention, in the items and ratios of outpatient service compensation, and same standards for minimum line and maximum line of hospitalization compensation. Meanwhile, the integrated medical insurance system should properly increase the compensation ratio for outpatient service, especially that in community hospitals and guide the people to pay more attention to disease prevention and outpatient treatment, helping them to have a scientific lifestyle and choose hospitals in a rational way. In this way we can truly maximize social effect with least money. And the two systems should also be completely unified in the maximum line, compensation ratio and compensation standard. In terms of system function, the universally integrated medical insurance system should add the “disease prevention and health care” function to the original “outpatient service” and “hospitalization” function. And it should proactively take measures to enhance the construction of community hospitals, improve the medical care of community hospitals, raise the compensation ratio of community medical care, and increase the types of medicines and essential drugs in community hospitals to meet the diversified needs of community residents. The function of disease prevention and health care should be given priority to truly change the current medical insurance system which focuses on disease treatment but not prevention. The universally integrated medical insurance system is also manifested in the integration of the management system. Previously, the basic medical insurance system was managed by various departments such as civil service bureaus, human resources and social security bureaus, health bureaus, agricultural bureaus and civil affairs bureaus, but now it is only under the management of human resources and social security bureaus. This will not only facilitate the overall management of the system, but also increase medical insurance funds, enhance the anti-risk capacity of basic medical funds, and provide convenient management channels for the transfer and

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225

renewal of basic medical insurance accounts. Health departments are responsible for the management and guidance of medical insurance services, and civil affairs departments are responsible for the verification of medical assistance recipients. And the whole medical insurance system is under the supervision of finance departments, audit departments, supervisory departments and so on.

10.2.2 Validation of Medical Insurance System Universal Integration We believe that the above-mentioned universally integrated medical insurance system is fairer than the original system. It can guide the people to choose hospitals in a rational way, improve the medical welfare level of certain groups, especially those not in employment, reduce the fragmentation of the system, and enhance the integration and overall planning of the system. Xiamen has already implemented the basic medical insurance for employees, the medical insurance for urban resident, the new rural cooperative medical insurance, the medical insurance for college students, and the medical insurance for people under 18 years old, basically covering all social groups. Altogether the basic medical insurance system benefited 2.3487 million people in Xiamen in 2010, accounting for 130.3% of the city’s total registered population and 66.5% of the city’s total population.19 In 2011, the number of insured people in Xiamen reached 2.5929 million, covering more than 98% of the city’s total population. Among them, the basic medical insurance systems for urban residents, farmers, college students, and people under 18 years old adopted the unified contribution amount and compensation ratio, and they were collectively called “the basic medical insurance for rural and non-working urban residents”. The basic medical insurance for employees requires employees to pay contributions according to different proportions of the average wage of the whole society in the previous year. Therefore, it can be said that Xiamen has realized the integration of medical insurance systems except for the basic medical insurance system for employees. Therefore, we take Xiamen as a case to carry out a verification study on the universal integration of the basic medical insurance system. First, the two-week prevalence rate of people in Xiamen is calculated. The prevalence rate is related to variables such as age and gender, and as getting older, the prevalence rate of men usually declines first and then increases. Based on this, we establish the prevalence rate model20 : 19

At the end of 2010, the registered population of Xiamen was 1.802 million, and the total population (including permanent residents and temporary residents) of Xiamen was 3.53 million. See the Statistical Yearbook of Xiamen Special Economic Zone in 2011. 20 In Eq. 10.1, Y shows whether the respondents are sick in two weeks:1 represents Yes, 0 represents No; X1 shows gender of respondents: 1 represents men, 0 represents women; X2 represents age of respondents: 1 represent 0–4 years old, 2 represents 5–14 years old, 3 represents 15–24 years old, 4 represents 25–34 years old, 5 represents 35–44 years old, 6 represents 45–54 years old, 7 represents 55–64 years old, and 8 represents ages above 65.

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Table 10.1 OLS regression of two-week prevalence Variables

Nonstandard coefficient

Standard error

Standard coefficient

Gender (with female as the reference group) Male

−0.028

0.017

−0.036

Age

−0.122***

0.018

−0.713***

Age square

0.019***

0.002

1.007***

Constant term

0.275

0.035

R-squared

0.123

Age (0–4 years old as the reference group) 5–14 years old 15–24 years old 25–34 years old 35–44 years old 45–54 years old 55–64 years old 65 years old or above

Observed value Note Dependent variable: illness. *** p ≤ 0.001;** p ≤ 0.01;* p ≤ 0.05

Y = B1 + B2 X1 + B3 X2 + B4 X22 + μ

(10.1)

For partial regression coefficient, it can be seen from Table 10.1 that the p-values of t-statistics of age and age square are 0.000, indicating that age and age square can affect Y. Gender has statistical significance at the significance level of 11%, indicating that gender also has an impact on Y, and the fitting coefficient is the same as expectations. The final model is as follows: Y = 0.275 − 0.028X1 − 0.122X2 + 0.019X22

(10.2)

Therefore, we can calculate the prevalence rate of each group of people based on the population distribution in Xiamen, and then calculate the total medical expenditure and get the proportion of total medical expenditure to financial expenditure. The second is to calculate the proportion of total medical expenditure to financial expenditure. The total expenditure of medical expenses can be divided into two parts: Outpatient expenditure and hospitalization expenditure. Total outpatient expenditure = total population × (two-week prevalence rate − two-week hospitalization rate) × 26.06 × average outpatient expenditure.

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227

Table 10.2 OLS regression of total medical expenditure Variable

Nonstandard coefficient

Standard error

Standard coefficient

Population

30,918.853**

7217.315

0.460**

CPI Proportion of men

5.055E7*

1.711E7

0.200*

−1.659E12**

4.373E11

−0.245** 0.373**

Growth rate of aging population

1.781E10**

5.036E9

Constant term

7.627E11

2.219E11

R-squared Observant value (N) Note *** p ≤ 0.001; ** p ≤ 0.01; * p ≤ 0.05

Total hospitalization expenditure = total population × two-week hospitalization rate × 26.06 × average hospitalization expenditure per person. Proportion of medical expenditure to financial expenditure = total medical insurance expenditure/financial expenditure. Model 4.1 shows that the prevalence is related to age and gender, and various expenditures are related to GDP, CPI, TCM price index and population. Therefore, the model Y = B0 + B1 X1 + B2 X2 + B3 X3 + · · · + µ is used for the fitting of the proportion of total medical expenditure to total financial expenditure. Y is the total medical expenditure, and the explanatory variables are GDP, CPI, TCM price index, population, proportion of men, proportion of the elderly, proportion of infants, etc. Regression of the above variables can be obtained by using SPSS17.0 statistical software: After backward regression, multiple variables are eliminated. The R2 of the model adjustment increases, and the fitting effect becomes better. Further test of the joint hypothesis is conducted: B2 = B3 = · · · = 0 which means R2 = 0. Table 10.2 shows the test statistics. F = (ESS/d. f)/(RSS/d. f) = 70.577

(10.3)

And the p value is 0.000. The original assumption Bi = 0, which means that the aging population, the growth rate of aging population, population, CPI have no effect on medical expense, is invalid. The p value of each coefficient is less than 0.05, so the original assumption failed. It can be shown that all the above factors can have significant influence on medical expenditure. The whole model and all coefficients are significant at the significance level of 5%, so the final model is as follows: Y = 7.627E11 + 30918.853 population − 1.659E12 proportion of men + 1.781E10 growth rate of aging population + 5.055 ET CPI

(10.4)

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Fig. 10.1 Time sequence diagram

The time sequence diagram (Fig. 10.1) shows that there is no heteroscedasticity. After Dubin-Watson test, we know that the model has no autocorrelation. The variance expansion factors of the variables are all less than 10, and there is no multicollinearity. From the normal probability graph above, it can be known that the residual errors follow the normal distribution (Fig. 10.2). Third, the consumption structure of rural and non-working urban residents is analyzed according to the extended linear expenditure model. Pi X i = Pi X i0 + Bi (Y −

n 

Pi X i0 )

(10.5)

i=1

Y is income, Pi Xi is the expenditure on the commodity of i, Pi Xi o is the basic expenditure on the commodity of i, and bi is the marginal propensity to consume of the commodity of i, which indicates the surplus of income after basic consumption expenditure is take off. It is used to indicate the proportion of additional expenditure of i, the commodity or service, and 0 ≤ bi ≤ 1, bi ≤ 1. In order to estimate the unknown parameters of the model, cross-section data samples are used. Assuming that on the same cross-section consumers with different incomes purchase the same commodity and its price Pi is the same, it can be obtained based on the formula 4.5 that:  Pi X i0 )bi Y, 1, 2, . . . , n (10.6) Pi X i = (Pi X i0 − bi I f ai = (Pi X i0 − bi



Pi X i0 )

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229

Fig. 10.2 Standard P-P diagram of regression to standard residual error

Then Pi X i = ai + bi Y, 1, 2, . . . , n

(10.7)

The observed values of samples of certain commodity’s consumption expenditure and income are used to get the values of the parameters ai and bi in formula 10.7 with o the OLS method. And then we get the value  ofo Pi X , the basic consumption expenditure of commodity i and the value of Pi X , the total expenditure of commodity i. The model parameters of consumption structures of urban and rural residents are calculated respectively: From Tables 10.3 and 10.4, it can be seen that the F statistic of the ELES model passes the test at a significance level of 1%, and the overall model effect is good. This shows that the per capita disposable income or per capita net income has a significant impact on rural and urban residents’ consumption of the eight types of commodities. The T values shows that all bi values are also significant at the 1% level. The test proves that the first order autocorrelation and heteroscedasticity cannot be found in the model. The constant term can determine the variation trend of the proportion of expenditure on commodities of a certain type as the income increases. If the constant term is less than zero, the proportion of such expenditure will increase as income increases; conversely, when the constant term is greater than zero, the proportion of such expenditure will decrease as income increases. Thus, with the increase of

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Table 10.3 Consumption structure of urban residents in Xiamen Expenditure

ai

bi

F Statistics

P value

Basic expenditure

Food

4030

0.099

103.809

0.000

5026.791

Clothes

211

0.047

301

0.000

684.2239

Devices and services

−137

0.046

164.8

0.000

326.1553

Medical care

−23

0.065

67.005

0.000

631.4586

Transport and telecommunication

34

0.128

15.488

0.003

Entertainment

100

0.077

170.29

0.000

875.2817

Housing

277

0.065

44.378

0.000

931.4586

Other commodities and service

−61.819

0.033

97.118

0.000

270.4446

1322.78

Table 10.4 Consumption structure of rural residents in Xiamen Expenditure

ai

Food

2659.105

0.083

39.787

0.016

Clothes Devices and services

bi

F Statistics

P value

Basic expenditure

490.324

0.000

3132.967

4673.948

0.000

131.1339

12.803

0.015

4046.96

0.000

Medical care

−56.317

0.076

1118.503

0.000

490.2149

Transport and telecommunication

−31.76

0.167

1447.065

0.000

921.6735

−4.699

0.098

539.831

0.000

554.8009

−45.995

0.067

602.063

0.000

336.5202

3.467

0.007

447.02

0.000

Entertainment Housing Other commodities and service

98.44074

43.43128

income, the proportion of urban residents’ expenditure on medical care, transportation and telecommunication, household device, education, culture and entertainment services and housing shows an upward trend, while the proportion of that on food, clothes, household device, and other commodities and services shows a downward trend. In rural areas, with the increase of farmers’ income, the proportion of expenditure on medical care, transportation and telecommunication, education, culture and entertainment services and housing shows a upward trend, while the proportion of expenditure on food, clothing, household devices, and other commodities and services shows a downward trend. Residents’ expenditure of basic consumption demand refers to residents’ ability to pay for basic consumption of commodities and services to ensure the normal reproduction of labor force under a certain socio-economic level, which reflects residents’ minimum consumption demand. From Tables 10.3 and 10.4, it can be known that the basic living standards of urban and rural residents in Xiamen are

10.2 The Design and Validation of the Universal Integration …

231

respectively 10,068 yuan per year and 5,709.783 yuan per year.21 In that year, the per capita disposable income of urban and rural residents in Xiamen was 26,130 yuan per year and 10,601 yuan per year respectively, so the surplus per capita disposable income of urban and rural residents was 16,062 yuan per year and 4, 891.217 yuan per year respectively. We have calculated the income elasticity of demand of rural and urban residents in Xiamen (see Table 10.5). Based on the current income, it can be calculated that the urban and rural residents’ medical consumption can reach 2082 yuan per year and 1275 yuan per year respectively, so they can afford the medical insurance. The fourth is the prediction of Xiamen’s future population and economic development. The universal integration of the medical insurance system is closely related to the indicators of the people’s medical consumption expenditure, per capita disposable income and total financial revenue in the next few years. To this end, it is necessary to calculate data such as population, economy, and financial investment in medical insurance in future years. The regression of the population of Xiamen on the first, second, third, and fourth- order lag variables has been conducted through SPSS17.0 (Table 10.6). The ARMA model and the statistical software SPSS17.0 are used to predict variables such as the future population, GDP, financial revenue and medical expenditure in Xiamen, and the results are in Table 10.7. With the stepwise regression method, the financial revenue is calculated by the fitting of the financial revenue and its first, second, third and fourth-order lag variables. According to the above calculations, the proportion of Xiamen’s financial revenue to GDP in 2015 will reach 35%, indicating the good economic development trend in the city. The stepwise regression method is used to fit the financial revenue and its first, second, third and fourth-order lag variables. It has been found that the medical expenditure is only related to the first order lag variable. AR (1) is adopted. The proportion of medical expenditure to financial expenditure can be obtained by the fitting (Table 10.8). It can be seen from the above that the medical expenditure required by the universally integrated medical insurance system accounts for a low proportion of the total financial revenue, so it is very possible to integrate various fragmented medical insurance institutions, establish a universally integrated medical insurance system, and promote the fair and sustainable development of the medical insurance system.

10.3 The Practical Exploration of of the Universal Integration of Medical Insurance System Many places across China have improved medical and health services and accumulated valuable experience in the integration of the medical insurance system. 21

Whether expenditure on entertainment belongs to basic consumer expenditure is still in debate. We still include it here and make calculation on the basis of the model.

0.376

0.739

Urban residents

Rural residents

Food

1.974

0.838

Clothes

2.307475

1.065

Devices and services

8.359

2.475

Medical care

Table 10.5 Income elasticity of demand of rural and urban residents in Xiamen

4.794

1.101

Transport and telecommunication 7.808

0.986

Entertainment

2.641

0.875

Housing

2.299

1.061

Other commodities and services

232 10 The Universal Integration of Medical Insurance System

10.3 The Practical Exploration of of the Universal Integration …

233

Table 10.6 The regression of population, GDP, financial revenue and medical expenditure in Xiamen Item

R2

F value

P value

Constant coefficient

Year coefficient

P value

Population

0.931

133.974

0.000

−7.977E7

40,538.643

0.000

GDP

0.987

664.288

0.000

4.875E9

1.073

0.000

Financial revenue

0.975

234.503

0.000

1.56232E9

1.121

0.000

Medical expenditure

0.963

237.766

0.000

2.220E7

1.119

0.000

Table 10.7 Prediction of the future population, GDP, financial revenue, and medical expenditure in Xiamen Year

2015

2020

2025

2030

Population (person)

1,821,202

1,986,043

2,150,357

2,314,433

GDP (yuan)

2.81765E11

4.28964E11

6.3833E11

9.36115E11

Financial revenue (yuan)

1.02289E11

1.501374E11

2.15654E11

3.21334E11

Medical expenditure (yuan)

4.320E9

7.720E9

1.368E10

2.415E10

Table 10.8 Calculation of the proportion of future medical expenditure in financial revenue in Xiamen [Unit: %] Year

2015

2020

2025

2030

4.23

5.15

6.34

7.515

10.3.1 Medical Insurance System Universal Integration in Hangzhou Hangzhou has over 13 districts (counties or county-level cities), such as Shangcheng, Xiacheng, Jiande, Fuyang, Lin’an and Tonglu. Since 2003, the pilot project of the new rural cooperative medical insurance has been implemented. After four years of practice and exploration, at the end of 2007, the policy began to be implemented on the medical insurance system characterized by universal coverage, overall urban and rural planning, interconnection and convertibility, realizing the universal integration of the new rural cooperative medical insurance and the basic medical insurance for urban residents. The city provides a practical example for us to study the universal integration of medical insurance system.

234

10.3.1.1

10 The Universal Integration of Medical Insurance System

Universal Integration of Basic Medical Insurance System

At the beginning of 2008, Hangzhou officially implemented the “Basic Medical Insurance Measures” (revised in 2010) and the “Implementation Measures of the New Rural Cooperative Medical Care”, integrating the new rural cooperative medical care scheme with the original basic medical insurance system for urban residents. The current basic medical insurance system in Hangzhou has three characteristics22 : First, farmers and non-working residents in urban areas can flexibly choose one of the two types of medical insurance systems. According to the Basic Medical Security Measures in Hangzhou released in 2010, farmers can participate in the basic medical insurance for urban residents in the light of the payment methods of urban selfemployed workers, and urban residents and those without fixed employment can also participate in the new rural cooperative medical insurance scheme. The Measures defined the participants of the new rural cooperative medical insurance as “rural registered permanent residents and urban non-working residents”, while the basic medical insurance for urban residents was extended to “rural registered permanent residents”, realizing the universal integration of insured people. The second is the universal sharing of designated medical institutions. All designated hospitals and retail pharmacies in the city become medical institutions for insured people. With social security card, people can enjoy relevant compensations if they go to designated hospitals to seek medical treatment and buy medicines in designated retail pharmacies. Meanwhile, the government has gradually increased the number of rural medical institutions for outpatient service compensation, and insured people can receive treatment and compensation at all networked community medical institutions in 13 districts and counties. In this way, the basic medical insurance system for urban residents and the new rural cooperative medical insurance scheme have acquired the characteristics of the basic medical insurance system for employees in operation, which has cleared the operation obstacles in the establishment of a universally integrated medical insurance system. Third, the compensation proportion for rural and non-working urban residents has been universally integrated. Rural participants’ medical expenses are the same as those of urban residents in several aspects such as payment standards, outpatient service, and minimum and maximum lines of hospitalization compensation. The compensation ratio above the minimum line for rural and urban insured people are roughly equivalent. For instance, in the district of Xiaoshan, for rural and urban insured people, the maximum amount of total annual compensations was 20,000 yuan in 2003, 30,000 yuan from 2004 to 2006, 50,000 yuan in 2007 and 70,000 yuan in 2008. And it increased to 100,000 yuan in 2009. The maximum compensation standards for the two types of insured people are exactly the same.23

22

Wang et al. [4]. Source: Answers to the Policy of the New Rural Cooperative Medical Scheme in Xiaoshan District, compiled by the Human Resources and Social Security Bureau of Xiaoshan District, 2010.

23

10.3 The Practical Exploration of of the Universal Integration …

10.3.1.2

235

Universal Integration of Medical Service Supply

First, the new rural cooperative medical scheme and the basic medical insurance system for urban residents are equal in proportion of individual’s contribution to government’s payment. The two systems belong to the basic medical insurance system of Hangzhou, and individual’s contribution in the two systems is relatively low but the government’s payment has been gradually increasing. For instance, the insured farmers in the district of Xiaoshan only needed to pay 100 yuan in 2009, while the township government and district government paid 115 yuan and 125 yuan respectively, totaling 240 yuan, 2.4 times individual farmers’ payment. Farmers’ contribution rate was roughly equivalent to that of urban residents. Second, the insured people by all types of medical insurance systems in Hangzhou can enjoy compensation for medical expenses. In addition, no matter what kind of medical insurance systems they participant in, they can get roughly equivalent compensation ratio, compensation amount and maximum compensation amount. In most places of China, the new rural medical insurance scheme provides hospitalization compensation, which is neither consistent with the compensation method of medical insurance for employees nor is conducive to fostering the health awareness among the people and reducing medical expenses.24 The policy of outpatient service compensation in Hangzhou is the universal integration of the compensation methods of various medical insurance systems and provides a reference for other regions. Third, in terms of system design, the basic insurance system for urban residents and the new rural cooperative medical insurance scheme should be compatible with the local economic and social development level to achieve sustainable development. Relevant survey shows that with the development of economy and the improvement of income level, rural and non-working urban residents prefer to increase the standard of contribution appropriately so as to obtain better health security and compensation benefits.25 The insured rural people and urban non-working residentss in Hangzhou have been enjoying the same contribution ratio and compensation amount since 2009, which lays a foundation for the universal integration of the medical insurance system. Moreover, Hangzhou also stipulates that insured people can not only choose a designated hospital in their district (or county), but also seek treatment in designated hospitals in other districts (or counties), realizing the universal integration of medical institutions.

10.3.2 Universal Integration of Medical Insurance System in Suzhou The universal integration of the medical insurance system includes not only medical insurance but also medical assistance and public health services. In recent years, in 24 25

Jing [5]. Gao [6].

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10 The Universal Integration of Medical Insurance System

the process of building the medical insurance system, some places have discovered the necessity and urgency of the universal integration of medical assistance and public health services and have done useful explorations based on their own actual conditions. Suzhou is among them.

10.3.2.1

Universal Integration of Medical Assistance System

In 2011, the population of Suzhou was 6.423 million, of which the urban population was 2.452 million. Suzhou has jurisdiction over five county-level cities of Zhangjiagang, Changshu, Kunshan, Taicang, and Wujiang, and seven districts such as Wuzhong, Xiangcheng, Canglang, the Industrial Park and the High-tech Zone. Our investigation shows that Suzhou has realized the universal integration of recipients, projects and items of medical assistance. Suzhou adopts an integrated urban and rural medical assistance system. The same regulation and standard is implemented within a district (or county-level city), and normative assistance is provided to recipients according to the same examination method and approval procedure. No matter in urban or rural areas, all the residents in one district (or county-level city) participate in the medical insurance systems according to the principle of “insurance before assistance”. For eligible individuals or families, 70% of medical expenses are covered by medical assistance, and 95% of the part of the annual medical expense exceeding the maximum compensation line are covered by medical assistance. In order to better provide medical assistance for rural and non-working urban residents, Suzhou provides “One-Card” for each insured person, and adopts the method of simultaneous settlement so that the recipients and their family members can receive convenient medical assistance services. Suzhou defines the recipients of medical assistance as people whose per capita living standard in the household is below the minimum living standard, people whose living standard is a little higher than the minimum subsistence allowance standard, severely disabled people, temporarily needy people, rural Five Guarantee Households and so on. For the people whose family income is less than twice the minimum subsistence allowance standard, if they get one of the eight kinds of major and very serious diseases, i.e. cancer, leukemia, uremia, severe psychosis, lupus erythematosus, hemophilia, aplastic anemia and organ transplantation, they can get the same medical assistance as people living on minimum subsistence allowance. In terms of projects and items of assistance, the government provides not only hospitalization and outpatient service, but also assistance on rehabilitation, physical therapy, psychological intervention and psychotherapy. In terms of medical assistance funds, in 2009, for example, the amount of the medical funds given out reached 18.2136 million yuan, benefiting 11,034 people, an increase of 5194 recipients and 6,966,600 yuan over the previous year. The number of recipients increased by 88.94% and the amount of the funds given out increased by 61.97%. Among the recipients, there were 6,764 people covered by the medical insurance for employees, 2,129

10.3 The Practical Exploration of of the Universal Integration …

237

people by the medical insurance for residents, 1950 people by medical insurance for students, 186 farmers of land expropriation, and 5 people who retired in the 1960s.26

10.3.3 Universal Integration of Community Health Services The community health service center is a basic service agency that provides disease prevention, disease treatment and rehabilitation nursing for residents. It can effectively improve the availability and accessibility of medical care services. By the end of 2008, Suzhou had 2344 registered health institutions, 133 community health service centers and 1161 community health service stations. People who received diagnosis and treatment in these institutions totalled 24,723,300, or 55% of all the people in the city who went to medical institutions for medical service.27 Suzhou has extensively strengthened the hardware construction of community health service centers in districts (or county-level cities), and has standardized and integrated the uncorrelated medical institutions in communities into community health service centers (stations). The city has also carried out universal and standardized construction of houses, medical equipment and electrical appliances, drugs and devices, and working capital in community health service centers (stations). It also attaches importance to the software construction. Districts (or county-level cities) all took measures to gradually make the medical health resources accessible to every residents. For instance, as early as 2009, the Canglang District put forward the “5.15 Service Circle for the People” plan, by which a goal was set that people could enjoy community health services within a 15-min walk. Suzhou city has been accelerating the construction of community medical and health personnel as well. It has trained all 186 general practitioners in the region, and took in more well-educated medical staff with professional skills. Moreover, health service stations have been set up in all villages to supplement the community health service centers in towns. For example, in the town of Shaxi of Taicang City, village-level health service stations were established in villages such as Songnan, Banjing, Yuezhen, Fanshan, Yinbei and Zhonghe. What’s more, farmers are all provided with free maternal and child health consultation, free premarital medical examinations, free prenatal screening and diagnosis, free planned child immunization, free disease screening for women in extreme poverty, and caring for women, caring for children, and caring for special groups. In this way, rural people can enjoy equal and universal public health services as urban residents.

26

Source of data: Survey conducted by Suzhou Civil Affairs Bureau on July 15–16, 2010. Source of data: Report of the Primary Health Department of the Suzhou Health Bureau at the forum of the Suzhou Civil Affairs Bureau on July 16, 2010.

27

238

10.3.3.1

10 The Universal Integration of Medical Insurance System

Universal Provision of Community Mental Diseases Prevention Services

Due to the accelerating urbanization and industrialization, more people are getting mental diseases. According to statistics from the Mental Disease Prevention Office of the Suzhou Public Security Bureau, by the end of 2009, 90,000 people had got various mental diseases in Suzhou, with a prevalence rate of 14.02 ‰. Nearly 40,000 patients were registered with severe mental diseases, the detection rate being 6.37 ‰.28 It is a major task for the medical insurance system to provide rehabilitation services to these people. First, Suzhou has achieved the universal integration of mental illness management. The public security department and its police stations are responsible for the reception mentally ill patients (especially those caused social disturbance). The health department is responsible for the medical treatment, disease prevention, health care and rehabilitation of patients with mental illnesses, and provides professional guidance and training for workers in community health service centers (stations) to improve their professional skills. The civil affairs department bears the responsibility for promoting the rehabilitation training for the mentally ill patients utilizing community resources. Other departments, such as education, finance, social security, and Disabled Persons’ Federation, have their respective tasks. Meanwhile, a mental disease prevention leading organ has been set up to integrate the work of various departments. Second, the mental disease prevention work has been carried out in all community health service centers. In terms of prevention and control means, services of regular visits, interviews and delivery of drugs have been integrated to provide more targeted services. In terms of medical service projects, several projects such as outpatient treatment, hospitalization, community rehabilitation guidance have been integrated to reduce palindromia and re-hospitalization. In 2008, the city’s psychiatrists accomplished a total of 99,866 visits, interviews and inspections, of which 10,885 visits focused on psychiatric patients who were prone to relapses and disturbance. And there were 2997 special interviews, 83,153 regular visits and 48 mandatory receptions. 198 patients were transferred for treatment and 89 hidden dangers to be caused by mental ill patients were eliminated in time, which contributed to social stability and social harmony.29 Third, medical services and family care has been universally integrated through the Daytime Rehabilitation Station, a rehabilitation service widely adopted in developed countries. It combines the medical care of hospitals and family care so that the two sources of services can be integrated into community rehabilitation service. As early as 2006, Guanqian and Sujin, two communities in Pingjiang District, Suzhou City, founded daytime mental health rehabilitation stations, with specified duties and service contents and provided a reference for the building of such stations in terms 28

Source of data: Reports of Suzhou Municipal Public Security Bureau and Suzhou Municipal Health Bureau at the forum of Suzhou Civil Affairs Bureau on July 16, 2010. 29 Ibid.

10.3 The Practical Exploration of of the Universal Integration …

239

of construction area and medical facilities. The stations invited medical workers of Guangji Hospital to provide rehabilitation training and guidance for those with mental illnesses. The stations offered services of home beds, remote consultation, two-way referrals, life and work skills training, employment assistance, intervention treatment and psychological counseling to help mentally ill patients to go back to the society. By the end of 2008, the daytime rehabilitation stations in Suzhou had visited 17,850 patients, provided treatment for 5650 patients delivered free drugs and medical help to 434 patients, and trained 1600 for life and work skills training. 63 patients successfully returned to society.30 The Daytime Rehabilitation Station integrated hospitalization and home care and was welcomed by patients and their family members and even members of society.

10.3.4 Universal Integration of Medical Insurance System in Xiamen Health is the foundation of a person’s all-round development and it affects the happiness of millions of families. According to the World Health Organization, health is more about prevention than treatment, and treatment is just a supplement. Therefore, the universal integration of the medical insurance system not only includes the universal integration of medical insurance, medical assistance and other systems, but also includes the universal integration of medical resources. Xiamen has made efforts to universally integrated medical resources, medical insurance and medical services.

10.3.4.1

Universal Integration of Medical and Health Resources

The so-called universal integration of medical resources mainly refers to the reallocation and optimized utilization of hospitals and doctors in a region by the health department. It includes the universal coverage of high-quality medical and health resources and the re-integration of idle medical and health resources. For one thing, the government has strengthened the universal coverage and availability of high-quality medical resources through balanced and fair horizontal allocation of medical resources in Xiamen. For example, all the grade-A tertiary hospitals were previously concentrated near Zhongshan Road, Siming District. Duringthe integration effort, the government moved Xiamen Hospital of T.C。M to the densely populated eastern area and built it into the largest hospital of T.C. M in the province of Fujian, which enhanced the accessibility of high-quality medical resources to the residents in the eastern area of Xiamen. Moreover, the city moved the headquarters of the Second Hospital and the Third Hospital to Jimei District and Tong’an 30

Reports from Suzhou Public Security Bureau and Suzhou Municipal Health Bureau at the forum of Suzhou Civil Affairs Bureau on July 16, 2010.

240

10 The Universal Integration of Medical Insurance System

District respectively, making them the medical centers of the two districts. Meanwhile, Xiamen Changgeng Hospital was put into use, which optimized the provision of medical and health resources in Haicang District. In 2012, relying on Xiamen University, the city government initiated the building of a grade-A tertiary hospital in Xiang’an District and a grade-A tertiary hospital in Jimei District which could also benefit people from Quanzhou and Zhangzhou cities of Fujian Province. For another thing, the government has improved the vertical allocation of highquality medical resources. With tertiary hospitals in each district or region as the center, the medical resources of personnel, money, and facilities are integrated to provide comprehensive medical services. For instance, Xinglin Hospital and Siming Hospital were merged into Xiamen First Hospital, which was then integrated with Tongmen Hospital in Xiang’an District. Jiangtou Hospital was merged into Xiamen Hospital of T.C.M, Jimei Hospital was merged into Xiamen Second Hospital. Xiamen Railway Hosital, Huli Hospital, and Hospital of Xiamen University were merged into Zhongshan Hospital. The Municipal Center for Disease Control and Prevention and the Medical Emergency Rescue Center and Health Supervision Office were relocated to Jimei District. All these measures vertical integration enhanced the universality and accessibility of high-quality medical resources.Through these measures, the Universab integratnom of medical resources has been realiled, and the Universality and accessibility of medcal resources have been enhanced. To reorganize medical resources, it is necessary to let tertiary hospitals take over community medical institutions to form medical service clusters and provide convenient and safe medical and health services. Xiamen adopted this practice and the people are guided to seek medical treatment in a reasonable way, for example, those with minor diseases can go to community hospitals and those with major and very serious diseases can go to large hospitals. Since 2004, Xiamen has issued a succession of regulations such as the Opinions on Establishing and Improving the Twoway Referral System for Community Health Service Institutions and Hospitals, the Opinions on the Implementation of the Development of Community Health Services, the Decisions on Reform and Development of Medical and Health Care to Solve People’s Difficulties in Getting Medical Treatment, the Administrative Measures for Community Medical Service Centers (for Trial Implementation), the List of Essential Drugs in Community Medical Service Centers (for Trial Implementation), and Several Opinions on the Implementation of the National Essential Drug System by Public Primary Medical Institutions. 36 community medical centers are entrusted to tertiary hospitals, and the latter appoint the staff for the latter and pay their basic salaries. In order to improve medical services, the government equips every community medical service center with X-ray, b-scan and other inspection equipment. The construction area of each center is no less than 1,000 square meters, and personnel in these cenetrs must receive training in tertiary hospitals. Moreover, medical staff in tertiary hospitals are required to work in a community medical service center for more than half a year to be promoted to vice-senior or senior titles.

10.3 The Practical Exploration of of the Universal Integration …

10.3.4.2

241

Universal Integration of Medical Insurance System Management

The first is the establishment of a universally integrated medical insurance management system. In the basic medical insurance systems for employees from government bodies and public institutions, employees from enterprise, urban residents, rural residents, college students, persons under 18 years old and so on, now businesses like payment of contribution, compensation for expenses, and the use of pooling funds for major and very serious diseases are all managed by medical insurance institutions under human resources and social security bureaus. Thus, the operation efficiency is improved and operation risks are decreased which is conducive to the sustainable development of the basic medical insurance system. The second is the universal integration of compensation and contribution standards. Since 2007, Xiamen has standardized the outpatient service compensation, minimum line of hospitalization compensation, the compensation ratio above the minimum line and maximum hospitalization compensation of basic medical insurance systems for urban residents, rural residents, college students and minors.31 In addition, the principle of compensation for medical expenses of these people is consistent with the that of basic medical insurance for employees. For example, as for the first-time expense incurred in tertiary, secondary, and primary medical institutions, the corresponding minimum lines of hospitalization compensation for employees are 6, 4, and 2% of average salary of the city’s employees in the previous year, while those for rural and non-working urban residents are 5, 3 and 1% of the average salary of the city’s employees in the previous year. In this way, the two types of basic medical insurance system have been well integrated to lay a foundation for the future integration of the basic medical insurance system for employees and that for individuals. What’s more, the government has integrated the contribution standards of rural and urban non-working residents. Since July 2011, each person contributes 80 yuan a year, and the government pays 300 yuan for the person each year. In order to make good use of the funds of personal accounts, on August 1, 2012, Xiamen implemented the Trial Measures for the Management of Comprehensive Sub-Accounts of Medical Insurance and Health, which stipulated that certain amount of surplus money of one’s personal account was used to pay his or her own medical expenses or the medical expenses of his or her parents, children or spouse. This not only effectively released the idle funds of personal accounts and improved the efficiency of personal accounts, but also realized mutual assistance among family members. The third is the establishment of the drug consumption system with universal compensation. To solve the problems of difficulties and high expenses in getting medical care and guide the people to choose medical institutions in a reasonable way, in 2010, Xiamen regulated that insured persons could receive a medicine subsidy of 500 yuan per year at the community medical service center. In other words, no 31

In Xiamen, four categories of urban residents, rural residents, college students, and minors are collectively referred to as “urban and rural residents”.

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10 The Universal Integration of Medical Insurance System

matter be enterprise employees or rural and urban residents, the insured people can receive a total of 500 yuan of free drugs every year if they go to community medical service centers to seek medical treatment. But if they go to hospitals only, they can not enjoy such benefits.32 The government also stipulated that every insured person could receive compensation ranged from 200 to 400 yuan each year for a medical examination.33 In addition, after July 2011, the drug markup rate in public hospitals was reduced from 15 to 10%.34 In 2012, drug markups were abolished. All these have been done to establish a universal and integrated medical insurance management system and drug pricing system to promote the universal access to medical insurance benefits by insured persons.

References 1. Li, Y.: Research on Urban Poverty and Social Assistance. Peking University Press (2004) 2. Zheng, B.: 60 years of the social security in China: achievements and lessons. Chin. J. Popul. Sci. 5 (2009) 3. Hertzman, C., Keating, D.P.: Developmental Health and the Wealth of Nations: Social, Biological, and Educational Dynamics. Guilford Publication (1999) 4. Wang, Y., Gao, H., et al.: On urban-rural coordination of new rural cooperative medical scheme. Northwest Popul. J. 6 (2010) 5. Jing, T.: Health problem of peasant: mutual cooperation between government, market and society. Hebei Acad. J. 4 (2006) 6. Gao, H.: Study on the sustainable development of new rural cooperative medical care-based on the experience of some economically developed cities. J. Beijing Normal Univ. 1 (2009)

32

Because the fund was from social pooling, there were arguments over the implementation of the policy. 33 Employees from government bodies and public institutions could get 400 yuan every year for a medical examination, while rural and non-working urban residents could get 200 yuan each year for a medical examination. 34 Xiamen Price Bureau, Work Plan for Reducing the Drug Markup Rate of Public Hospitals by 5% in Xiamen, April 8, 2011.

Chapter 11

The Universal Integration of Employment Security System

Employment has a vital bearing on people’s livelihood. Closely bound up to people’s life, it is an important topic to economic and social policymakers and essential to social stability and harmony. If employment problems are left unsolved and urban and rural labor forces are not entitled to full and equal employment, harmony in other aspects will be out of the question. Building a complete employment security system, thereby realizing universal and equal employment and improving individual welfare level, is the dream of everyone, as well as the political and social goal pursued by governments all over the world. Therefore, it is a must to explore the universal integration in the employment security system.

11.1 The Operation and Problems of Employment Security System Since the reform and opening-up, China has set the goal of realizing full employment and creating better jobs, prioritized employment, adopted proactive policies to promote and drive employment, and focused on providing reemployment training for laid-off and unemployed workers to enhance the employment and entrepreneurial abilities and skills of various workers, while improving the unemployment regulation mechanism and reinforcing labor security supervision as well as dispute reconciliation and arbitration to consolidate the employment security system.

11.1.1 Operation of Employment Security System Employment security should run through the whole process of employment, covering job hunting, labor rights and interests and unemployment insurance. It should take specific conditions of different labor groups into consideration and tilt toward certain © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_11

243

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11 The Universal Integration of Employment Security System

groups. Universally it includes proactive employment policies, workers’ right and interest protection system and unemployment insurance system.

11.1.1.1

Labor Employment Policies

Proactive labor employment policies are the main part of the employment security system, reflecting the government’s philosophy and goal in employment policies. Since the 16th CPC National Congress, the government has carried out industrial, trade, fiscal, tax, and financial policies that are more conducive to employment promotion, improved the comprehensive policy system for promoting employment, and implemented support policies that encourage workers to get employed flexibly through multiple channels and by diversified means. In terms of policy making, the government has given priority to laid-off and unemployed workers to build a relatively sound employment service system. As early as in 2002, the central government promulgated the Notice on Further Ensuring Reemployment of Laid-off and Unemployed Workers (Document No. [2002]12). The focus of government work was shifted from unemployment insurance to reemployment promotion. In order to implement the policy document, ministries under the State Council released eight supporting documents while local governments formulated according measures for implementation in 2013, initially shaping a proactive reemployment policy system. Moreover, the government expanded the coverage of reemployment policies to such groups as surplus rural labor, in a bid to solve employment problems related to surplus labor in rural areas. In 2005, the State Council extended the proactive reemployment promotion policies to new urban labor and surplus rural labor in its No. 36 document the Notice on Further Reinforcing Employment and Reemployment Work, enriching diverse guarantee measures like fiscal and tax guarantee, social security and employment services. In 2008, the Employment Promotion Law was enacted, which elevated proactive employment policies to a legal height, with original proactive employment policies consolidated, enriched and improved. First, the government has spared efforts to create a macroeconomic environment favorable to employment, and increase employment rate and support. The central government ordered people’s governments at the county level and above to take job enlargement as important goals for economic and social development, incorporate it into their national economic and social development planning, and formulate “medium and long-term plans and annual work plans”1 for promoting employment locally. For such, the Employment Promotion Law requires governments at the county level and above to set up special employment funds and establish a policy system covering fiscal, financial, trade, investment, industrial, regional economic, educational and social security with employment at the core. Furthermore, the inclusiveness has been enhanced. It encourages various enterprises to “create more jobs by launching new enterprises or expanding businesses”, and support “unemployed

1

See Article 4 in the Employment Promotion Law.

11.1 The Operation and Problems of Employment Security System

245

persons and the disabled”2 to get jobs. The scopes of enterprises entitled to tax preferences and groups benefiting from microfinance have been enlarged, and “zeroemployment families” incorporated into the targets of employment aid. In addition, equal employment of workers is highlighted. It stresses that women, the disabled, pathogen carriers of infectious diseases, migrant workers enjoy equal job opportunities in accordance with the law, protecting equal labor rights enjoyed by workers of all ethnic groups.3 Last but not the least, attention was paid to the construction of the public employment service system, and the overall supply of employment services to balance industrial and employment polices between urban and rural areas, between regions, and between different groups with employment demands. Regarding raising employment, the government has focused on the employment of new job-seekers and reemployment of laid-off workers in urban areas to improve the employment security system. From 2007 to 2011, the numbers of laid-off workers reemployed in urban areas stood at 12.04 million, 11.13 million, 11.02 million, 11.68 million, and 12.21 million, respectively, while the numbers of registered laid-off workers in urban areas were 8.30 million, 8.86 million, 9.21 million, 9.08 million and 9.22 million, respectively. The urban registered unemployment rate was controlled below 4.3%.4 Meanwhile, the government has attached importance to the employment of surplus rural labor, maintaining that surplus rural labor would inevitably transfer to nonagriculture sectors and urban areas. In the Opinion on Several Policies for Promoting Farmers to Increase Incomes issued in 2004, the central government proposed safeguarding legitimate rights and interests of farmers going to work in cities, urging urban governments to strengthen vocational training on rural labor, provide certain subsidies and funds, and firmly correct wrong practices of forcing farmers to take part in paid training and occupational qualification appraisal. The No. 1 central document of 2010 reiterates the importance of facilitating farmers’ employment and entrepreneurial endeavors, building a public employment service system covering both rural and urban areas, and promoting rural labor to transfer to urban areas steadily and in an orderly fashion. As far as Xiamen, one of the destinations for our investigation, is concerned, the government strived to improve labor employment policies, accelerate the cultivation of industrial technicians, ameliorate the job environment, and speed up the structural transformation of labor employment to practically solve such problems as inadequate total labor supply and prominent structural contradiction. Labor supply and demand were active. In 2010, there were a total of 2.07 million employees across Xiamen, an increase of 679,500 employees from 2005. Among the more than 2 million employees, the employment proportion was 0.3:66.03:30.4 for the primary,

2

See Article 12 and 17 in the Employment Promotion Law. See Article 28 in the Employment Promotion Law. 4 See the 2011 Statistical Communique on Human Resources and Social Security Development released by the Ministry of Human Resources and Social Security. 3

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secondary and tertiary industries.5 Employees in the secondary industrial still took the largest share.

11.1.1.2

Workers’ Rights and Interests Protection System Gradually Improving

To provide universal labor protection for employed workers, ensure them a stable, safe and healthy working environment, timely deal with various labor disputes and avoid unreasonable unemployment, the government released such laws as the Labor Law, Labor Contract Law and Law on Mediation and Arbitration of Labor Disputes. The Labor Law that took effect in 1995 specifies major rights and obligations of workers, covering labor contracts, working hours and rest, occupational safety and health, vocational training, wages, social insurance and welfare, labor disputes, supervision and inspection, and so forth. The Labor Contract Law formulated in 2017 starts from the aim to “improve the labor contract system”, “protect legitimate rights and interests of workers”, and “establish and develop a harmonious and stable labor relationship”, offering detailed provisions on the conclusion, performance and modification, and revocation and termination of a labor contract. The Law on Mediation and Arbitration of Labor Disputes provides comprehensive and thoughtful protection for workers through specific regulations on the formulation and implementation of labor contracts, handling of labor disputes, definition of occupational injuries and the establishment of according insurance funds. In this way, the system centering on the Labor Law offers universal protection for employed workers. Moreover, the government has also been committed to improving the human resource market, intensifying the provision of employment information, vocational training and other employment services, promoting the integration in the human resource market and regulating it constantly. Data shows that the government rectified the order of the human resource market across the nation in 2011, when it inspected 133,000 job-introduction agencies and employers, dealt with 10,100 illegal cases, and cracked down on 4,055 illegal job intermediary activities. In fact, it had handled 13,000 illegal cases annual on average in 2009 and 2010 and banned 5,000 and more than 4,100 illegal job intermediary activities, respectively, in the two years.

11.1.1.3

Gradual Establishment of Unemployment Insurance System

To provide laid-off workers basic living guarantee when they are out of work to promote their reemployment is mainly reflected in the Regulations on Unemployment Insurance executed in 1999. Currently, employees of enterprises and public institutions in urban areas are the main body paying unemployment insurance premium and enjoying unemployment insurance. Enterprises and public institutions in cities 5 Data source: The 2011 Statistical Yearbook of Xiamen Special Economic Zone on the website of Xiamen Municipal Bureau of Statistics (http://tjj.xm.gov.cn/).

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and towns shall pay unemployment insurance premium at a rate of 2% on the basis of the total amount of their salaries, while employees pay the premium at a rate of 2% on the basis of their own salaries. Local social insurance agencies shall be responsible for the matter. The overall planning of the unemployment insurance fund shall be conducted in municipalities and cities divided into districts; and levels of overall planning in other areas are stipulated by people’s governments of provinces and autonomous regions. The insured shall be entitled to receive unemployment insurance compensation for a maximum of two years based on the period of paying premiums. The standard for unemployment insurance compensation shall be set by people’s governments of provinces, autonomous regions and municipalities at a level lower than the minimal local salary standard but higher than the minimal living security standard for urban residents. Social insurance agencies shall be responsible for the registration, investigation and statistics of unemployed persons, appropriating subsidiary fees for vocational training and job seeking for the unemployed group, and offering free consultation services to the unemployed, among other duties. In the Social Insurance Law implemented in 2011, the government expanded the coverage of unemployment insurance, stipulating that all kinds of workers, including rural residents working in cities, farmers whose land has been expropriated, and foreigners working within the territory of China, shall be insured and unemployment insurance premiums shall be paid jointly by employers and workers as required.6 This has enhanced the universal coverage of the unemployment insurance system and the universal acquisition of unemployment insurance compensation, safeguarding legitimate rights and interests of all kinds of employees. Data shows that in the decade from 2002 to 2011, the total employment in the nation, the employment in cities and towns and the number of people covered by unemployment insurance all showed an upward trend, indicating that the universal coverage of the unemployment insurance system was being enhanced. See Table 11.1. Table 11.1 suggests that with the promulgation and implementation of the Regulations on Unemployment Insurance, the number of people participating in unemployment insurance across China increased year by year from 2002 to 2011. It hit a plateau from 2002 to 2005, but showed strong growth momentum thereafter, up 19.42% during the four yeas from 2006 to 2009. This signifies the universal coverage of the unemployment insurance system to a certain extent, which has provided the last safety net for guaranteeing the employment of social members.

11.1.2 Problems in Employment Security System As the Chinese social welfare system has transitioned from a system based on work units into a society-based one since the 1990s, there is a need to reform and improve the employment security system inherently to radically change the previous system based on work units. However, due to the huge employment population in China, 6

See Articles 95, 96 and 97 in the Social Insurance Law.

677.8

847 598.1

1137

830 538.5

1210

Source China Statistical Yearbook 2010, 2011 and 2012, published by China Statistics Press in 2010, 2011 and 2012

753.5

2052

839

516.7

1482

886

483.9

1682

921

209.1

2283

908

197.0

2159

922

741.6

1623

827

Number of people receiving unemployment insurance compensation 657

800 1643

1620

2011

770

2010

Unemployment in urban and rural areas

2009

10,181 10,372 10,583 10,647 11,186 11,644 12,399 12,715 13,375 14,317

2008

Unemployment in cities and towns

2007

Participants of unemployment insurance

2006

73,740 74,432 75,200 75,825 74,978 75,321 75,564 75,828 76,105 76,420

2005

24,780 25,639 26,476 27,331 29,630 30,953 32,103 33,322 34,687 35,914

2004

Employment in cities and towns

2003

Total employment

2002

Year

Table 11.1 National employment and participation in unemployment insurance from 2002 to 2011 (Unit: 10,000 persons)

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the long-standing dual economic structure that separates urban and rural areas, and the inertia of the previous system, current employment security still has following problems.

11.1.2.1

Narrow Coverage

In order to meet the needs of the development of the market economy, reform of state-owned enterprises and the construction of the social welfare system, China has strived to build a market-based employment security system. However, the coverage of the current system is quite narrow and lacks integration. The narrow coverage of the system first manifests in the failure of employment policies to cover the entire labor population. Current employment policies mainly target the urban population, hardly involving such groups as farmers and migrant workers. For example, the systems on minimum wage, the reemployment of laid-off workers, the employment of females above 40 years old and males above 50, and professional and technical titles predominantly serve urban employees and residents. Farmers and migrant workers are almost unlikely to enjoy benefits brought by these systems and polices. Moreover, the current unemployment insurance system also applies to employees of enterprises in urban areas only. It includes neither farmers nor migrant workers, or civil servants, employees at some public institutions, and those working in various parties and people’s organizations. Second, the coverage of the employment security system is narrow also because statistical objects are limited. The objects of employment population statistics are restricted to non-agricultural hukou holders who are within the range of labor ages, unemployed yet demanding jobs, have working capacities, and have registered in local employment service agencies. The statistics of the employment population, particularly the unemployment population, excludes not only the majority of farmers, but also huge numbers of migrant workers, so the employment information registration and management systems are basically void. What’s more, the statistics also leave out land-lost farmers and retired fishermen. The disclosed unemployment rate is normally lower than the actual unemployment situation. In fact, the restriction of employment population statistics not only hinders us from accurately grasping real conditions of employment, but makes it harder for us to propose fairer employment policies and protect legitimate employment rights and interests of groups like farmers, migrant workers, land-lost farmers and retired fishermen. For such, some scholars always hold a critical attitude toward the official unemployment rate. Also the defect of the employment security system is reflected by the segmentation of occupational identities. The personnel system closely related to employment is differentiated and selective. The employment of non-college graduates is attached to the Ministry of Human Resources and Social Security, and they are still identified as workers. On the other side, fresh college graduates are managed by talent markets that are administered by the State Administration of Civil Service, and their so-called identity of “cadre” is retained. The personnel files of this group, even unemployed, are preserved in talent markets. Consequently, it is difficult to build a unified labor

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market across the nation, even across a city or district, which hinders the integration of employment populations and artificially increases costs to the flow of human resources. In addition, employment services are not diverse enough to meet the demands of different groups. Land-lost farmers, migrant workers, university students and particularly needy people (the disabled as well as females above 40 years old and males above 50) have their respective employment intentions and needs, but current employment training and support are too homogeneous and less targeted. For example, vocational training schools universally feature bad teaching conditions and inadequate market orientation in teaching content and methods. Similar to universal institutions of higher education and technical colleges, they are far away from real market needs. Moreover, many farmers go to work in cities blindly, calling for effective organization by related departments in the flow of rural labor. Last but not the least, labor employment protection is not universal enough, and employment security is differentiated as well. Some occupational groups, such as civil servants, staff members of public institutions, and regular employees at stateowned or collective enterprises enjoy sound employment protection, while the above mentioned non-regular employees and those working in the front line of high-risk industries, such as miners and boiler operators, universally lack adequate labor protection. Some institutions even fail to provide sufficient labor protection for pregnant and childbearing-age women.

11.1.2.2

Incomplete Unemployment Insurance System

Unemployment insurance is inseparable from and employment policies. A sound unemployment insurance system will help solve employment problems. At present, the unemployment insurance system with unemployment insurance at the core is flawed in the following three ways during the implementation process. First the coverage of unemployment insurance is not wide enough. The coverage can be measured by the ratio of unemployment insurance participants to the total employment population. The bigger the ratio is, the bigger the rate of the insured is. In ideal conditions, the ratio of unemployment insurance participants to the total employment should be 1. In fact, according to Table 11.1, the ratio of unemployment insurance participants to the urban employment population remained below 45% in the recent decade, and the ratio to the national total employment never exceeded 16%. This is largely due to the insufficient coverage of the Regulations on Unemployment Insurance. The Regulations on Unemployment Insurance released in 1999 initially stipulated that only employees at enterprises and public institutions in urban areas could participate in unemployment insurance programs, while “contractsystem farmer workers engaged by enterprises and institutions in cities and towns do not pay unemployment insurance premium themselves.”7 This has resulted in the exclusion of non-regular employees, freelancers and numerous migrant workers 7

See Article 6 in the Regulations on Unemployment Insurance enacted in 1999.

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from the unemployment insurance system.8 Besides, many non-public economic organizations have deliberately skipped the payment of unemployment insurance premium for their employees by rent-seeking means, further narrowing the coverage of unemployment insurance. The Social Insurance Law indeed expands the scope of objects for unemployment insurance, incorporates all employees into the unemployment insurance system, and requires the unemployment insurance of the floating population transferred to wherever they float to, which has enhanced the universality of unemployment insurance. However, there is a lack of according registration and supervision mechanisms. Second, the unemployed don’t enjoy enough unemployment insurance benefits in universal. Theoretically, the number of people receiving unemployment insurance compensation should roughly equal to that of the unemployed. The ratio should be 1 in ideal conditions. However, Table 11.1 shows that the number is not only far smaller than the unemployment population in urban and rural areas combined, but also lower than the urban unemployment population. Among those years, 2003 saw the highest ratio of the number of people receiving unemployment insurance compensation to the urban unemployment population, reaching 92.7%, and the lowest ratio occurred in 2009, standing at 52.5%. In terms of the ratio of the number of people receiving unemployment insurance compensation to the national total unemployment population, the highest was 46.4% in 2004 and the lowest was 13.8% in 2002. In other words, in 2002, the number of people receiving unemployment insurance compensation across China was merely 13.8% of the total registered unemployment population in urban and rural areas. This hints at the low level of unemployment insurance benefits for workers. Although many people have participated in unemployment insurance programs, they cannot receive unemployment insurance compensation timely once they lose their jobs, which will check the sustained development of the whole unemployment insurance system in turn. Third, the Regulations on Unemployment Insurance is inadequate in preventing unemployment and promoting employment. The Regulations on Unemployment Insurance was released to cope with the international financial crisis. Its aim is to guarantee the basic living of laid-off workers, facilitate them to get reemployed and prevent employees from losing their jobs. It should serve as the first line of defense in preventing unemployment, promoting employment and advancing social stability. However, the current unemployment insurance system has failed to stipulate clearly the share of expenses in promoting employment. The matter is totally subject to informal arrangements by unemployment insurance agencies. As a consequence, many places have laid a particular stress on relieving the unemployed of their life stress, while investing less in vocational training and job recommendation, which has affected the function of the Regulations on Unemployment Insurance in preventing unemployment and promoting reemployment. For example, since the 8

Although the government encourages migrant workers to participate in unemployment insurance, it is required that they should pay unemployment insurance premium for more than 1 year. However, migrant workers are normally on a rolling one-year contract. Therefore it is difficult for them to get unemployment insurance compensation when they lose jobs, so they are unwilling to participate in unemployment insurance.

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implementation of the regulations, the national unemployment population has universally showed an upward trend. It even exceeded 20 million in 2005, reaching 20.52 million. In 2010, the number was 22.83 million. That is, the implementation of the Regulations on Unemployment Insurance hasn’t effectively stopped the increase of the unemployment population, so it has failed to function in preventing unemployment. Certainly the growing unemployment population is a result of multiple factors, including the expansion of the labor force, “market monopoly by buyers, imbalanced employment due to imbalanced industrial structure, incomplete employment training system, information asymmetry in the labor market and unsmooth employment channels”,9 but the failure of the unemployment insurance system itself in preventing unemployment and promoting employment is a crucial factor. Fourth, the management of unemployment insurance is not scientific enough. On the one hand, the terms of calculation, distribution and payment of unemployment insurance benefits are unreasonable. Proportional relations among unemployment insurance benefits, the minimum subsistence level and minimum wages should be scientific. Since the current minimum subsistence level is more than three times higher than minimum wages in cities, it is too universal and arbitrary to simply define unemployment insurance benefits as higher than the minimum subsistence level of urban residents and lower than local minimum wages. On the other hand, the Regulations on Unemployment Insurance provides a two-year term for claiming unemployment insurance compensation. This can guarantee the basic living of the unemployed group, but is also likely to induce voluntary unemployment objectively.

11.1.3 Necessity of Universal Integration of Employment Security System At present China is in the critical period of completing the building of a moderately prosperous society in all respects. Whether the employment security system is sound and employment-related problems concerning the public are properly settled are vital to driving socioeconomic development, enhancing social stability and promoting the building of a moderately prosperous society in all respects. The universal integration in the current employment security system to make it more complete is necessary in multiple ways. First, the implementation of the spirits advocated by the CPC Central Committee requires the universal integration in the employment security system. Since the 16th CPC National Congress, the CPC Central Committee has paid much attention to the cause of people’s livelihood with employment at the core, proposing “doing everything possible to create more jobs and improve people’s livelihood”. Hence it is important to “improve the system of pre-job training and employment services and raise workers’ skills for new jobs”. The report to the 17th CPC National Congress stresses the importance of following a proactive employment 9

Sun [1].

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policy, improving the market mechanism for employment as well as the employment structure, improving vocational education and training for the labor force and strengthening pre-employment training for surplus labor transferred from rural areas, and improving employment aid to the needy and making it a priority to help zeroemployment families to have job opportunities. The 18th CPC National Congress regarded delivering a better job in creating employment as the goal of constructing the employment security system, calling for efforts to strengthen vocational skill training and improve employment services, the system of labor standards and the mechanism for harmonizing labor relations to build harmonious labor relations. Second the universal integration in the employment security system is a necessary requirement for easing the contradiction between labor supply and demand, safeguarding legitimate rights and interests of workers, and promoting the benign cycle of economic development and employment growth. Currently, the contradiction between labor supply and demand is very outstanding in China. On one hand, due to the large population and its inertial growth, China has seen an additional population of more than 8 million every year. On the other hand, the transformation in economic system and development structure has led to labor surplus. The size of surplus labor force amounts to approximately 15 million in cities while 150 to 200 million people are surplus labor in the countryside. Under such circumstances, only by improving the employment security system and carrying out universal integration can the employment potential of workers be maximized, employment channels expanded and job opportunities increased, so that workers can get employed smoothly and the conflict between labor supply and demand practically mitigated. From the perspective of safeguarding workers’ legitimate rights and interests, it is also essential to integrate the employment security system universal. A great deal of surplus labor has brought into being a buyer’s market for a long time in the employment field, putting labor suppliers at a disadvantage. Taking advantage of its powerful position, the demand side would raise the access threshold at will and even create difficulties for job seekers, giving rise to discrimination in the job market. Through an investigation into Xiamen, Suzhou, Chongqing and Honghe, the research team found that 71.5% of the surveyed professionals in a wide array of areas reported discrimination in “gender,” and 66.6% and 79.8% opted for “household registration” and “educational background,” respectively. 68.8% of the populace agreed upon educational background discrimination in employment. Relatively speaking, 59.2% of the respondents didn’t think there was “ethnic discrimination” in the employment field. In fact, some employers take advantage of labor surplus and try hard to drive down salaries for workers, in an attempt to reduce labor costs and maximize their profits. For instance, they force employees to work overtime, overlook the deterioration of the working environment, and depress salaries and other benefits. This requires us to accelerate the universal integration in the employment security system and through such measures as policy adjustment, institutional innovation and legal protection, reasonably utilize limited resources to build a unified, fair and humanized labor market, and improve public services and related service agencies to provide a more equal job environment for job-seekers.

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Third, speeding up industrialization and urbanization necessitates the universal integration in the employment security system. Industrialization and urbanization are inevitable courses for China to grow into an economic power. The two are complementary. In the processes of industrialization and urbanization, a large agricultural population would immigrate to cities.10 To enable them to survive and develop in cities and supply human resources for industrialization and urbanization, it is a must to extend the original scope of employment security and widen the coverage of the employment security system to incorporate all workers and properly solve their problems in employment security and services. Targeted pre-job counseling and training based on their conditions are particularly important to provide them useful job information. Only in this way can they feel reassured to contribute their power to social development, industrialization and urbanization, thereby improving their income. Fourth, the universal integration in the employment security system is an objective requirement for bridging the urban–rural gap and easing social contradictions. The reform and opening-up have substantially increased China’s economic strength, ranking the nation second in the world in terms of economic aggregate. Nonetheless, the Chinese economy is plagued by serious imbalances. There are wide income gaps between regions, social strata and industries, represented by a high Gini coefficient. According to estimates made by related UN agencies, the Gini coefficient exceeded 0.5 in 2015 in China, ranking the country fourth from bottom globally.11 Excessive income gaps and the high Gini coefficient have largely hindered the solving of problems regarding labor employment security. Therefore we should start from the source to create a fair job environment and equal opportunities for all workers, provide them more convenient and practical employment training, and pragmatically guarantee their incomes. Meanwhile, those with difficulties in finding jobs should be given basic living guarantee, alongside more considerate and effective support. The majority of farmers, especially land-lost farmers, sea-lost fishermen and migrant workers, should be universally included in the whole employment security system, thus breaking employment-related institutional barriers detrimental to farmers’ interests, practically narrowing the urban–rural gap, regional gap and gap between social strata that are universal in employment, alleviating social contradictions caused by excessive wealth gaps and employment inequality, and promoting social harmony.

11.2 The Process and Design of the Universal Integration of Employment Insurance System These problems in the area of labor employment require us to build a universally integrated employment security system, make clear the goal of universal integration, 10

Data shows that the urban population in China first outnumbered the rural population by the end of 2011, accounting for 51.27% of the total population. 11 Cong Yaping and Li Changjiu: China’s Gini coefficient crosses the warning line, reaching 0.5. See http://www.ce.cn/.

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conduct institutional and process design based on the goal, and determine the path of integration to enable the universally integrated system to facilitate the solving of public employment problems more justly.

11.2.1 Goal of Universal Integration The overall goal of employment security in China is to build a universal, multifunctional and systematic employment security system with to provide comprehensive employment services for all types of job-seekers, including all workers and unemployed persons, meet their diverse employment needs and deliver a better job in creating employment. First it is vital to build an employment security system with full coverage. The full coverage has three implications. It should be able to cover the entire employment population, not only urban employees, but also urban residents, migrant workers and farmers, and even civil servants and members of all parties. In other words, it is an employment security system for all employees, not simply for certain strata or groups. For example, the current employment security system, especially the coverage of unemployment insurance, has excluded civil servants, which is obviously not a universal employment security system, because civil servants are also likely to lose their jobs. Our survey involving 2000 respondents in four places including Xiamen and Suzhou shows that 55.5% of the surveyed thought it “very necessary” and “necessary” for civil servants to participate in unemployment insurance programs, and only 26.2% found it “unnecessary”. Vertically, such an employment service system should universally cover countylevel people’s governments, and extend to towns, villages, streets and even village neighborhoods with people’s governments as the carrier, thereby building a universal employment security system. According to our investigation in Xiamen, Suzhou, Chongqing and Honghe, 43.2% of the surveyed professionals agreed that the building of an employment information service network can be extended to “village neighborhood committees” and 20.5% chose the option “towns, villages and streets”. That is, most professionals opted for extending employment information services to the community level. Moreover, the employment security system should be as comprehensive as to cover employment services, employment management, vocational education, employment training, employment aid, and employment supervision and security. According to Chapter IV “Employment Services and Management” of the Employment Promotion Law, people’s governments at and above the county level shall not only intensify the construction of information networks and relevant facilities of human resource markets, and foster and improve uniform, open, competitive and orderly human resource markets, but also establish a sound public employment service system and provide workers with such services as offering consulting services on employment policies and regulations; announcing information about supply and demand of jobs, guiding market wages and vocational training; offering vocational guides

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and job recommendations; offering aid to persons with difficulties to find jobs, and handling the register of employment and unemployment to promote the improvement of an employment service system covering urban and rural areas.12 In other words, employment services should be universal and comprehensive. Second, efforts should be made to establish a fully functional employment security system. From the perspective of process, the system should include job information offering, employment counseling and training, occupational skill appraisal, job safety and labor protection, employment payment and benefits, labor rights and interests defending, and employment development and unemployment insurance. That is, the employment security system should run through links before, during and after employment, and shouldn’t be impartial. For example, unemployment insurance is an important component of the employment security system, so the formulation and implementation of unemployment insurance regulations should have such functions as guaranteeing basic living, promoting employment and preventing unemployment.13 The three functions should be all in place. If one is stressed and the other two neglected, unemployment insurance as part of the employment security system will be not truly effective. To workers on the micro level, the so-called fully functional employment security system is to build a unified information network system on labor markets, so that every worker can log onto the system to find a job or register unemployment, and obtain services like vocational guides and job recommendations, employment training counseling, vocational skill appraisal, employment policy consultation, labor supervision and consultation on employment rights and interests defending, wages and social insurance benefits, and employment aid. Or as long as workers go to the human resource market, they can get all employment-related matters done. So to speak, the fully functional employment security system should be able to form an all-round service network for all workers, furnishing various vocational training schools related to vocational training; appraisal centers related to vocational skills; labor supervision teams, labor arbitration institutions and law firms to safeguard workers’ rights and interests; and social insurance agencies related to unemployment insurance, preferential policy and welfare. The completeness of the service network can not only ensure that workers can quickly find services they need on public employment service platforms, but also facilitate public employment service platforms to grasp workers’ employment intentions and movements to realize the dynamic and effective management of the whole employment information system. Third, a standardized and orderly employment security system should be established. To establish the system, it is vital to make the labor market orderly, integrate current labor and talent markets, change the situation in which labor and talent markets are separate, ensure all kinds of workers can obtain employment security equally, allow them to flow freely across regions, industries and work units based on their own conditions and judgment, carry out two-way selection between workers and employers, and define rights and obligations of the two sides in the form of labor 12 13

Articles 32, 33, 34 and 35 in the Employment Promotion Law. Lv [2].

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contracts. Besides, it is necessary to build a scientific system for employment security fund raising, use and regulation. Social insurance agencies and service outlets should ensure all employers and employees timely and sufficiently pay premiums. Regional agencies should calculate scientifically according to the amount of insurance fund reserve and unemployment conditions to ensure the maintenance, appreciation and reasonable expense of unemployment insurance funds and provide the biggest support for promoting employment. Meanwhile, it is essential to clarify the function and target of governments and organizations at all levels to realize the national integration in the employment security system, characterized by macro planning and management by the state on the top, human resource management on the provincial, municipal and county levels in the middle, and implementation in urban streets, rural villages and even village neighborhoods. On the state level, the central government should pay attention to areas with difficulties in employment security, apart from releasing macro employment policies, guiding local employment work, and gathering and managing labor information across the nation. Governments at and above the county level should, based on the Employment Promotion Law, conduct reasonable planning and management of related service institutions including labor markets, public employment service platforms, vocational training schools, vocational skill appraisal centers and social insurance agencies, to ensure workers can obtain employment services conveniently. In addition, an unemployment early-warning system should be established based on specific regional conditions of labor force to guard against, regulate and control potential large-scale unemployment, thereby preventing large numbers of laid-off workers from affecting economic development and social stability.

11.2.2 Process Design for Universal Integration of Employment Security System To build a standardized and orderly employment security system with complete services and full functions, systematic planning of employment management and service agencies, and integration of related agencies and resources are crucial. The aim is to form a set of service procedures for the universally integrated employment security system.

11.2.2.1

Principles of Process Design

The process design for the universal integration in the employment security system includes a vertical process and a horizontal process. It should follow three principles as follows. The first is the labor-oriented principle. The principle is an embodiment and operation of the people-oriented principle in the employment area. The core is to

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Fig. 11.1 Services needed by an employee during job-seeking, employment, unemploymeny and reemployment

safeguard workers’ legitimate employment rights and interests and improve their employability and competence at work, thus providing employment protection for workers. Labor orientation is to require the government and employment management and service departments in all sectors of society to regard workers as an object of service, rather than an object of management, and to integrate possibly needed services for workers in the links of the job seeking—employment—unemployment— reemployment process (See Fig. 11.1), so as to make employment services cover all links of the process. The second principle is operability. All employment security systems would present flaws in the process of implementation. Only through repeated practices and implementation can we find many aspects of the employment security system need to be improved. Therefore, we should not necessarily pursue a perfect institution or policy system during the process design of the employment security system, but detail the content of employment policies and improve policy terms in light of changes in the employment situation, and constantly summarize experience to solve problems in the implementation of employment policies. The third principle is consistence. The employment of workers is a continuous process. All links of the pre-employment—employment—post-employment process and the job application—employment—unemployment—reemployment process are continuous, requiring the government and all sectors of society to provide workers with employment services and aid. Therefore, it is essential to clarify the tasks and responsibilities of all subjects of benefits provision in each link of the process design for the employment security system, in order to make employment services run through the entire employment process and evade inconvenience caused by a lack or break of employment services to job-seekers.

11.2.2.2

Requirements for Process Design

The process design for the universal integration in the employment security system should take into account the supply side of employment security and the demand side of employment services.

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The supply side of employment security involves employment security institutional construction between related superior and subordinate government departments (vertical process design) and between departments of governments at the same level (horizontal process design). From the perspective of vertical process design, the universally integrated employment security system, through process re-engineering, will be able to better coordinate the supply of employment services between related superior and subordinate departments, and straighten out the scope of responsibilities that superior and subordinate government departments should undertake in the field of labor employment security, to ensure employment services provided by governments at all levels can be obtained by the public. In the process, “national employment service agencies” are charged to improve employment laws and regulations, formulate national employment systems and policies, make statistics of employment information across the nation and provide guidance and training for provincial (municipal) employment service agencies. “Provincial employment service agencies” should, based on the workflow of national employment service agencies and provincial conditions, build a local employment service workflow and guide related municipal (county-level) departments in providing employment services. Accordingly, municipal (countylevel) employment service centers should engage in local employment security under the guidance of national and provincial employment service agencies to improve local employment security procedures, so as to make employment policies of governments at all levels acceptable to the public and practically meet employment service needs of local people. From the perspective of horizontal process design, the universal integration in the employment security system is to, through process reengineering, integrate fragmented employment services provided by different employment security departments in the same region to make sure people living in the region can conveniently obtain employment services. Therefore, it is important to integrate employment-related functions of such bureaus as civil services, human resources and social security, civil affairs, and arbitration commissions as well as labor unions, communist youth leagues and women’s federations and by building online or physical employment service halls, provide all workers with one-stop services including employment guidance, vocational planning, ability testing, unemployment insurance, occupational injury evaluation and compensation, employment training, job information search, job recommendations and job placement to facilitate job-seekers and shorten their job-hunting time to the largest extent, thereby advancing the universal integration in the employment security system.

11.2.2.3

Content of Process Design

Regarding the content, the process design for the universal integration in the employment service system includes the process design of the entire employment system and the process design and planning for various groups of employment.

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First, attention should be paid to conducting overall planning of employment service agencies across the nation to create an employment service system in which information is concentrated on the top and services are delivered to the bottom. When formulating annual employment plans, people’s governments at and above the county level should consider the integration of employment service resources as part of their work content to coordinate employment services within the region and ensure the reasonable layout of labor markets, public employment service platforms and other related service agencies alongside the sharing of employment information. It is important to not only realize the above-mentioned integration and universal supply of employment service agencies and functions at the Party and government levels, but also integrate governmental, folk and Chinese-foreign funded employment service agencies of the government, to make subjects of employment service provision more diverse, content more comprehensive and supply more effective. The content of the process can be referred to in Fig. 11.2. Second, different groups of employment should be provided diverse, tailored employment services. For example, when filing the application for their dream schools, junior and senior high school graduates can be guided to consider various vocational training schools apart from applying for education of a higher degree, thereby furnishing junior and senior high school graduates who fail to enter high school or university with vocational training schools, guiding them to obtain according occupational qualifications through vocational education and training, enhancing their employment capacities while avoiding the problem that employers have difficulties in recruiting professional technicians. University students can rely on employment service agencies at their own universities to obtain sufficient employment information and counseling. Universities can carry out vocational education of students in the form of employment training courses, help them know about the employment situation and market demands, encourage them to take social practices, direct them to foster their own career aspiration and planning, strengthen their abilities in applying professional knowledge and skills, and improve graduates’ job-hunting skills. As to migrant workers, it is not only necessary to provide them services equal to those for employees of enterprises in cities and towns, such as skill training, but also strengthen the construction of employment management and service agencies of villages and towns and give play to their functions in organizing and guiding employment of rural labor, providing information, and recommending jobs for rural labor. In places where conditions permit, the order-like vocational training approach can be adopted to enable migrant workers to find jobs and adapt to urban life soonest possible, reduce their blindness and arbitrariness in going to cities and towns and enhance the efficiency of rural labor outflow to urban areas. Surely, to workers with difficulties in find jobs, such as long-term unemployed persons, females above 40 years old and males above 50, zero-employment families and the disabled, it is feasible to give play to the special status and role of streets, towns and village neighborhoods in solving employment difficulties of these groups, leverage convenient

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Fig. 11.2 Process design for the employment security

public employment service stations and through measures like creating more publicservice jobs, providing skills training, social security subsidies and tax breaks, offer them employment aid and effectively promote their reemployment.

11.2.3 Institutional Design for Universal Integration of Employment Security System Institutions are not only key to economic growth, but also guarantees for the fair allocation of social welfare resources and the fair development of the cause of

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people’s livelihood. This requires us to intensify institutional design for the universal integration in the employment security system. First, the improvement of the employment security system should be placed at a strategic height. In China featuring the largest population in the world, the formulation of economic and social policies should enter on how to promote employment to the largest extent, integrating all resources available, mobilizing forces of all parties, and accelerating the universal coverage and institutional integration of the employment security system. Therefore, importance should always be attached to economic construction, striving to enlarge the employment capacity, realize the benign cycle between economic and employment growth, promote steady job growth along with rapid economic development, and increase the coefficient of employment elasticity. It is worth noting that the coefficient of employment elasticity has remained at a low level in recent years, standing around 1%. This requires us to readjust the equilibrium of such factors as capital, technology and labor and stress putting labor employment first in industrial development. While attention is paid to the development of the real economy, efforts should be made to quicken the development of tertiary industries with higher coefficient of employment elasticity, such as the tourism and service sectors, focus on boosting labor-intensive industries and various small and medium-sized enterprises that can create more jobs, and encourage more flexible forms of employment, such as self-employment and self-reliant entrepreneurship. In addition, the government should proactively invest in creating public-service jobs, such as integrating community service resources and exploiting community service positions. In the meantime, departments at all levels should take measures to ensure the balanced allocation of labor supply and demand, thereby avoiding structural unemployment like jobs unattractive to workers. Second, it is essential to accelerate the reform of the household registration system and establish labor markets with universal coverage. Efforts should be made to rectify flaws in household registration, build labor markets characterized by universal coverage and urban–rural coordination and able to promote labor flow, practically put an end to traditional employment in the urban–rural dual system, strive to solve problems about the household registration transfer of migrant workers who have worked and lived in cities for a long time, and facilitate the implementation of welfare systems like elderly care, medical care and education to make the institutional coverage of employment reach all residents in urban and rural areas, cover various groups of employment in different regions and ensure employment security projects universally cover all employees. Therefore, according to the Social Insurance Law, the creation of individuals’ social security numbers uniform throughout the country requires enterprises to get a social security card for every employee and the card number shall be identical with the citizen’s identity number, thereby improving the card’s function of employment security and making employment security services universally enjoyed by employees with the card, and realize dynamic management with the flow of workers. Besides, those non-full-time workers, those in flexible employment and the majority of farmers should also be furnished with social security cards to gradually improve the supply of employment security services to them.

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Third, all workers should be integrated into the unemployment insurance system to enhance the universality of workers participating in unemployment insurance programs, make sure all that should be insured are insured, and give full play to the function of the unemployment insurance system in preventing unemployment and promoting employment. This requires us to amend the Regulations on Unemployment Insurance according to the Social Insurance Law as soon as possible, replacing the concept “enterprise employees” in the Regulations on Unemployment Insurance with the concept “employees” or “workers” in the Social Insurance Law, so that every worker can enjoy unemployment insurance and benefit from the unemployment insurance system. In other words, the amended Regulations on Unemployment Insurance should be able to solve the problem related to the participation of all workers in unemployment insurance, particularly that of those in self-reliant employment and flexible employment and migrant workers, thus expanding the coverage of unemployment insurance to the greatest degree. On this basis, it is important to moderately loose restrictions on those in self-reliant employment and flexible employment and migrant workers in receiving unemployment insurance compensation, urgently narrow the scope of “stopping enjoying unemployment insurance benefits”, improve the universality in the supply of unemployment insurance benefits and increase the number of people receiving unemployment insurance compensation. For example, it can be stipulated that these groups, after paying unemployment insurance premium for six months consecutively, are entitled to unemployment insurance compensation of a certain proportion once losing their jobs. Clause 2 under Article 45 of the Regulations on Unemployment Insurance, “have suspended employment undue to their own willingness” that specifies qualifications for the unemployed who may receive unemployment insurance compensation, can be revised into “have suspended employment for various reasons”. That’s because in real life, some workers are forced to quit “proactively” for invisible pressure placed by their work units. Under such circumstances, they are not qualified for receiving unemployment insurance compensation in accordance with current regulations. However, they also paid unemployment insurance premium during the contract period, so they likewise need social relief after unemployment, hence should enjoy unemployment insurance benefits. In turn, if these groups are given unemployment insurance compensation upon unemployment, the proactive function of unemployment insurance benefits in guaranteeing living, promoting employment and preventing unemployment can be brought into full play, and workers’ psychological rejection of unemployment can be eased. In addition, we should base on local realities of economic development to connect and integrate unemployment insurance and special employment funds to ensure abundance of capital while avoiding repeated waste, scientifically estimate indicators like possible unemployment problems to all employees, the amount of fund needed for unemployment insurance and revenues of the fund, and explore the relationship between expenses of the unemployment insurance fund and the size and expenses of special employment funds to gradually establish a systematic employment security fund management mechanism. Fourth, efforts should be made to improve the vocational training system oriented by employment demands and for all workers and beef up supplies of employment

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services to groups in difficulties. Vocational training is an objective requirement to improve labor quality and enable workers to adapt to economic and social development. It is necessary to, in light of population development trends and the employment situation, flexibly adjust investments in education at all levels, attach importance to developing various vocational education, and encourage workers to improve their employment capacities by increasing investments of human capital, so as to make unemployed persons employed and employees respect and enjoy their jobs. Therefore, it is a must to regulate and integrate various vocational training schools with employment demands as the orientation and the cultivation of applied technical talent as the major task. The schools should break traditions in terms of the size, curriculum and teaching model, take social demands into full consideration, and value the cultivation of workers’ employment abilities with the improvement of their competence as the goal. Besides, they should strengthen practical capabilities of teachers and intensify the training of teachers’ practical, skill and pragmatic consciousness to avoid empty talks. Then it is important to reform the current length of schooling of vocational training schools, adopt a flexible length and teaching management system, attach importance to integrating with specific needs of enterprises, strive to establish good cooperative relations with employers and solidly carry out the “order-like” cultivation model. In addition, all regions should strengthen the support of groups with difficulties in finding jobs, improve public employment service platforms at the community level, and leverage the platforms to fully grasp real conditions of groups with difficulties in finding jobs, such as long-term unemployed persons, zero-employment families and females above 40 years old and males above 50, and provide them with aids like public-service jobs, tax breaks, social insurance subsidies, loan guarantee and skill training to ensure they get employed stably. Particularly in some regions or industries with difficulties in providing jobs as a consequence of structural adjustments, such as old industrial bases, resource-exhausted cities and independent industrial and mining areas, the government should make reasonable planning and arrangements, offer according subsidies and policy support, organize the implementation of national training programs, encourage enterprises to undergo steady transformations, guide and organize cross-regional labor service cooperation and export, and promote the reemployment of unemployed persons to prevent massive unemployment.

11.3 The Realization Conditions of the Universal Integration of Employment Insurance System Employment is a source of people’s happy life, economic development and social stability. Building a more equitable employment security system through the universal integration in the employment security system entails support from multiple

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parties, such as the government, society, enterprises and even workers, particularly government support in public finance, institutional guarantee and policy measures.

11.3.1 Financial Support Implementing proactive financial policies in the field of employment security requires us to take the socioeconomic goal of promoting employment into full account during tax revenue and fiscal expenditure planning. Multiple tools like tax revenue, budget, national debt, interest subsidy, transfer payment and government purchase can be utilized to provide sufficient financial support for the universal integration in the employment security system. First, it is necessary to appropriate money for employment security from the social security fund to supplement the whole unemployment insurance fund to be used for covering expenses from employment services for various kinds of workers. The stipulation of “setting up a national social security fund” in the Social Insurance Law should be followed. Funds earmarked from central budget and raised by other means approved by the State Council should be used to supplement and adjust social security expenditure. Based on the stipulation, we can set aside an employment security fund from the whole social security fund to pay for employment training, support and subsidies for all types of workers in urban and rural areas, therefore addressing the possible lack of financial support for the universal integration in the employment security system. Second, the scope and requirements of fund use should be clarified to avoid not only the deposition and surplus of large amounts of employment security capital, but also excessive allocation to unemployment insurance, striving to use the fund directly in employment skill training, and job creation. For example, to unemployed persons, the government should, when ensuring their claim of unemployment insurance benefits and providing them services like job recommendations, occupational training and appraisal, carry out support policies like tax breaks and small-sum guaranteed loans while encouraging self-reliant entrepreneurship. Capital needed can be expended from the employment security fund. To those with difficulties in finding jobs, employment aid policies should be implemented to provide them moderate job subsidies with the fund. For enterprises accepting laid-off workers and people with difficulties in finding jobs, the government should provide them subsidies on social insurance and tax breaks, and even carry out national employment training programs. Land-lost farmers and sea-lost fishermen should be provided certain amounts of reemployment subsidies, free employment training and related employment services. Publicwelfare and non-profit labor markets and public employment service platforms can be provided moderate fund support. Meanwhile, vocational training schools can be subsidized in carrying out employment training. These reform measures will maximize the effect of the employment security fund. Third, attention should be paid to optimizing the structure of fiscal expenditure for employment security, increase financial input for employment security and beef up

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support for reemployment training and vocational education, and reinforce the scientific management of employment security capital. It is essential to change the current situation in which capital is titled toward basic living guarantee and unemployment insurance of urban unemployed persons, and less is spent on vocational training and related employment services. Arbitrary employment expenses should be reduced and the structure of financial support for the unemployed should be optimized, with the focus shifted to the improvement of their employability and technical training, to nonurban employees, and to rural areas, farmers and other flexibly employed persons. Moreover, efforts should be made to compensate the lack of input in vocational education locally. Particularly the per-student educational expenditure in the budget of vocation education is lower than that for regular senior secondary education. It is vital to align the per-student educational expenditure of the two educational models, and on this basis, invest in some practical training facilities and special projects to ensure students at vocational schools can receive good vocational training. Besides, supervision and inspection of the appropriation and use of employment security capital should be reinforced to ensure the capital use conforms to related rules for fixed purposes. In addition, the national overall planning of fiscal expenditure should be enhanced to tilt special preference and support policies toward regions with high unemployment rates and intensify fiscal transfer payments and financial support for regions in difficult conditions.

11.3.2 Legal Support As a formal institutional arrangement, the law forcefully regulates behaviors of various subjects, and therefore has supreme authority and most powerful restriction. People’s recognition of a certain social policy to a large extent depends on how mandatory and restrictive it is. To build a universally integrated employment security system, it is a must to improve the legal system for the universal integration in the employment security system and give such an institutional arrangement solid and strong legal support. First, efforts should be made to improve the Employment Promotion Law and strengthen the execution of the law. Some articles in the Employment Promotion Law should be made clearer and more operable. For example, such articles as “the state highlights the increase of employment in the development of economy and society, and implements proactive employment policies” and “the State Council shall establish a coordination mechanism for employment promotion work throughout the country” in the universal Provisions part are abstract and should be modified into “the state highlights the increase of employment in the development of economy and society and the State Council shall found a national employment promotion work office to study major issues in employment work, and inspect, direct and coordinate labor employment work throughout the country to promote employment proactively.” Article 16 should also be clarified and the current stipulation “the state shall establish

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a sound unemployment insurance system so as to ensure the basic living of unemployed persons and promote their employment” should be altered into “all workers shall participate in the unemployment insurance system; workers shall obtain basic living guarantee and participate in vocational training and job introduction during the unemployment period in accordance with the law to promote their employment.” Article 20 “the state shall implement employment policies under an overall urban and rural plan, establish a sound system for equal employment of urban and rural workers, and direct the transfer of employment of excessive labor force of rural areas in an orderly manner” should be amended as “the state shall implement employment policies under an overall urban and rural plan. Workers in urban and rural areas shall participate in various social insurance programs and get the same pay for the same job. The state shall establish a sound system for equal employment of urban and rural workers, and promote the transfer of employment of excessive labor force of rural areas in an orderly manner.” Meanwhile, it is important to reinforce the execution of the Employment Promotion Law and clarify local governments’ responsibilities in increasing jobs, promoting equal employment and safeguarding workers’ rights and interests, thereby accelerating the realization of the universal integration in the employment security system. Second, it is essential to straighten out legal norms on labor employment in the Labor Law and Labor Contract Law to enhance the universal integration of the two laws in employment security and reduce inconsistencies between the two. The Labor Law promulgated in 1995 and the Labor Contract Law implemented in 2008 are inconsistent in some ways in terms of employment, highlighting the need of integrated reform. For example, Article 10 in the Labor Law that “the state shall create conditions for employment and increase opportunities for employment by means of the promotion of economic and social development” is not only too abstract, but doesn’t cover the role of the employment security fund in promoting employment, so it should be extended. Article 11 “local people’s governments at various levels shall take measures to develop various kinds of job-introduction agencies and provide employment services” is also too narrow. It seems local governments are only responsible for developing job-introduction agencies in promoting employment. The function of the employment security fund should be incorporated. Articles 13, 14 and 15 respectively stipulated employment rights of such groups as females, the disabled, the personnel of ethnic groups and ex-service persons, while neglecting the protection of employment rights of migrant workers, so this part should be reflected and improved. For another example, Chapter 8 of the Labor Contract Law, “Vocational Training” should add local governments’ funding sources for vocational training and the content of assessment in vocation training to ensure the significant role played by the universal coverage of vocational training in solving employment problems. Last, obsolete articles in the Regulations on Unemployment Insurance should be improved. It is necessary to stipulate that all workers shall pay unemployment insurance premium. According to Article 2 of the current Regulations on Unemployment Insurance, enterprises and public institutions in cities and towns as well as their staff and workers shall pay unemployment insurance premium. These enterprises in cities and towns are limited to state-owned enterprises, collectively owned enterprise

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in cities and towns, enterprise with foreign investment, privately owned enterprise in cities and towns as well as other enterprise in cities and towns. There is neither provision on unemployment insurance participation and premium payment of flexibly employed persons and migrant workers, nor on whether the staff at government organs should pay unemployment insurance premium and how to pay it. Therefore, the unmentioned groups should be included in the provision on the payment of unemployment insurance premium to practically extend unemployment insurance participants to all non-agricultural workers. On the other hand, rules on the payment of unemployment insurance premium by enterprises and individuals are not rigorous enough. The integration of five insurances, namely endowment insurance, medical insurance, unemployment insurance, industrial injury insurance and maternity insurance, has yet to be enforced and implemented. Supervision over the payment of social insurance premium is not strong, so that some enterprises and individuals subjectively delay, default on, refuse the payment of social insurance premium as well as fake or conceal related truths. Hence some articles should be added to the Regulations on Unemployment Insurance, clarifying legal consequences for not participating in unemployment insurance. For example, unemployment insurance shall be incorporated into labor supervision and imposed in accordance with the law through labor supervision. When industrial and commercial authorities carry out annual inspections, they shall review the payment of unemployment insurance premium. Employers that fail to go through the qualification procedure of annual unemployment insurance inspection at unemployment insurance regulatory agencies shall be denied the qualification by industrial and commercial administrative departments. When going through the formality of canceling business license, the document proving the termination of unemployment insurance relations issued by unemployment insurance agencies shall be reviewed first. Auditing departments shall audit the payment of unemployment insurance premium on a regular basis to urge enterprises to timely pay unemployment insurance premium. Meanwhile, detailed regulations should be provided on the management of unemployment insurance and special employment funds to establish a budgeting system, strengthen scientific management and manage the funds in accordance with the law. On this basis, efforts should be made to reinforce standardized management of the unemployment insurance fund and increase penalties on institutions and individuals that embezzle unemployment insurance premium to ensure the safe use of the unemployment insurance fund.

11.3.3 Technical Support The universal integration in the employment security system necessitates certain technical support. It is an important guarantee for the cause. First, we should expand the scope of objects applying for and using the social security card and universally incorporate all workers, even part of the rural employment population, to realize the widest coverage of the social security card. This is not only an internal requirement for the universal coverage of the employment security

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system, but also an objective requirement for the development of labor employment in China. When conditions ripe, the social security card should be integrated with the ID card. Second, it is crucial to add functions to the social security card, to not only include the claim of unemployment insurance compensation, but also integrate employment information posting, employment training record and employment contract registration. Therefore, social security card ATMs should be installed in all communities and densely populated areas, thereby making it convenient for the public to use the individual social security card to inquire employment information, obtain employment training materials, receive online employment counselling and sign employment agreements at the ATMs or online directly. Last, the employment security management information system should be built as soon as possible, which should include databases on labor force dynamics and job information posted by employers, while providing information from agencies related to employment services, such as vocational schools, vocational skill appraisal centers, and labor law firms. From village neighborhoods, streets and towns, counties, cities, provinces to across the nation, data should be concentrated upward to form a dynamic data network and service network, thereby providing powerful technical support for establishing a unified national labor market, enhancing the efficiency of public employment service platforms, coordinating the layout of employment service agencies throughout the country and managing the employment service system in an all-round manner.

11.3.4 Social Support Not only are financial, legal and technical, particularly information technology, support significant to the universal integration in the employment security system, but the support of good public opinion, social monitoring and social environment is also necessary. First, attention should be paid to strengthening the publicity of employment policies and comprehensively utilizing various media, such as radio, TV, newspaper and the internet, to introduce the employment situation, employment policies, employment information and other content of employment service, thus enhancing workers’ understanding about employment. For example, mobile TVs on the subway and bus, electronic screens on the square and bulletin boards in the community are all good platforms for publicizing employment resources, disseminating policy content like the social security card and employment (unemployment) registration card, and releasing employment information to the public. Radio, TV and the internet can also be leveraged to provide the public with consulting services on labor rights and interests and labor disputes, thereby making employment services more convenient and open to the people, and improving their efficiency in serving the people.

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Second, social organizations should be mobilized to actively participate in employment service work. It is important to play the role of communities in employment information collection and verification, dynamic employment management and follow-up of people with difficulties in finding job, establish community-level public employment service platforms and create public-welfare jobs centering on elderly care, rehabilitation and life services in communities. Labor unions, communist youth leagues, women’s federations, disabled persons’ federations and other social organizations should be directed and encouraged to assist people’s governments in promoting employment and safeguarding workers’ labor rights according to the law. It is also crucial to encourage universities and enterprises to cooperate and all sectors of society to fund and donate for vocational education. Enterprises and public institutions, social groups and individuals that have made donations to schools should be granted tax preferences. All sectors of society should be encouraged to offer jobs and financial support for people with difficulties in finding jobs. The integration of these social resources will bring into being strong joint forces for promoting employment.

References 1. Sun, Q.: A study of the reasons and countermeasures of structural unemployment in China. Econ. Probl. 4 (2009) 2. Lv, X.: On the reform and optimization of China’s Unemployment Insurance System. China Social Secur. 9 (2010)

Chapter 12

The Universal Integration of Income Security System

Since the reform and opening-up, China’s comprehensive national strength has been greatly improved on the basis of economic and social development, and social wealth and the people’s income have seen continuous increase. According to data released by the National Bureau of Statistics, in 2011, the per capita disposable income of urban residents was 21,810 yuan, an increase of 2701 yuan or 14.1% over 2010; the per capita net income of rural residents was 6977 yuan, an increase of 1058 yuan or 17.9% over the previous year. On this foundation, the 18th National Congress of the CPC proposed to “double the 2010 per capita income for both urban and rural residents by 2020”. While recognizing the income increase, many problems still exist in the field of income distribution. It is urgent to establish a more just income distribution system, reduce the severe inequality of income distribution, and promote a more equitable distribution of wealth. This requires us to integrate current income distribution systems.

12.1 The Operation of Income Security System Income distribution is an important factor influencing people’s well-being. It is not only a hot topic widely concerned by all walks of life, but also a field academia attaches great importance to. Many scholars have studied the manifestations, causes and solutions of great disparities in income distribution in China. Li Shi, Zhao Renwei, and others found association of human capital with income disparity, for example between professional and technical personnel and ordinary worker.1 Bian Yanjie and Zhang Zhanxin further elaborated from a sociological perspective that with the accelerating marketization, both human capital and political capital of laborers are increasing in value, expanding the income gap.2 In addition, some 1 2

Li and Zhao [1]. Bian and Zhang [2].

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scholars analyzed the issue from the institutional perspective, maintaining that the primary distribution in China gives too much emphasis on capital while neglecting the value of labor, and there are also problems like “negative welfare” in secondary distribution. They also detected other factors contributing to income gaps, such as institutional arrangements resulting in disparities between urban and rural population as well as among industries, illegal income, industry monopolies and rent-seeking conduct,3 which further widened the income gap. According to Liu Guoguang and others, the main reason for income gap is the unfairness in primary distribution, especially the properly handling of relationships between labor income and capital income as well as between fairness and efficiency.4 The key to resolving these problems is to adjust the relations between primary, secondary and tertiary distribution to create a reasonable income distribution structure. Therefore, it is believed that only by insisting on principles of the public ownership being the mainstay and distribution according to work can effectively solve the problem of unfair primary distribution. And to establish a public income declaration system to make everyone’s income transparent and fair can narrow the income gap.5 These studies have important reference value for improving income distribution policies. However, they only research on income distribution itself and fail to incorporate it into the entire security system or rationalize the relationship between distribution mechanisms at three stages. Therefore, it is necessary to deepen the existing research and explore how to achieve the goals of increases in individual income in step with economic development and work remuneration in step with improvement in labor productivity. Moreover, the income of the low-income people should be raised significantly, middle-income groups should keep growing, and the number of people living below the poverty line should drop by a large margin, so that the quality and level of people’s livelihood improves continuously. In recent years, the government has exerted efforts to improve income distribution policies and reform the income distribution system to solve problems in this field. To this end, the minimum wage system and the minimum living allowance program has been amended and implemented to protect the lawful income of laborers as well as their basic livelihood. These measures lay a foundation for deepening the income security system reform.

12.1.1 Improve Income Distribution Policies, Narrow Income Gaps The aim of the income distribution reform is mainly to adjust the income of different subjects to control the income gap within a reasonable range. Early in the beginning of the twenty-first century, the reform of the income distribution system laid 3

Wang and Xu [3]. Liu [4]. 5 Zeng [5]. 4

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stress on improving the relationship among all levels of governments, enterprises, individuals and other bodies as well as the relationship between different distribution mechanisms. Through adjusting the relations between primary distribution and re-distribution, the reform aimed to increase the income of low-income earners, expand the proportion of middle-income earners, relate excessively high income, and prohibit illicit income to narrow income gaps. In 2006, the central government set the goal of “building a scientific, reasonable, fair and just social income distribution system”. The 17th National Congress of the CPC proposed to “deepen the reform of the income distribution system and increase the income of urban and rural residents”. It regarded equitable income distribution as an important indication of social equity. The Work Report to the 17th National Congress of the CPC stated that “We will adhere to and improve the system whereby distribution according to work remains the predominant mode and coexists with various other modes. We will improve the distribution system to allow factors of production such as labor, capital, technology and managerial expertise to have a rightful share according to their respective contribution. A proper balance will be struck between efficiency and equity in both primary distribution and redistribution, with particular emphasis on equity in redistribution. We will gradually increase the share of personal income in the distribution of national income, and raise that of work remuneration in primary distribution. Vigorous efforts will be made to raise the income of low-income groups, gradually increase povertyalleviation aid and the minimum wage, and set up a mechanism of regular pay increases for enterprise employees and a mechanism for guaranteeing payment of their salaries. Conditions will be created to enable more citizens to have property income. We will protect lawful incomes, regulate excessively high incomes and ban illegal gains. We will increase transfer payments, intensify the regulation of incomes through taxation, break business monopolies, create equal opportunities, and overhaul income distribution practices with a view to gradually reversing the growing income disparity.” Since 2008, the authority has continuously improved income distribution policies in documents of Opinions of the National Development and Reform Commission on the Key Work on Deepening Economic Restructuring released every year. In terms of adjusting primary distribution, the salary system for heads of state-owned enterprises was clearly regulated, the salary system for government agencies and public institutions was reformed, the collective contract system and the minimum wage system were implemented. For the policy of redistribution, the Methods for Rural Migrant Workers to Participate in Basic Old-age Insurance and the Guidelines on the Pilot Program of New Rural Social Pension Insurance were carried out, in order to raise old-age pensions and improve the minimum living allowance program. In 2010, under the requirement from the National Development and Reform Commission, local governments accelerated the income distribution system reform to increase income of workers. The reform raised minimum wage standards for enterprises, and promoted the implementation of the performance-based salary systems in government organs and public institutions as well as the mechanism of collective bargaining on wages. In November 2012, the 18th National Congress of the CPC once again

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proposed to “make every effort to increase individual income”, to “increase individual income in step with economic development and work remuneration in step with improvement in labor productivity”, and also that “a proper balance should be struck between efficiency and fairness in both primary and secondary distribution”, in order to increase proprietary individual income through multiple channels. In practice, the following measures were taken. The first is to standardize the salary management system for leaders of stateowned enterprises. In 2009, the Ministry of Human Resources and Social Security together with other ministries and commissions jointly issued the Guiding Opinions on Further Regulating the Remuneration Management of Central Governmentowned Enterprise Leaders, stipulating that work remuneration of leaders of central government-owned enterprises mainly includes three parts: basic annual salary, performance-based annual salary as well as mid- and long-term incentive income. The basic annual salary is determined in reference to the average salary of employees of the previous year, and the performance-based annual salary relates to the results of the annual business performance. Meanwhile, principle provisions were made as a constraint on post-related consumption by major enterprise leaders. It demanded central government-owned enterprises to keep tight control over duty consumption and establish the post-related consumption management system in accordance with relevant regulations. The second is to advance the wage system reform in government organs and public institutions through implementing the collective agreement system. In 2009, the Ministry of Human Resources and Social Security introduced measures for wages and other benefits to be indexed with ranks in the working units in state organs and public institutions as well as giving preferential policies for key leaders of governments at the county and township levels. The reform actively promoted the implementation of performance-based salary system in compulsory education schools, and explored to implement this system in other public institutions. It also guided enterprises to establish a mechanism for adjusting employee wages in step with economic benefits based on consultation. The third is to increase the universality of the social security system and narrow the income gap. On the one hand, the government formulated the Measures for Migrant Workers to Participate In Basic Old-age Insurance in 2009 based on the principles of “low rate, wide coverage, transferability, and connection with the existing pension system,” which was released to the public to solicit their opinions.6 On the other hand, pilot projects of the new rural social old-age insurance and the social old-age insurance for urban residents were carried out to ensure that all the people enjoy their rights to old-age care. It was also clarified that the costs of these two schemes shall be shared by beneficiaries, collectives and the state. The central government shall give full subsidies to central and western regions according to the basic pension standards and 50% subsidies to eastern regions in the country; 6

Of course, this policy was later proposed to be merged with social security systems such as the new rural social endowment insurance or social endowment insurance for urban residents to reduce the fragmentation of the old-age insurance system.

12.1 The Operation of Income Security System

275

local government shall give subsidies for payments of the insured. At the same time, pensions of retirees were increased to improve the life quality of the aged. Since January 1, 2009, the country raised pensions of enterprise retirees for six consecutive times, each time by about 10%.7 In 2013, the State Council decided to continue to increase the monthly basic old-age insurance benefits for enterprise retirees by 10%. This is the 9th consecutive increase in the basic old-age insurance since 2005.

12.1.2 Implement and Raise the Standard of Minimum Wage System The minimum wage refers to “the mandatory minimum work remuneration paid by an employer required by law on the premise that an employee provides normal labor during the legal working hours or the working hours agreed on in the labor agreement signed according to law”8 It is the level of income that must be maintained by the simple reproduction of the laborer, and generally takes the form of monthly minimum wage and hourly minimum wage. The former applies to full-time workers and the latter applies to part-time workers. In as early as 1994, the Labor Law of China stipulated to implement the minimum wage guarantee system. To this end, the former Ministry of Labor and Social Security introduced the Minimum Wage Regulation in 2004, and the scheme was established in most parts of the country. Several adjustments have been made to the minimum wage standards since then, among which the standard in 2012 was the highest. In some provinces such as Shandong, the minimum wage went up to more than 40% of local average wage, closing to the international standard of 40–50% (see Table 12.1). The minimum wage scheme effectively protected the low-income group.

12.1.3 Implement Minimum Living Standard System The minimum living guarantee is a standard of living relief formulated by the state for social members who cannot maintain their basic living. It is the last safety net for the poor. The scheme was first implemented in Shanghai in June 1993. With the promulgation and implementation of the Regulations on Guaranteeing Minimum Allowance for Urban Residents in 1999, the minimum standard of living was universally established across the country. In 2007, the State Council issued the Notice on Establishing the Minimum Living Allowance Program in Rural Areas, and since then the living allowance program has been promoted from urban to rural areas, and it has been established in regions at and above the county level. The Suzhou Province 7

See Yang [6]. See Article 3 of the National Minimum Wage Regulations of the Ministry of Labor and Social Security.

8

276

12 The Universal Integration of Income Security System

Table 12.1 Minimum wage standards in different regions in 2011 (Unit: yuan) No.

Region

Monthly minimum wage

Month average wage in 2011

Proportion of minimum wage in average wage

Province

Hourly minimum wage

1

Shenzhen

1500

4595

32.64

Beijing

14

2

Shanghai

1450

4331

33.48

Shenzhen

13.3

3

Tianjin

1310

3520

37.22

Tianjin

13.1

4

Zhejiang

1310

3888

33.69

Shandong

13

5

Guangdong

1300

3763

34.55

Guangdong

12.5

6

Beijing

1260

4672

26.97

Shanghai

12.5

7

Shandong

1240

3061

40.51

Shanxi

12.3

8

Xinjiang

1160

3004

38.62

Xinjiang

11.6

9

Jiangsu

1140

3832

29.75

Fujian

11.6

10

Shanxi

1125

3325

33.83

Sichuan

11

11

Hubei

1100

2892

38.22

Ningxia

11

12

Ningxia

1100

3715

29.61

Liaoning

11

13

Fujian

1100

3249

33.86

Hebei

11

14

Liaoning

1100

3179.5

34.60

Zhejiang

10.7

15

Hebei

1100

3014

36.50

Anhui

10.6

16

Henan

1080

2803

38.53

Gansu

10.3

17

Sichuan

1050

3160

33.23

Henan

10.2

18

Inner Mongolia

1050

Unknown

Shanxi

10

19

Hunan

1020

2960

34.46

Hubei

10

20

Anhui

1010

3387

29.82

Hunan

10

21

Shaanxi

1000

3254

30.73

Guizhou

10

22

Jilin

1000

2850

35.09

Qinghai

9.3

23

Guangxi

1000

2848

35.11

Jiangsu

9.2

24

Gansu

980

2742

35.74

Yunnan

9

25

Yunann

950

2960

32.09

Inner Mongolia

8.9

26

Tibet

950

Unknown

Chongqing

8.7

27

Guizhou

930

2621.5

35.48

Jiangxi

8.7

28

Qinghai

920

3541

25.98

Guangxi

8.5

29

Heilongjiang

880

2792

31.52

Tibet

8.5

30

Chongqing

870

3337

26.07

Jilin

7.7

31

Jiangxi

870

2838

30.66

Heilongjiang

7.5

32

Hainan

1050

3060

34.31

Hainan

7.2

12.1 The Operation of Income Security System

277

in 2011 integrated the urban and rural minimum living allowance programs, practicing the consistent standards, and realized the coverage of all areas and all citizens. Tables 12.2 and 12.3 show urban and rural minimum living standards in 2010 for different provinces and municipalities.

12.1.4 Provide Legal Protection for Workers’ Income Distribution Since the beginning of the twenty-first century, the government has strengthened the construction of laws and regulations on labor protection through revising or promulgating the Employment Promotion Law, the Labor Law, the Labor Agreement Law, the Trade Union Law, etc. Moreover, the Social Insurance Law was introduced in 2011. These laws provide a powerful weapon for workers to protect their income. The revised Labor Law affirmed the principles of distribution according to work and equal pay for equal work, and made clear provisions on setting the standards and payment of wages by employers, overtime pay on holidays, and minimum wages. The Labor Contract Law implemented in 2008 serves as a powerful tool for workers to protect their rights and interests in wages. It stipulated that work remuneration of workers should be specified in the labor contracts they sign with employers, and also specified dispute settlement methods for work remuneration that is not clarified in work contracts. At the same time, the Labor Agreement Law also detailed provisions on salary for probation period, part-time employment regulations and the economic compensation to workers for termination of employment contracts by the employing side. According to the document, if an employing unit defaults in payment or underpays the labor remuneration, the worker concerned may, in accordance with law, apply to the local people’s court for an order for payment, and the people’s court shall issue such an order in accordance with law. The Trade Union Law affirmed the legality of the existence of trade union organizations in enterprises, emphasizing that “trade unions are mass organizations of the working class formed by the workers and staff members on a voluntary basis”. Trade unions shall coordinate labor relations and ensure the legal income of workers to “safeguard the legitimate rights and interests enjoyed in work by the workers and staff members of enterprises according to law,”9 as well as to avoid the occurrence of deduction of employees’ wages and earnestly benefit workers. In addition, the government initiated the legislative process of the Wage Law in 2007, focusing on the issue of equal pay for equal work. The goal is to regulate, guide and supervise the distribution of wages in enterprises through legal, economic and necessary administrative means. Through the implementation of these laws and policies, China has initially established an income distribution system, which comprehensively protects the basic income of the people from the aspects of wage and remuneration systems, minimum 9

See Article 2 of The Trade Union Law of the People’s Republic of China.

278

12 The Universal Integration of Income Security System

Table 12.2 Table of minimum living standards for cities in the fourth quarter of 2010 (Unit: yuan/month) Code for region

Region

Average subsistence allowance

Total amount in all districts and counties

Total number of districts and counties

11

Beijing

428.89

7720

18

12

Tianjin

447.5

7160

16

13

Hebei

249.85

47,721

191

14

Shanxi

216.13

26,152

121

15

Inner Mongolia

286.79

29,539.8

103

21

Liaoning

280.97

31,188

111

22

Jilin

213.97

14,764

69

23

Heilongjiang

234.91

33,122

141

31

Shanghai

450

8100

18

32

Jiangsu

336.2

40,344

120

33

Zhejiag

354.79

32,641

92

34

Anhui

247.5

28,462

115

35

Fujian

215.59

18,756

87

36

Jiangxi

237.05

26,075

110

37

Shandong

272.26

45,195

166

41

Henan

196.04

34,895

178

42

Hubei

240.71

25,034

104

43

Hunan

204.62

27,010

132

44

Guangdong

252.12

31,010.9

123

45

Guangxi

226.05

24,865

110

46

Hainan

247.38

5195

21

50

Chongqing

232.44

9530

41

51

Sichuan

206.66

38,438.2

186

52

Guizhou

178.53

16,067.5

90

53

Yunnan

199.6

25,748.2

129

54

The Autonomous Region

305.75

22,320

73

61

Shaanxi

199.57

21,553.3

108

62

Gansu

185.03

16,097.4

87

63

Qinghai

217.41

10,000.9

46

64

Ningxia

211.45

4652

22

65

Xinjiang

181.75

21,265

117

Data source Department of Planning and Finance, Ministry of Civil Affairs, http://cws.mca.gov.cn/ article/tjsj/dbsj/bzbz/201011/20101100112320.shtml

12.1 The Operation of Income Security System

279

Table 12.3 Table for rural minimum living standards in September 2010 (Provincial) (Unit: yuan) Code for region

Region

Standard

Total amount in all districts and counties

Number of districts and counties

11

Beijing

270.00

3510.00

12

Tianjin

298.80

2988.00

10

13

Hebei

93.18

17051.80

183

14

Shanxi

83.86

9728.20

116

15

Inner Mongolia

148.41

13,801.80

93

21

Liaoning

131.87

13,582.80

103

22

Jilin

108.88

7513.00

69

23

Heilongjiang

108.08

13,077.50

121

31

Shanghai

300.00

2700.00

9

32

Jiangsu

240.56

25,499.00

106

33

Zhejiang

230.26

20,263.00

88

34

Anhui

104.06

11,238.00

108

35

Fujian

120.33

9747.00

81

36

Jiangxi

108.37

11,812.00

109

37

Shandong

108.19

17,418.50

161

41

Henan

81.96

13,932.40

170

42

Hubei

91.90

9282.00

101

43

Hunan

75.72

9995.10

132

44

Guangdong

166.04

18,098.00

109

45

Guangxi

94.94

10,443.70

110

46

Hainan

166.19

3490.00

21

50

Chongqing

122.51

4900.20

40

51

Sichuan

82.08

14,774.40

180

52

Guizhou

104.94

9444.90

90

53

Yunnan

69.96

9024.70

129

54

The Autonomous Region

64.16

4684.00

73

61

Shaanxi

80.59

8461.70

105

62

Gansu

72.63

6319.00

87

63

Qinghai

87.97

3958.50

45

64

Ningxia

69.30

1524.50

22

65

Xinjiang

79.76

7736.70

97

13

280

12 The Universal Integration of Income Security System

wage and the minimum living allowance program, and income protection, which provides a guarantee for improving the income and quality of life of the people.

12.2 The Problems of Income Security System After more than 40 years’ endeavor, China has gradually established an income distribution system in which distribution according to work is the main form that coexists with other forms of distribution, and initially established an income guarantee system with Chinese characteristics. Since the 16th National Congress of the CPC, the Party and government have attached great importance to the people’s well-being, especially the issue of income distribution, and have proposed a series of income distribution reform measures to improve the way in which income is distributed, which played a positive role in narrowing income gaps and promoting the harmonious development of economy and society. However, according to requirements of completing the building of a moderately prosperous society in all respects and building a harmonious socialist society, the current income security system still has the following problems.

12.2.1 Large Income Gap Theoretically, as long as there is the division of labor, there will be income gap. Controlled within a reasonable range, the income gap will not affect efficiency, but will ignite social vitality and encourage people to create social wealth. Nonetheless, in China, the current income gap is excessively large. First, income gaps and disorders in income distribution exist. Influenced by the urban–rural dual system and other factors, income gaps are fairly large among regions, industries and social groups. Wages of farmers and employees in laborintensive enterprises are far below the average social wage. The failure of labor negotiation and wage negotiation mechanism in these industries even worsens the situation. According to the data released by the National Bureau of Statistics, the income gap between urban and rural residents reached 3.13: 1 in 2011.10 If social welfare is taken into consideration, the gap is even larger. Another aspect is the disorder in income distribution. For instance, employees default in payment or underpay the labor remuneration, and the situation of unequal pay for equal work is serious. Data show that the income of the highest-income industries is almost 15 times more than that of the lowest-income industries in China, and the individual income in the richest regions are 2.68 times more than that in the poorest regions. The remuneration of some senior executives in enterprises is hundreds of times higher than the average

10

National Bureau of Statistics, Urban–Rural Residents Income Ratio in 2011 is 3.13:1, China Economic Net, January 20, 2012.

12.2 The Problems of Income Security System

281

Fig. 12.1 The ratio of China’s urban per capita disposable income to rural per capita net income from 1978 to 200813 13

Data source: Yang and Chi [9].

social wage.11 The newspaper Economic Information Daily once reported that “The income of listed state-owned enterprise executives is 18 times higher than that of front-line employees, and 128 times higher than the social average wage astonishingly. The income gap between the top 10% highest earners and the bottom 10% has risen from 7.3 times in 1988 to 23 times in 2007.”12 The second is the large income gap between urban and rural population. Since the beginning of the twenty-first century, China’s urban–rural income gap has been widening, as shown in Fig. 12.1. Since 2004, although the ratio of urban per capita disposable income to rural per capita net income has been growing slower, in 2008 it was still as high as 331.49%. If the welfare benefits are taken into consideration, the urban–rural disparity in income is even more severe. This disparity further exacerbates the existing urban–rural dual economic structure, causing fragmentation between urban and rural areas. It greatly affects the social integration and coordinated development between urban and rural areas as well as the improvement of living standards of the people. In addition, the income disparity within rural areas and urban areas respectively is growing. Figure 12.2 shows that the income gap among urban residents is relatively stable, with the Gini coefficient remaining below 0.15, presenting no radical change. But in rural areas the situation is quite different. For example, the central and western regions in the country embrace large land and population. If their economic development lags far behind other regions, the growth of people’s income and as a result people’s living standard will be greatly affected, which in turn will damage domestic demand and the economic development nationwide.

11 12

Su [7]. Xinhua News Agency [8].

282

12 The Universal Integration of Income Security System

Fig. 12.2 Regional income gap from 2002 to 200914

14

Ibid.

Moreover, the problem of excessive income gap among industries has not been fundamentally improved. Some income gaps caused by particularities of industries are reasonable. For example, salaries of employees from information transmission, computer services and software industries are higher because of high requirements for technical expertise. Still, there are unreasonable income gaps caused by industrial monopoly. The negative effects resulted from it is the concentration of human resources in monopoly industries which will destroy the economic dynamism. Figure 12.3 shows the growing income gap between industries, which will be even larger if the hidden income is taken into account. At last, the proportions of labor remuneration and individual income in GDP have been declining. The two indicators, the proportion of labor remuneration in GDP and the proportion of individual income in GDP, represent the model of social wealth distribution and the result of distribution. The low proportions signify that the growth of labor remuneration is slowing down while the revenue of enterprises and the government are increasing, reflecting inequality in income distribution. Scholars

Fig. 12.3 Gini coefficient of per capita income of various industries from 2005 to 200915

15

Data source: Yang and Chi [9].

12.2 The Problems of Income Security System

283

studied the pattern of primary distribution and redistribution of national income in three major sectors of national income, namely enterprises, government institutions and the housing sector, in 1992 to 2007 (Table 12.4). Results show that both the proportion of worker remuneration to GDP in primary distribution and the growth of work remuneration as well as property income in redistribution have seen a downward trend. Figure 12.4 demonstrates the trend more explicitly. The line chart made according to Table 12.4 clearly shows the trend in 10 years.16

12.2.2 Inadequate Adjustment of Income Distribution The government is the responsible party for adjusting the income gap and improving the income security system, and also the operator of income security. It can monitor the income distribution of the entire society through income distribution schemes. However, so far, effective monitoring and supervision methods are still missing and a sound income security system is yet to be formed. In primary distribution, the government lacks effective supervision over the income distribution of leading state-owned enterprises. Some state-owned enterprises gain high profits relying on the monopoly power granted by the government, but are not effectively constrained and supervised by the government as how to distribute their profits. For example, the income from state-owned capital are not spent on public causes and only used for developing national economy.17 Some state-owned enterprises even become a tool for government officials and their managers to seek personal benefits. In addition, the government’s attempts to propose income distribution reform programs to increase the income of low-income groups, adjust excessively high income and expand middle-income groups, are sometimes obstructed by various factors. During secondary distribution, the adjustment of the income gap by the government is not adequate. The secondary distribution is the re-distribution of income of various subjects in cash or in-kind forms on the basis of primary distribution. In China, two major means of redistribution are personal income tax and transfer payment. However, problems exist in both of them. As far as personal income tax is concerned, a feasible method for monitoring individual income is lacking, and actions of tax evasion and tax avoidance prevail, hence the authority cannot grasp the actual status of individual income. Moreover, China’s personal income tax program design 16

Labor remuneration refers to the percentage of of labor remuneration in primary income distribution. Household sector refers to the percentage of household sector income in primary income distribution. Household sector 2 refers to the percentage of household sector income in disposable income. See Jia et al. [11]. 17 The central state-owned capital operating budget expenditure was 155.33 billion yuan from 2008 to 2009. The expenditure was mainly in state-owned economic and industrial restructuring, post-disaster recovery and reconstruction of central enterprises, major technological innovations of central enterprises, energy conservation and emission reduction, overseas mineral resources equity investment, and reform and restructuring subsidies, etc. See Jia and Liu [10].

51.43

52.29

52.78

52.1

53.02

52.51

52.56

50.42

49.59

50.41

49.21

47.07

50.65

49.72

48.64

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

17.73

16.83

16.24

14.93

17.28

17.18

16.85

16.31

16.28

16.41

15.58

15.03

13.98

15.55

15.62

14.51

33.62

33.45

33.11

38.00

33.51

32.41

33.56

33.28

31.16

31.08

31.4

32.87

33.24

32.16

32.95

30.90

22.57

22.39

22.93

25.98

20.93

20.32

20.19

18.95

17.81

16.19

16.89

16.90

19.53

17.77

20.10

17.37

18.42

18.52

20.04

23.27

18.20

18.00

17.50

16.60

14.70

13.45

13.10

13.69

16.22

14.52

15.73

11.70

Secondary distribution

19.52

18.59

17.48

16.34

19.37

19.14

18.50

17.65

17.15

17.74

17.08

16.62

15.22

17.08

17.29

16.57

24.06

22.75

20.55

18.90

22.00

21.00

20.50

19.20

18.10

18.13

18.30

17.88

16.55

18.51

19.65

19.96

Secondary distribution

57.92

59.02

59.59

57.68

59.70

60.54

61.31

63.39

65.05

66.07

66.02

66.48

65.25

65.15

62.61

66.06

Primary distribution

57.52

58.73

59.41

57.83

59.80

61.00

62.00

64.20

67.20

68.41

68.60

68.44

67.23

66.96

64.62

68.34

Secondary distribution

Data source The data of 1992 to 2004 was calculated based on the Data of Flow of Funds of China 1992–2004 (this data revised the physical transaction part of the funds flow from 1992 to 2003 based on the results of the 2004 economic census and changes in calculation methods). Data of 2005 to 2007 was calculated based on China Statistical Yearbook 2008 and 2009. See Jia and Liu [10]

54.59

1993

Primary distribution

Primary distribution

Business surplus

Work remuneration

Net production tax

Government bodies enterprises Housing

Calculation of income (composition of income in Enterprises GDP)

1992

Year

Table 12.4 Primary and secondary distribution of three major sectors in national income in 1992–2007 (Unit: %)

284 12 The Universal Integration of Income Security System

12.2 The Problems of Income Security System

285

Fig. 12.4 The trend of “two proportions” of China’s national income from 1992 to 2007

has innate defectiveness, such as unreasonable taxation methods, low threshold for tax exemptions, and low proportion of tax revenue to GDP. At the same time, the main subjects of taxation are not high-income earners but low-income groups. In terms of transfer payment, the scale is relatively small at present due to insufficient fiscal revenue. Again, there is large gaps in social security income between urban and rural areas as well as between different social classes, which restricts the improvement of the income guarantee system. The role of the tertiary distribution in narrowing income gaps has not yet been shown. The tertiary distribution mainly includes social mutual assistance, private donations and voluntary services provided by nongovernmental entities. It involves giving material assistance, funding and living care to the disadvantaged groups to improve their living conditions and increase their income. This pattern of distribution can reflect the living conditions of the vulnerable groups in a more direct way. But in fact, many social organizations such as charities are government-led or incompetent in management, thus cannot virtually offer service to socially disadvantaged groups.

12.2.3 Unreasonable Income Guarantee System The improvement of the income distribution system must be supported by other systems in the field of employment and income security. There are still many shortcomings in the current income guarantee system. First of all, the minimum wage, the security line for minimum subsistence and the unemployment insurance fund are not well integrated. The three mechanisms are institutional arrangements for guaranteeing the basic living standards of people in need. The scientific design and integration of three mechanisms is conducive to equitable income distribution. However, the current minimum wage and the minimum living standard are not well integrated. The minimum wage standards are worked out by local governments based on local economic conditions, living standards of local people and labor compensation. But, in addition to maintaining their own survival, workers usually need to

286

12 The Universal Integration of Income Security System

support family members. Therefore, family support coefficient and the scale of the family should also be taken into account. If the minimum wage gained by a worker is not very much higher than the minimum living guarantee line, he or she inevitably lack passion for work. Take for instance a family in the city of Xiamen of three people with only one labor force. Assuming that he earns the minimum wage, which is 900 yuan per month according to the 2011 standard in the city, then the per capita monthly income of the family is 300 yuan, which is exactly the line of minimum living standard in the region. In this case, the worker will naturally prefer to apply for minimum living allowance rather than go to work. Again, the current minimum living standard is not integrated with unemployment insurance. Unemployment insurance provides basic living needs of the unemployed. It should be lower than the minimum wage standard, otherwise it will not effectively encourage re-employment. Take Xiamen as another example. According to Article 18 of the Xiamen Unemployment Insurance Regulations, “the unemployed with accumulated payment period within one year and less than five years shall receive unemployment insurance benefits as much as 85% of the minimum wage standard of the current year in the municipality”. In 2010, the minimum wage standard in Xiamen was 900 yuan, hence the unemployment insurance would be 765 yuan, and the gap was only 135 yuan. Supposing the unemployed enjoy other welfare benefits as well, then the actual income might be higher than the minimum wage standard. In other words, the unemployment insurance will not play the role of promoting employment and increasing income. Moreover, laborers have very little say in deciding salaries and income from capital is often much more than work remuneration. The Labor Law, the Labor Contract Law, and the Trade Union Law have offered comprehensive legal guarantees for workers, but they have not been effectively implemented in some areas. Still, the labor force are the vulnerable group due to the situation of supply exceeding demand in the job market for a long time as well as the failure to establish a real wage negotiation mechanism between employers and employees. In some places, wages remain unchanged all the year round. The role of trade unions in protecting workers’ income is very limited and systems of minimum wages and collective bargaining on wages in enterprises are not effectively implemented. Lastly, insufficient social security systems also contribute to widening income gap. The income of workers should include welfare benefits in addition to wages. However, benefits of pensions, medical care, housing provident fund and other welfare schemes are connected with payments, that is, participants with high wages and who pay more premiums receive more security benefits than those with lower wages and therefore pay less premiums. The outcome is that along with the widening of the wage income gap, the welfare income gap is expanded. Studies show that if social welfare is added, the gap of individual income of Chinese residents will increase from the current 3.3:1 to over 5:1. Likewise, a considerable part of personal income is spent on education, medical care, old-age and other expenditures. The same amount of expenditure constitutes a larger proportion and therefore heavier burden for low-income groups than for high-income groups, which in turn reveals the weakness of the income distribution system.

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12.3 The Design of the Universal Integration of Income Security System In view of aforementioned problems, we need to strengthen the universal integration and construction of the income security system, to alleviate contradictions between social classes and promote economic development as well as social progress.

12.3.1 Necessity of Universal Integration The universal integration of the income security system is an objective requirement for the overall planning of urban–rural and regional development, and an inevitable choice for optimizing the pattern of income distribution. Through the adjustment of income distribution policies, especially the transfer payment system and related measures, it aims to make the income distribution policies tilt towards the middleand low-income groups as well as the poor areas, in order to narrow income gaps among regions and occupations. First of all, the universal integration of the income security system is essential for the country to overcome the middle income trap by means of modifying the income distribution pattern. In 2009, China’s per capita GDP exceeded 3600 US dollars and began to develop into a middle-income economy. Two years after, the per capita GDP reached over 5400 US dollars. Historical experience shows that middle-income countries often encounter many economic, social, political, and technological challenges as well as various conflicts resulted from rapid economic and social development. At this stage, many countries fail to handle these challenges and conflicts well and get stuck in the middle income trap when growth is undercut or stagnating. For example, some Latin American countries became middle-income countries in the 1970s, but until 2007, the per capita GDP at these countries hovered around 3500–6000 US dollars.18 And the reason is largely because of the negligence on controlling income gaps. At present, China has reached the middle-income country status and are naturally confronted with many challenges, and the prominent ones are severe polarization between the rich and the poor as well as the uneven income distribution. To escape the middle-income trap and maintain stable economic development calls for integrating and reforming the income security system. We should implement tax policies, the minimum wage system as well as vocational education and employment training programs, to increase the income of the low-income groups, expand the proportion of middle-income earners, and regulate excessively high income, in order to allow the broad masses to enjoy the results of economic development. We should also generate consumer demand and improve consumption structure to upgrade the industrial structure and economic structure, and thereby promote the steady and rapid 18

Liu and Li [12].

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economic development, the overall increase of national income as well as the rapid growth of per capita GDP, so that we can surpass the middle income trap. Next, the universal integration of the income security system is a necessity for meeting the growing material and cultural needs of the people and promoting the healthy and sustainable development of the economy. A country’s economic development requires everyone’s active participation, and the benefits brought about by economic growth must be beneficial to all the people. The universal integration of the income security system is conducive to increasing the proportion of work remuneration in individual income, thus making the growth of individual income in step with economic development. As a matter of fact, only when people’s income increases, will they be capable of new consumption, which will lead to expansion in production. Affected by the global financial crisis in 2008 and RMB appreciation, many China’s exporting companies transferred their businesses to domestic selling to seek breakthrough. This inevitably requires a steady increase in the income level of the people in order to stimulate the consumption potential of our residents, stimulate the production of enterprises, promote the sustained and healthy development of the economy, and form a virtuous cycle of economic development and income growth. Lastly, the universal integration of the income security system is a prerequisite for building a harmonious society and promoting national stability and unity. Income is the material foundation for personal survival and development and it affects the standard of living. People have great concerns for their income as well as its growth and distribution. They always try to maximize their income and care about the fairness in income distribution. In recent years, the continuous decline in the proportion of labor remuneration to individual income has caused widespread concern among the people. People have expressed discontent with the high income of monopolistic industries and are craving for income distribution reform. To improve the income security system is crucial to building a strong country and ensuring the well-being of the people as well as to social harmony and national stability.

12.3.2 Goal of Universal Integration We believe that the goal of universal integration of the income security system is to establish a more reasonable structure among primary distribution, redistribution and tertiary distribution, and to reverse the two trends in national income distribution. The first is to reverse the trend of increasing national income gap and guide the Gini Coefficient to decline. The second is to reverse the year-on-year downward trend in the proportion of labor remuneration in income distribution and the proportion of individual income in GDP, so that the low- and middle-income groups can benefit from economic development, and the people’s income will not be emptied by excessively fast-growing consumer price. First, we should comprehensively eliminate monopoly in the field of primary distribution. The premise of rationalize the first, second, and tertiary distribution structure is to ensure the rationality and fairness of the first distribution, which

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provides a sound foundation for the fairness in the latter two stages. Therefore, for some monopolistic enterprises closely related to national economy and people’s livelihood that cannot be eliminated for the time being, it is necessary to establish a fairer wage system and annual salary system by formulating a scientific profit delivering mechanism and operating budget system, to effectively regulate the high income of employees especially the middle and senior managers. Second, we should explore a scientific and reasonable minimum wage standard to promote the fairness of primary distribution. The minimum wage serves as an important guarantee for fairness in primary distribution. The goal of building a universally integrated income security system is to seek a scientific relationship between the minimum wage and the average social wage, so that the minimum wage standard reaches 40–50% of the average social wage. The income growth rate of laborers shall be appropriately higher than that of GDP, and the proportion of work remuneration to GDP shall be gradually increased from 35% in 2011 to about 50%, which is basically close to the standard of middle-income countries, to truly make individual income grow in step with economic development. Third, we should comprehensively use real estate tax, inheritance tax, income tax, profit tax, yield tax, social insurance, and social welfare benefits, among other means. The real estate tax and inheritance tax shall be piloted and eventually be universally implemented nationwide at the end of the 12th Five-Year Plan period and during the 13th Five-Year Plan period. Other taxes shall be regulated and priority shall be given to the development of education, employment, health care, social assistance, public welfare and other undertakings through payment transfer. In addition, the minimum living allowance program shall be improved so that the minimum subsistence level, minimum wage, and unemployment insurance can have a scientific proportional relation to reduce the income gap among social strata. Income disparity caused by unequal opportunities, rules, and personal abilities in primary distribution shall be rectified to promote fairness in starting points and opportunities. Fourth, we should give full play to the role of enterprises and social charitable organizations in bridging the income gap, introduce regulations or policies, revise and improve the Public Welfare Donation Law and Fund Management Regulations, and refine tax deduction and other preferential policies for charitable donations. Besides, we should encourage and guide enterprises and charitable organizations to reach out to towns and villages to provide relevant social services to the people, especially the disadvantaged groups, to improve the welfare level of these groups, which is a means to make the tertiary distribution function in reducing the income gap.

12.4 Proposals for Universal Integration Based on the above policy objectives, we believe that the key to the universal integration of the income security system lies in how to optimize the economic structure to maintain the healthy and stable economic development, based on which policies for the three links of distribution shall be improved. At the stage of primary distribution,

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excessive income gap shall be reduced. For secondary distribution, through social security, transfer payment and other means, we should increase the income of lowincome groups, adjust excessively high income and expand middle-income groups. In addition, we should enable the tertiary distributions to function in adjusting the income gap. First we should improve the state-owned enterprise profit delivering mechanism and the state’s operating system for state-owned enterprise profits, increase the proportion of labor income, and build a fairer primary distribution system. The monopolistic position helps state-owned enterprises to crowd out other enterprises and distort the supply prices of various factors. Their huge gains further aggravates the trend of rising corporate income in GDP. Without a reasonable mechanism for collecting their profits, the income of state-owned enterprise employees is much higher than that of other groups. To this end, it is necessary to transform government functions and deepen the reform of state-owned enterprises. On the one hand, for state-owned enterprises irrelevant with the public interest, the state should gradually reduce the shareholding ratio in these enterprises and break their monopolistic position of them, and the final objective is to turn them into profitoriented modern enterprises controlled by social capital, so that the market can play the fundamental role in resources allocation and industrial structure adjustment. The authority should also establish a fairer market access mechanism to encourage the development of enterprises of other types of ownership in areas formerly monopolized by state-owned enterprises. State-owned enterprises closely tied to public interests shall still be directly operated by the government, but the reform of the modern enterprise system should be implemented to improve their operation efficiency. Also, the income distribution among the government, enterprises, and employees should be clarified through the salary system management. Moreover, to eliminate the possibility that enterprises keep all their profits, the state should establish the profit collection system to increase the amount and expand the scope of profit collection from state-owned enterprises and gradually realize the control of enterprise profits by the state. On the other hand, it is necessary to establish and improve the collective wage system of enterprises and ensure the equal status of workers in wage formation. To this end, it is necessary to implement a minimum wage system oriented to encourage employment, establish a minimum wage dynamic adjustment mechanism linked to the average social wage and CPI, and enhance the enforcement inspection of the minimum wage standard, to truly protect the income earned through work. Besides, it is necessary to establish an effective system for collective bargaining on wages in enterprises, which is not only the best way to reverse the disadvantaged position of individual workers, but also an effective way to obtain reasonable and fair work remuneration, so that workers can share the development results of the industry and the enterprise. In addition, the Labor Law, Labor Contract Law, and the Social Insurance Law should be implemented to provide legal basis and legal support for protecting the legitimate rights and interests of workers. At the same time, we should reform the tax system to really benefit enterprises and the public. In the primary distribution, the government’s revenue is mainly derived

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from the net production taxes, which are the various taxes and fees paid for production, sales and management activities as well as the use of certain factors of production. These taxes and fees include business tax, value-added tax, consumption tax, import tax, fixed asset use tax, stamp duty, effluent fee, etc. Among them, business tax, value-added tax and consumption tax are indirect taxes, which are easy to collect and monitor. They are conducive to obtaining stable financial income but prone to transferring the tax pressure to consumers. Moreover, these three types of indirect taxes account for a large proportion of production taxes, which will naturally lead to the rapid growth of the governments’ net production taxes in the primary distribution link, thereby crowding out the proportion of corporate and resident income. Thus, designs for business tax and value-added tax should be reformed to appropriately decrease the proportion of indirect taxes and alleviate the tax burden of enterprises, especially those in the service industry. Second, we should improve secondary distribution and, in particular, develop a universally integrated social welfare system to reduce income disparities through the provision of social welfare. First and foremost, the government shall upgrade the Individual Income Tax Law, which is the premise of improving the secondary distribution. To this end, it is necessary to promote the building of real estate tax, inheritance and gift tax, implement direct tax for the affluent class, and establish a scientific and reasonable method of monitoring individual income. Besides, it is necessary to raise the threshold of taxes, adjust the tax rates of various income levels, and change the current situation of the proportion of individual income tax in GDP being relatively low and the main taxpayers being low- and middle-income earners. While ensuring the timely and full payment of individual income tax for the affluent people, the scope of exemption for the poor shall be expanded. Furthermore, it is necessary to enhance the tax collection and management of high-income people with high shareholding ratio and thus investment returns, and those who engage in financial insurance, securities trust investment, real estate and mineral resource investment. In addition, the collection of real estate tax, inheritance and gift tax and other taxes of a stock nature should be enhanced to adjust the wealth gap between the rich and the poor. Also, we must improve the welfare systems for employment, medical care, education, housing, and social assistance. Welfare projects such as social insurance and social assistance, especially transfer payments for the poor, can best demonstrate the government’s role in promoting social equity and stability. The state should extend the scale of transfer payment channels such as social insurance and social assistance, increase the minimum living guarantee line for urban and rural residents, and continuously improve the social welfare system, so as to protect the basic living of the people while narrowing the income gap between different classes. In addition, we must narrow the income gap between urban and rural population as well as among regions through income integration. Every effort should be made to ensure the economic growth and create more jobs for residents in the central and western regions. It is also necessary to promote urbanization in accordance with local conditions, gradually reduce the proportion of rural population in the total population, push up the price of agricultural products, and increase the income of farmers.

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Third, the tertiary distribution system should be improved to provide benefits for vulnerable groups and other people in need, and narrow the income and welfare gap between them and other social groups. On the one hand, we should establish and improve the Public Welfare Donation Law, Regulations on the Registration Management of Social Organizations, Regulations on Foundations, Regulations on Promotion of Voluntary Services and Regulations on Social Work Services. Preferential policies in tax, price and other aspects should be offered to non-governmental organizations that can provide benefits to the society. We should also encourage the fostering of specialized and professional volunteers and social workers to provide in-kind and service benefits to the society. On the other hand, it is necessary to define the rights and duties as well as positions and functions of social organizations and individuals in the provision of social welfare. We should also improve the system for accepting donations and social supervision, and establish open and transparent supply channels and supply methods for in-kind benefits, funds and services. Among the above-mentioned measure, to transform the growth mode and maintain healthy and stable economic development are is prerequisite for integrating the income security system, to improve the primary and secondary distribution is the key and focus, and the tertiary distribution is a supplement. Through the universal integration of the three distribution mechanisms, we can effectively increase the income of low-income groups, adjust excessively high income and expand middle-income groups, to promote the formation of a more equitable income distribution system.

References 1. Li, S., Zhao, R.: Re-research on individual income distribution of Chinese residents. Econ. Res. J. 4 (1999) 2. Bian, Y., Zhang, Z.: Marketization and income distribution: analyzing the 1988 and 1995 urban household income surveys. Social Sci. China 5 (2002) 3. Wang, T., Xu, Y.: Research review of income distribution in China. Red Flag Manuscript 9 (2011) 4. Liu, G.: disorder primary distribution is major factor of social injustice. China Business Times, 14 Oct 2005 5. Zeng, X.: Two outstanding issues in the current income distribution of urban employees: excessive income gap and equalitarianism. People’s Daily, 6 Feb 2002 6. Yang, Y.: Main problems existing in china’s income distribution and the countermeasures. JING JI YAO CAN 37 (2010) 7. Su, H.: Crux and the way out of income distribution problems. 21st Century Business Herald, 23 Feb 2010 8. Xinhua News Agency: China’s gap between rich and poor approaching red line of social tolerance. China Economic Net, 10 May 2010 9. Yang, Y., Chi, Z.: China’s income distribution situation and future development trends in 2009. Rev. Econ. Res. 6 (2010) 10. Jia, K., Liu, W.: Thoughts and suggestions on increasing the two proportions in national income distribution and reducing income gap. Chin. Acad. Fiscal Sci. Ministry Finance 93 (2010) 11. Jia, K., et al.: National income distribution pattern in China: recent trends and international comparison. Chinese Acad. Fiscal Sci. Ministry Finance 15 (2010)

References 12. Liu, F., Li, Z.: Can China escape the middle income trap? People’s Daily, 6 Sept 2010

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Chapter 13

Universal Integration of Education Security System

The development of education is the cornerstone of national rejuvenation and social progress. It is also an effective way for people to change their economic and social status and promote the justice in social development. Educational security is a social welfare project that is widely concerned by all sectors of society and is one of the major issues for improving the people’s lives. Therefore, the universal integration of the education security system has become an important part of the universal integration of the social welfare system.

13.1 The Analysis of the Universal Integration of Education Security System The education security system is an institutional arrangement made to protect the basic right to education of members of society through capital investment in order to raise the scientific and cultural standards of the people, enhance their professional skills, and promote their self-development. It is a major task for the social welfare system to develop education, guarantee the people’s access to basic education services, and continuously meet their needs for personalized education services through government input, social support and popular participation.

13.1.1 Overseas Studies Studies on the universal integration of education security system started earlier in foreign countries. Based on the exploration of the connotation and problems of the equalization of educational opportunity, they put forward suggestions to promote education equalization, in order to promote the realization of a universally integrated education security system. © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_13

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Concept and Connotation of Education Equalization

One of the purposes of the universal integration of the education security system is to promote the equalization of educational opportunities. Education equalization is on the basis of universality. It requires the equitable allocation of educational resources through the integration of various education systems. Sociologist James S. Coleman in his volume Equality of Educational Opportunity held that the equalization of educational opportunities is best demonstrated in children and compulsory education, including allowing all children of school age to enjoy a certain level of free education, and all children of school age receive general education irrespective of their social background, and meanwhile, school-age children from different families and different strata have the opportunity to enter the same school.1 Lorin W. Anderson in his work A Taxonomy for Learning, Teaching, and Assessing believed that educational equity is mainly reflected in four aspects: providing everyone with the same amount of education, school education promoting students to meet established standards, providing equal opportunities for each individual to bring out his or her potential, and providing opportunity of continuing education.2 Absorbing the thought of Lorin W. Anderson, Torsten Husén in his work Social Influences on Educational Attainment claimed that educational equality includes: equality at starting point, equality at the intermediary stage and equality of the ultimate goal of individuals. He stressed everyone’s equal opportunities for learning and the opportunities for educational attainment.3 In other words, the equalization of education is reflected in the equalization of admission, learning process and academic assessment. Generally speaking, the concept of equalization of education in the West focuses on the equalization of rights and opportunities. From a quantitative angle, their equalization focuses on the equalization during the compulsory education stage, such as the equality in number of teacher per student, teaching facilities and education funding. From a qualitative perspective, they pay more attention to the quality of schools and teaching.

13.1.1.2

Problems in Educational Equalization

Education equalization requires people from different regions, classes and social groups to obtain equal rights to education, everyone to be treated equally in the process of receiving education, education resources to be equally distributed and education forms to be shared by all. However, there are still many problems in the education security system in the West. On the one hand, there are inequalities in the supply of educational resources, opportunities for students to attend schools, and opportunities for students to choose 1

James [1]. Anderson [2]. 3 Husen [3]. 2

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courses.4 Coleman found that as a major factor influencing students’ academic performance, teachers from different races represent different teaching competence. The quality of teachers in white schools is higher, while the quality of those in schools for the colored is relatively low, which inevitably affects students’ academic performance. On the other hand, the social prestige, social status of and social resources owned by students’ families will surely affect the equality in the supply of educational resources, which in turn affects students’ educational results.5 A report released by the National Institute of Education in France discovered that factors such as cultural values of classes, educational aspirations, academic performance and education background of family members can impair the equality, universality and integration in education.6

13.1.1.3

Research on Measures to Promote Education Equalization

Through analysis of 600,000 children at the compulsory education stage, Coleman discovered that we must not only pay attention to educational input but also to education results, to examine the universality and equalization of education opportunities, so as to change the situation of inequality in educational opportunities for vulnerable groups.7 The American educator Philip H. Coombs in his book The World Educational Crisis believed that in order to reduce educational inequality within cities and between urban and rural areas, it is necessary to improve the popularity and quality of education in poor or rural areas and to increase the coverage of education in these areas. He advocated the priority of these areas in receiving resources and even that some resources now in developed areas should be shifted to poor areas.8 Drawing experience on universal coverage and balanced development of basic education in South Africa, Doe proposed to achieve balanced allocation of educational funding based on the Equitable Share Formula and the National Norms and Standards for School Funding. He called for national standards of equipping school teachers aiming for a balanced teacher-student ratio. In addition, he advocated adopting the National School Nutrition Progamme to provide nutritious meals for all learners in poorer primary and secondary schools. The objective is to improve the ability to learn of learners especially those from the deprived communities.9 Although education inequality is common in countries around the world, foreign education systems do not present sharp urban–rural disparities, so little attention as been paid to urban–rural education inequality. China is unique in economic, social 4

Shen and Qiao [4]. Quoted from the National Center for Education Development Research [5]. 6 Ibid., p. 77. 7 Quoted from Lin [6]. 8 Kums [7, p. 242]. 9 Doe [8]. 5

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and demographic structures which give rise to more problems to be addressed. Therefore, foreign research results can only provide epistemological and methodological references. We should explore China’s own solutions.

13.1.2 Domestic Exploration Domestic research on the universal integration of the education security system mainly focuses on two dimensions. One is how to ensure that all school-aged children can receive compulsory education and in turn how to further expand the scope of compulsory education. The second is how to integrate educational resources. The former focuses on the equalization of opportunities to compulsory education, while the latter focuses on the investment of educational resources, especially education funding, including how to reasonably allocate education funds among regions as well as between urban and rural areas, how to improve the layout of primary and secondary schools as well as how to improve the quality of teaching to narrow gaps among schools.

13.1.2.1

Research on Education Equalization

Universality is the foundation and a prominent character of the education security system. Universality in education mainly refers to the universal coverage of compulsory education. It requires the adoption of compulsory education in all parts of the country, and all school-age children and adolescents must receive compulsory education. It also stipulates that the period of compulsory education can be extended according to the level of economic development in different regions. In addition, it requires the establishment of a relatively complete education system, including preschool education, basic education, special education, vocational skills training and education, continuing education and even higher education, to meet the needs of the people. Domestic scholars regard fairness in education as the basis of social fairness, and believe that education fairness means everyone has equal right to education and equal access to educational resources, the allocation of educational resources is inclined to disadvantaged groups and all forms of educational privileges are got rid of.10 On this foundation, they probe into issues of universality, fairness and equalization in education based on politics, pedagogy, economics, sociology and other theories. They further give measures as how to reasonably allocate education resources effectively as well as how to promote fairness in education through education investment and planning. These studies serve as important references for deepening the universal integration and reform of the education security system.

10

Shi [9].

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Equalization, as an important measurement of the universal integration of the education welfare system, can be assessed from two aspects. The first is the degree of integration among different stages of education such as basic education, secondary education, higher education and continuing education. Studies found that there is an extremely shortage of senior secondary education resources. Together with the historical gap between key and ordinary high schools, high-quality education resources in ordinary high schools have become a bottleneck restricting the admission of high school students.11 For example, in 2005, the budgetary appropriation for ordinary undergraduate colleges and universities in China was 93.605 billion yuan, accounting for 89.46% of the appropriation for ordinary colleges and universities in that year, while the appropriation for vocational colleges and universities was 11.032 billion yuan, only 10.54% of financial allocation for ordinary colleges.12 For private higher education, both schools and students enrolled are small in number, far from the standard of universality.13 Even the public higher education is not adequate in universality. Zhong Binglin and others found that following growing higher education enrollment in China, there emerged regional imbalances and stratified differentiation and education quality is yet to be enhanced.14 Geographically, education equalization manifests itself in the equality between urban and rural areas, especially in basic education. It is generally believed that there are obvious disparities in urban and rural education, especially in basic education,15 not only in terms of management, facilities, teachers, but also in terms of educational opportunities. There are also disparities and imbalances in educational resources between high-quality and ordinary schools within a city.16 To study this, many scholars analyzed the characteristics and changes of disparities in the development of urban and rural compulsory education in China from the two aspects of education investment and education level, using statistics released by authorities. Also, some scholars studied the fairness of financial investment in rural compulsory education from the perspective of fiscal decentralization. They found that the urban–rural gap in per capita funding for basic education has undergone a movement of decline after initial rise, then second rise followed by continuous decline. Moreover, the gap between urban and rural public funding for all types of students in basic education is very significant.17 In other words, the gap between urban and rural areas in basic education is not reflected in the enrollment rate but in education investment for per student.18

11

Yang [10]. Hu and Ma [11]. 13 Wu [12]. 14 Zhong and Zhao [13]. 15 Zhai [14]. 16 Wang [15]. 17 Wu [16]. 18 See Liu [17] and Zhang [18]. 12

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Generally speaking, there are four reasons for inequality in education in China. First of all, the urban–rural dual system is the social root. Education in cities is mainly funded by public finance, while education costs in rural areas are often passed on to farmers due to insufficient financial input. The imbalanced allocation of educational resources between urban and rural areas lead to imbalance in the development of urban and rural basic education.19 Other differences such as educational facilities, teaching quality and enrollment rates further exacerbate the urban–rural dual education system.20 The second reason is the imbalance in supply and demand of educational resources. For a long period of time since the founding of the People’s Republic of China, the government invested most of the country’s limited financial resources into various key schools, resulting in welfare concentration in education.21 Though there was the transformation from elite education to educational popularization, the change in supply was still lagging behind. The pursuit of high-quality schools in the society generated phenomena such as choosing schools by scores, by power or by individual financial strengthen.22 The third reason lies in the fiscal system. Gao Rufeng conducted an empirical analysis of the fiscal arrangements for rural compulsory education and found that the county-level pooling method started in 2001 was a factor for urban-rural gap in education. Financial investment varies greatly according to capacities of different regions. Some places even cannot fulfill the basic educational needs. The uneven development of urban and rural education was thus developed.23 Moreover, poor areas have an even stronger “inherent motivation to reduce investment in rural compulsory education”,24 which further worsens the condition of education in rural areas. Finally, social policies have exacerbated the inequality between urban and rural education. For example, the dual household registration system and other related policies not only prevents rural children from entering schools in cities, but also restricts education resources from being distributed to rural areas, and hence the difference between urban and rural compulsory education is difficult to eliminate.25 Zhai Bo believes that education policies increase the unfairness and imbalance in the allocation of educational resources between urban and rural areas. Urban education is better than rural education in both hardware and software, and this is the policy factor leading to urban and rural education gaps.26

19

Bao [19]. Jiao [20]. 21 National Center for Education Development Research [21]. 22 Dong et al. [22]. 23 Gao [23]. 24 Lu and Li [24]. 25 Wang [25]. 26 Zhai [26]. 20

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Research on Measures to Promote Equalization

Scholars put forward suggestions on improving the universal integration and equalization of education from three aspects. The first is to strengthen the government’s responsibility to guide the balanced development of urban and rural compulsory education. For example, it is necessary to clarify the responsibilities of education investment of governments at all levels, incorporate the implementation of education equalization into the assessment of government performance, guide and urge governments to improve the overall layout of school, maximize the efficiency of quality education resources,27 and require governments to be committed to equalized education supply. Yang Dongping claimed that to promote the balanced development of education, especially compulsory education, an administrative accountability system and an independent supervision system need to be set up.28 The second is to reform the financial system. Financial support is inseparable for developing education. The promotion of equalization in education largely depends on the degree and structure of fiscal investment. At the compulsory education stage, it is necessary to implement the “minimum guarantee” in financial policy and averagely allot financial resources according to number of students in different areas.29 At other stages of education, rural, western and other underdeveloped areas as well as all ordinary schools should be given priority in distributing educational funding, in order to narrow gaps among regions and between prestigious schools and ordinary schools. The third is to change the mechanism of educational investment and pooling method. The method of investment should be changed from “reverse disequilibrium distribution” to “forward disproportionate distribution”. And the investment should be shifted from the “scattered input” by grassroots governments to “coordinated input” or “general input” by the central government.30 On this foundation, various non-governmental organizations and non-profit organizations should be encouraged to invest in education so as to invite private funds into the education field. The objective is to alleviate the pressure on public education expenditures and promote equal development of education.31

13.1.3 Learning from Overseas Foreign studies on equalization of educational opportunities have expanded our research scope. They seek ways to solve the problem from the aspects of economic 27

Kang [27]. Yang [28]. 29 Li [29]. 30 Wang [30]. 31 Gong [31]. 28

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system, social structure and social stratification. According to them, educators alone cannot correct all these disconnections in the education system. They must work together with the society to make adjustment, otherwise, the growing disparity between education and society will inevitably break the structure of the education system.32 These conclusions help us examine the issue of equalization of education in a specific space and time. In addition, foreign studies have shown that equalization of education should allow the existence of differentiations rather than pursue absolute equality. As Coleman puts it, we can only get close to equality in education but will not arrive at it.33 Education equality is a relative equality compatible with social and economic development as well as people’s cultural values. It is subject to economic and social equality, and in turn influences economic and social equality. These views have important reference value for us to explore the universal integration of the education security system in China. Domestic research on the equalization of education started relatively late. It is mainly centered on the equalization and universality in compulsory education, higher education, and other types of education, and has put forward several suggestions. However, the existing research results still have the following shortcomings. First off, when studying the unequal development of urban and rural education, scholars often compare the absolute differences in the amount of educational resources, and rarely consider the coordination between their education levels with socioeconomic development conditions respectively. They believe in absolute equality, deeming that urban and rural areas should be provided with equal resources so that urban-rural education development can keep pace. However, education is closely related to the level of economic development. The evaluation the equality of education should take into account its adaptability and coordination with regional social-economic level, so that education will not hinder economic progress or be ignored. This requires us to explore the changing relationship between education and economic development, so as to better promote the universal integration of the education security system. Moreover, many studies only focused on the equalization of education, especially compulsory education, failing to pay attention to the coverage and balanced development of other types of education, such as preschool education, vocational education, higher education and continuing education. They also overlooked research on the universal integration of the education system, education management institutions and education resources. Universal integration is the foundation of equalization, and equalization is the manifestation of universal integration. If we ignore the integration between compulsory education with other types of education as well as the integration of various education systems and institutions, then by no means can we achieve equalization in compulsory education. Lastly, existing researches highlight the macroscopic and qualitative approach and underestimate microscopic and quantitative approach. Most scholars analyzed the 32 33

Kums [7, p. 4]. Coleman [32].

13.1 The Analysis of the Universal Integration of Education …

303

institutional and policy reasons that affect the universal integration of the education security system from a macro level, and few of them tried to explore the issue by constructing an index system, which makes the existing research results not well targeted.

13.2 The Operation of Education Security System Education runs through a person’s whole life and is a guarantee for people’s all-round development. There are different levels of education included in the education security system: preschool education, primary education, secondary education, higher education, continuing education, special education and vocational education.

13.2.1 Implementation of Education Security System Education is the basis for people to understand the world on an equal footing, and it is also the foundation for any country to maintain its standing in the world. After the founding of the People’s Republic of China, the government attached great importance to education and promulgated laws and regulations to protect the people’s rights to education. First off, a relatively complete education system was established. Focusing on basic education, higher education, continuing education, special education and vocational education, the entire education system can be divided to preschool education, primary education, junior high school education, senior high school education and higher education. After more than 60 years of development, a relatively complete education security system has gradually taken shape. By the end of 2011, there were a total of 166,800 kindergartens across the country, accommodating 34.245 million children, with the gross enrollment rate of preschool education reaching 62.3%. The total number of primary schools nationwide was 241,200 receiving 99.264 million students. The net enrollment rate of school-age children reached 99.79%, the qualification rate of full-time teachers in primary schools reached 99.7%, and the student–teacher ratio was 17.7: 1. In 2011, there were 54,100 junior high schools, with 50.668 million students, and the gross enrollment rate reached 100%. The qualification rate of full-time teachers in junior high schools was 98.9%, and the student–teacher ratio was 14.4: 1. The total number of senior high schools was 27,638 schools, accommodating 46.865 million students, and the gross enrollment rate was 84%. Full-time senior high school teachers were 1.557 million, the student–teacher ratio was 15.8: 1, and the qualification rate of fulltime teachers was 95.7%. Also in 2011, there were 2762 ordinary universities and adult universities in China, with 31.67 million students. The scale of higher education ranks the world’s first, and the gross enrollment rate was 26.9%. 1.393 million fulltime teachers were in ordinary colleges and universities, and the teacher-student ratio

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13 Universal Integration of Education Security System

was 17.4: 1. State-run vocational training schools were 129,500 with 29.8 million of full-time teachers. Together with 21,403 private vocational training institutions, the total number of people receiving vocational education was 9.555 million. In addition, private education saw rapid development, reaching a total of 698 institutions, accommodating 5.051 million students.34 The total number of students at all types of schools reached 25.4127 million in that year. In addition, an education security policy system with Chinese characteristics has been built. As early as 1951, the authority then announced the Decision on Reforming the School System, which stipulated school attendance hours for various types of full-time education institutions. The Constitution of 1954 of China for the first time confirmed the nature and status of education in China and stipulated that “Citizens have the right to education”. In 1977, the central government decided to resume the college entrance examination and in 1980 the Regulations on Academic Degrees was adopted. After the 3rd Plenary Session of the 11th Central Committee, Deng Xiaoping stated that “Education is the most fundamental cause of a nation” and “To develop science and technology is not possible without education”. In 1981, the State Council approved and forwarded the Ministry of Education’s Report on the Trial Measures for Higher Education Self-study Examination and decided to establish the self-study examination system. In 1983, Deng Xiaoping proposed that education should be oriented to modernization, the world and the future, which became the guidelines for education in China. The CPC Central Committee promulgated the Decision on the Education System Reform in 1985, requiring Party committees, governments at all levels, and all walks of life to support education. The Compulsory Education Law was passed in 1986, deciding to implement the nine-year compulsory education step by step. In 1987, the 13th Party Congress proposed that “the development of science, technology and education should be given top priority, and economic construction should be shifted to the track of relying on scientific and technological progress and raising the qualities of labor force”. In 1990, the State Education Commission determined to implement the graduation examination system in ordinary high schools. At that time, the central Government successively promulgated the Decision on Vigorously Developing Vocational and Technical Education, the Outline of China’s Educational Reform and Development, the Education Law, the Higher Education Law, and the Action Plan for the Revitalization of Education for the 21st Century. Since the 16th National Congress of the CPC, the authority has attached great importance to education and pointed out that “the development of education must be prioritized to build a country with strong human resources”. To this end, the Compulsory Education Law was amended. The promulgation and implementation of these policies have effectively promoted the progress of China’s education security system and the formation of an education security policy system with Chinese characteristics. Lastly, a stable financial support system for education was established. After the reform and opening-up, China has deepened the education system reform, improved

34

Statistical Bulletin on the Development of Education in China [33].

13.2 The Operation of Education Security System

305

the education funding investment system, and set up a system based on fiscal appropriation by central and local governments while raising money from multiple channels. Since 1978, China has increased fiscal investment in education year by year, reaching 72.875 billion yuan in 1992, accounting for 2.71% of GDP. In 1997, 2002, 2007 and 2012, government expenditures on education were 186.254 billion yuan, 3491.4 Billion yuan, 828.02 billion yuan and 2 trillion respectively, or 2.36, 2.9, 3.32 and 4% of GDP in the corresponding year.35 The government’s increasing investment in education has provided a reliable financial guarantee for the development of education. In addition, the government exerted great efforts to expand the funding resources for education. In 1989, the policy of simultaneous enrollment of publicly funded and self-funded students in colleges and universities was put into effect. In 1996, colleges and universities enrolled students on a trial basis. These measures played a role in promoting the autonomy of colleges and universities as well as in improving the conditions for schools. With the increase of education funding, the government continued to optimize the structure of education expenditures, giving priority to lightening the burden of compulsory education, especially for the rural primary and middle schools in poor areas. In 2001, the Ministry of Education and other departments issued the Opinions on Trial of Free Textbooks for Rural Primary and Secondary School Students in Part of the Poor Areas to reduce charge of teaching material costs for rural primary and secondary school students in some poor areas. In 2006 and 2007, students from western regions and compulsory education students in the western region and rural areas around the country were gradually exempted from paying tuition and miscellaneous fees. In 2008, the tuition and miscellaneous fees of students in urban compulsory education were also completely waived, thus realizing the free compulsory education system in urban and rural areas. This marks a milestone in the history of Chinese education, and a compulsory education system that benefiting all has basically taken shape.

13.2.2 Problems in Education Security System Though great achievements have been made, we should recognize that there are still problems in the universal coverage and integration of the current education security system. Since funding is the core of educational development, it is also the focus of discussion in this section. Firstly, investments in higher education are not scientifically distributed due to lack of integration. On the one hand, there is great unfairness in financial expenditures between higher undergraduate colleges and higher vocational colleges. For example, in 2011, the average financial expenditure of students in ordinary colleges and universities in China was 32,940 yuan, while the figure for students in vocational 35

Refer to National Bureau of Statistics [34]. The data of 2012 is sourced from the website of National Bureau of Statistics.

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13 Universal Integration of Education Security System

colleges was 10,960 yuan, only one third of the former. Again, the average national financial education expenditure on students in ordinary colleges and universities was 17,860 yuan, while that of higher vocational colleges was only 50.13 thousand yuan, less than one third of the former. On the other hand, the government attaches much more importance to the publicly funded higher education than to private higher education. Also in the year 2011, the average national financial education spending on ordinary public college students in China was 12,570 yuan, with barely any on private college students. In fact, as early as 2001, a study of 39 private colleges and universities across the country by Wu Daguang found that except for Shanghai Jian Qiao University whose statistics were “unidentified”, only in one of the remaining 38 private colleges, the tuition fee accounted for less than 30% of the school’s total income. In another school, the figure was 60%. For the rest, the figures were 70–80% in 4 schools, above 90% in 9 schools, and 100% in 32 schools.36 See Table 13.1 for details. Secondly, the financial investment in secondary education is not equal. As the intermediate link between primary education and higher education, various of secondary education institutions across the country should receive roughly equal funds for each student. However, this is not the case in practice. For example, in 2011, among all secondary education institutions, ordinary senior high schools received the highest financial support for each student of 8160 yuan, while the lowest was for technical school students, which was 3940 yuan, less than half of that for the former (see Table 13.2). Vocational high schools and secondary specialized schools were between the two. In addition, among the four national secondary schools, the financial appropriation for vocational high schools was the most, which was 5770 yuan, followed by ordinary high schools of 5380 yuan, and the lowest was still for technical schools, which was 2490 yuan, less than half of that for vocational high Table 13.1 Number of students in and financial appropriations for various higher education institutions in China in 2011 Institution

Total financial expenditure (1)

State funding for education (2)

(2)/(1) (%)

Student number (3)

(1)/(3)

(2)/(3)

Ordinary college and university

549,786,489

290,180,256

52.8

23,085,078

23.81

12.57

Higher undergraduate school

444,637,576

241,017,683

54.2

13,496,577

32.94

17.86

Vocational college

105,148,913

49,162,573

46.8

9,588,501

10.96

5.13

China Education Fund Statistics Yearbook 2011, China Statistics Press, 2012, p. 4; China Statistics Abstract 2012, China Statistics Press, 2012 Unit: Thousand yuan/person 36

Wu [35].

13.2 The Operation of Education Security System

307

schools. The low investment in technical schools is not conducive to training various professional and technical workers as well as the balanced development of secondary education as a whole. Thirdly, the distribution of education funds among various schools lacks organic integration. The above analysis has demonstrated the large difference in financial investment in education between higher schools and secondary schools in China. In specific, higher education funding tends to be invested in public colleges and universities, less is in vocational colleges, while seldom is in private institutions. In secondary education, more financial input is into ordinary high schools and vocational schools, while technical schools and secondary specialized school can get relatively less financial input. In terms of ordinary high schools and primary schools, the average national financial input for junior high school students was 5980 yuan, higher than 5380 yuan for senior high school students and also 4680 yuan for primary school students (see Table 13.3). Among all education institutions, the per capita expenditure on ordinary high school students ranked top, showing the inconsistency between total per capita expenditure and state education funding per student. A reasonable explanation is that local governments have increased financial input for senior high schools through other channels. In addition, the per capita expenditure on preschool students in China was only 2130 yuan, while the state funding per student was only 714 yuan (see Table 13.3). Fourth, gaps of educational resources owned by different provinces are quite large. The allocation of educational resources reflects the level of education development in a country or region. According to data from the fifth and sixth national censuses, China’s higher education resources are mainly concentrated in economically developed areas such as Beijing, Tianjin, Shanghai, and Jiangsu Province. The numbers of higher education students per 100,000 population in 2011 in these places were Table 13.2 Number of students in and financial appropriations for various secondary schools in China in 2011 Institution

Total financial expenditure (1)

State funding for education (2)

(2)/(1) (%)

Student number (3)

(1)/(3)

(2)/(3)

Secondary specialized school

60,655,115

41,513,358

68.4

8,552,071

7.09

4.85

Vocational high school

50,929,581

39,276,109

77.1

6,809,722

7.48

5.77

Technical school

16,964,436

10,709,221

63.1

4,304,232

3.94

2.49

Ordinary high school

200,334,600

132,183,501

65.9

24,548,227

8.16

5.38

China Education Fund Statistics Yearbook 2011, China Statistics Press, 2012, p. 4; China Statistics Abstract 2012, China Statistics Press, 2012 Unit: Thousand yuan/person

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5613 in Beijing, 4329 in Tianjin, 3556 in Shanghai, 3378 in Shaanxi, 2991 in Hubei, and 2824 in Jiangsu. The five provinces with the lowest number of higher education receivers per 100,000 population are less developed regions, and the figures were 1081 in Qinghai, 1254 in Guizhou, 1446 in Tibet Autonomous Region, 1520 in Yunnan, and 1521 in Xinjiang.37 In terms of talent gathering, in 2010, provinces with most human resources of the college education or above per 100,000 people were still major economically developed provinces such as Beijing, Shanghai, and Jiangsu, whose per capita GDP generally came at the top of the ranking nationwide. Again, provinces with relatively less human resources of the college education or above per 100,000 people were Guizhou, Yunnan, Henan, Anhui, and Gansu, where both the development level and per capita GDP were low (see Table 13.4). This shows that there is a certain correlation between education resources, human resources and the level of economic development and also there are gaps in education resources among provinces. Lastly, significant disparities exist in per capita financial investment in education in different places. In recent years, as the government continues to increase financial input, the proportion of education expenditures in GDP has increased from 2.9% in 2002 to 4% in 2012. However, on the one hand, there are regional differences. For example, in 2005, the average funding for elementary school students in the eastern region was 2440 yuan, while in the central and western regions it was only 1400 Table 13.3 Number of students in and financial appropriations for various elementary schools in China in 2011 Institution

Total financial State funding expenditure (1) for education (2)

(2)/(1) (%)

Student number (3)

(1)/(3)

(2)/(3)

Ordinary junior middle school

341,314,952

315,236,936

92.4

50,642,058

6.47

5.98

Special education school

6,878,902

6,543,779

95.1

398,736

16.16

15.37

Reform school 311,927

294,266

94.3

8976

29.06

27.41

Ordinary primary school

488,707,190

464,259,842

95.0

99,263,674

4.92

4.68

Preschool education school

72,801,425

24,435,264

33.56%

34,244,456

2.13

0.714

China Education Fund Statistics Yearbook 2011, China Statistics Press, 2012, p. 4; China Statistics Abstract 2012, China Statistics Press, 2012 Unit: Thousand yuan/person 37

Source: National Bureau of Statistics of China, China Statistical Yearbook 2012, China Statistics Press, 2012. According to the data of China Statistical Yearbook 2000 and China Statistical Yearbook 2010.

13.2 The Operation of Education Security System

309

yuan, 1000 yuan less than the former. Again, the average funding for junior high school students in the eastern region was 3070 yuan, but in the central and western regions it was only 1670 yuan, with a gap of 1400 yuan.38 On the other hand, there are provincial differences. According to the report on the implementation of national education funding in 2009, the average budget for elementary school students in Shanghai was 14,792.68 yuan, ranking first in the country, while in Henan Province it was only 1949 yuan, 6.59 times less than the former. In the same year, the average budget for ordinary junior high school students in Shanghai was 18,224.25 yuan, ranking top in the country, while in Guizhou Province it was only 2698.18 yuan, 5.75 times less than the former. Again, in 2009, in Shanghai the average budget for senior high school students also ranked first in China, reaching 16,853.72 yuan, and in Hubei Province it was 2192.67 yuan, 6.69 times less than in Shanghai.39 The same report in 2010 shows that in 2010, the average public budget for ordinary elementary school students in Shanghai was 16,143.85 yuan, ranking first in the country, while in Henan it was 2186.14 yuan, 6.38 times less than the former. Also, the average public budget for junior high school students in Beijing was 20,023.04 yuan, ranking top in the country, and the lowest was in Guizhou Province which was 3204.20 yuan, 5.25 times less than in Beijing. As far as the ordinary senior high Table 13.4 Number of educated population per 100,000 people and GDP per capita in eastern, central and western China Region

Secondary school

Higher education

2000

2000

2010

Per capita GDP

2010

2000

2010

Ranking 8930

Ranking

Nationwide 11,146

14,032 3,611

Beijing

23,151

21,220 16,843

31,499

1

24,127 78,194

3

Shanghai

23,018

20,966 10,940

21,952

2

34,547 93,488

1

Jiangsu

13,039

16,143 3917

10,815

5

11,773 52,448

4

Zhejiang

10,758

13,562 3189

9330 11

13,461 52,421

5

Henan

10,031

13,212 2674

6398 27

5444 23,842

20

Anhui

7625

10,774 2297

6697 25

4867 19,768

26

Hubei

12,595

16,602 3898

9533 10

7188 27,339

14

Hunan

11,125

15,420 2927

7595 21

5639 23,798

21

Yunnan

6563

8376

2013

5778 29

4637 16,049

29

Guizhou

5626

7282

1902

5292 31

2662 11,640

31

Shaanxi

12,246

15,773 4138

7

4549 27,267

15

Gansu

9863

12,687 2665

7520 22

3838 14,459

30

10,556

7086

Source China Statistical Yearbook 2000 and China Statistical Yearbook 2010. 38 39

Hu [36]. Statistical Bulletin on the Implementation of National Education Funding [37].

29,970

310

13 Universal Integration of Education Security System

education was concerned, the highest average public financial expenditure was in Beijing, reaching 20,619.66 yuan, while the lowest was in Henan Province, which was 2475.82 yuan, or 11.9% of that in Beijing. Again, in 2010, the average cost of education for college students in Beijing was 34,546.43 yuan, ranking top in the country, and the lowest was 4276.64 yuan in Henan Province, 7.08 times less than in Beijing.40 In addition, financial input in education is also different between key school and ordinary schools. Compared with ordinary ones, key schools can obtain more educational resources, including quality teachers, high investment, scientific research funding and preferential policies, which inevitably leads to inequality. Generally speaking, the fiscal investment and resource allocation in education are uneven in China. There is a tendency for fragmentation and lack of top design as to how much to invest and how to invest in different types of education institutions. It is necessary to accelerate the universal integration and construction of the education security system and promote the just and sustainable development of educational undertakings in China.

13.2.3 Necessity of Education Security System Integration The 18th National Congress of the CPC proposed to work hard to run education to the satisfaction of the people, give high priority to developing education, promote fairness in education, ensure balanced allocation of educational resources, encourage and guide nongovernmental entities to run educational program, and help all children gain required knowledge and skills. This aspiration requires the universal integration of the education security system. First off, to promote fairness in education calls for the integration of the education security system. Educational fairness is mainly manifested in equal opportunity, which can “make sure that all the people have full and equal opportunities for education”.41 Equal opportunity for education is widely valued by developed countries who made great efforts to increase education input, balance the distribution of education resources, improve the education security system, and grant equal educational rights, opportunities and conditions to all regions and groups. Therefore, educational fairness should be not only an ideal pursuit, but also concrete practice. It requires us to adjust the scale and speed of educational development, make the structural layout of the development of different levels of education more balanced, integrate educational resources, and improve the educational guarantee system. In addition, we should also implement balanced financial investment, in order to improve school-running conditions, make sure everyone has equal access to education, and effectively reduce urban–rural gaps and disparities among regions, social classes, genders and ethnic groups. The ultimate goal is to promote harmonious social development.

40 41

Statistical Bulletin on the Implementation of National Education Funding [38]. National Center for Education Statistics [39].

13.2 The Operation of Education Security System

311

Next, building a country with strong human resources requires integrating education security systems. Economic and social development must ultimately serve the development of the person. At the meanwhile, economic and social development is not possible without the support of talents. China is a large country with a population of 1.4 billion and has abundant human resources. However, for a long time, China’s education security system has been fragmented, and the overall investment in education has been relatively low, especially in basic education and vocational education. Large gaps have been existing in terms of education investment in different regions. Also, education qualities in different regions and among different institutions are uneven, and the undertaking of well-rounded education for all students has been progressing slowly. In addition, the training of high-level innovative talents, innovation in the education system, and flexibility in the education operating mechanism have been insufficient. The system of lifelong education has not yet been fully established. In accordance with the goal set up in the Outline of National Plan for Mediumand Long-Term Education Reform and Development released in 2010, we need to accelerate the universal integration of the education security system and optimize the structure of financial investment. We should adjust the proportion of inputs between compulsory and non-compulsory education as well as among preschool education, basic education, secondary education, higher education and continuing education, and also optimize the financial investment among different institutions within the same level of education. We also need to appropriately expand compulsory education and improve the quality of higher education to provide a solid foundation for building a country with strong human resources as well as a moderately prosperous society in all respects. Finally, to promote social mobility requires the integration of education security systems. Reasonable social mobility is conducive to the transformation of people’s social status and social role so as to progress social development and social harmony. Social mobility is closely related to career choices. Occupational change is an important factor of social mobility. The path, channel, degree and trend of social flow, by the other way round, influence the content, model, structure and goals of education. Moreover, education is also the main means for people to move upwards in the society, especially for disadvantageous groups. Therefore, education is the most equitable way to rationalize social occupational structure and narrow income gaps among classes. Unreasonable allocation of educational resources and facilities reduces people’s equal access to education opportunities, which is not conducive to social mobility and reasonable social stratification. We should deepen the reform of the education security system, develop preschool education, basic education, secondary education, higher education, and continuing education in a balanced manner. In particular, we must integrate personnel, funding and institutions in education with a focus on rural, remote, poverty-stricken and ethnic minority areas. The ultimate goal is to improve the quality of education, promote education equity, and develop education to the satisfaction of the people.

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13.3 The Realization of the Universal Integration of Education Security System To achieve the universal integration of the education security system, we need to unite the broad consensus of all sectors of the society, make the top design and outline the implementation steps of the work, and promote the balanced and fair development of education.

13.3.1 Design for Universal Integration The universal integration of the education security system is to establish a basic public education system to ensure that all school-aged children and young people can enjoy equal access to basic education. On this basis, efforts will be made to improve the systems of higher education, continuing education, special education and vocational education. Therefore, the design for the universal integration of the education security system includes the integration and construction of various education systems to promote the sustainable development of various types of education. Firstly, it is necessary to establish a universally integrated basic public education system. Basic public education is the core of basic education and the starting point for the integration of the education security system. It focuses on the universal integration of kindergartens, primary schools, junior high schools and senior high schools. For one thing, basic education should be included in compulsory education. To this end, it is necessary to revise the Compulsory Education Law to gradually extend the period of compulsory education from the current 9–15 years, so that more students can enjoy the basic education guarantee. The current compulsory education system was originated in 1986. At that time when China’s economy and per capita GDP were relatively low and the enrollment rate of school-age children was not high. The gross enrollment rate of higher education was lower than 3.56%, less than 1/4 of the world average. In 1980, the average education for China’s population aged 15 and over was no more than 7.13 years.42 The act of proposing the nine-year compulsory education in that era was reasonable and forward-looking. Nevertheless, with the deepening of the reform and opening-up, in 2007, the gross enrollment rate of higher education rose to 23%, and the size of school students became the largest in the world. In 2010, the average years of schooling of adults in China were 9 years. The gross enrollment rate of primary schools, junior high schools, senior high schools and higher education reached 99.7%, 100%, 82.5% and 26.5% respectively.43 In 1996, the average years of schooling of people over 15 years old in China reached 8.33 years, and in 2009 it further increased to 8.5 years. Nine-year compulsory education is no longer a goal but a basic condition in China. It is imperative to appropriately adjust the duration 42 43

Li and Min [40]. National Statistical Bulletin on the Development of Education [41].

13.3 The Realization of the Universal Integration …

313

Table. 13.5 Stages respondents believe should be included in compulsory education Number (person)

Professional

Common people

994

1974

Primary and junior high school ( %)

4.5

5.6

Kindergarten, primary and junior high school (%)

10.2

12.4

Primary, junior high and senior high school (%)

24.3

20.3%

Kindergarten, primary, junior and senior high school (%)

61.0

61.8

Total (%)

100.0

100.0

of compulsory education according to the economic and social situation as well as the development of education in the country. In fact, extending the length of compulsory education is a general appeal of the society. Our surveys in Suzhou, Xiamen, Chongqing and Honghe proved this. Respondents of both professionals and ordinary people generally think that the 9year compulsory education from primary to junior high school is far from meeting the needs of the society, while a duration of 15 years from kindergarten to senior high school is the most widely recognized, that is, by 61% of professionals and 61.8% of ordinary people interviewed. If a 12-year compulsory education is adopted, the public and professionals are more willing to include senior high school education (see Table 13.5). For another, it is necessary to increase the coverage of compulsory education. While making efforts to extend the duration from 9 to 15 years, we should also try to incorporate vocational education, secondary technical education, etc., into compulsory education. In addition, we should ensure all students in compulsory education receive free schooling. The enrollment rate of preschools, primary and junior high schools should reach 100%, and the cumulative enrollment rate of senior high school, vocational high school, and technical secondary school should also reach 100%. Children of migrant workers enter local public schools to receive compulsory education in accordance with the admission dicing system. The school costs of those who go to private schools are paid by public finance. In terms of educational funding, it is necessary to guide and encourage local governments to adopt the same standards in urban and rural areas when allocating compulsory education funds, and provide free schooling for students of all types. This will not only reduce the gap between urban and rural education investment, but also go with the will of the people. According to our survey, as many as 66.3% of professionals and 70.7% of the public interviewees agreed that unifying urban and rural education funding per student was the direction of the development of compulsory education as well as a key step in eliminating the urban–rural dual education system. Some 10.9% of professionals and 11.3% of the public interviewees even believed that per capita education funding for rural students should be higher than that for urban students (see Table 13.6) so as to reduce the urban–rural gap.

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Table 13.6 Reasonable per capita education funding for urban and rural students in compulsory education recognized by respondents Professional

Common people

Number (person)

999

1973

Urban should be higher than rural areas (%)

22.8

18.0

Rural areas should higher than urban areas (%)

10.9

11.3

Uniform standard (%)

66.3

70.7

Total (%)

100.0

100.0

Meanwhile, the boarding fees for rural students should be exempted, and textbooks should be provided free to students in underdeveloped areas. The compulsory education funding per student, student grant, and nutritional subsidies for rural students should be determined based on scientific sampling surveys of all levels of compulsory education in regions as well as local economic and social development level. Also, we should work hard to narrow the gap between key schools and ordinary schools. The imbalance between key schools and ordinary schools is distinct at the compulsory education stage. To improve the conditions of ordinary schools, two measures professionals interviewed agreed with were to “provide subsidies to guide and encourage key school teachers to teach in ordinary schools” (79.4%) and to “increase investment in ordinary schools” (69.6%). The proportion of choosing “strict school entry based on computer-generated waiting list and admission dicing system” was 45%, “principals (vice-principal) of key schools assume the role of school leaders in ordinary schools” was 43.4% and only 30.7% of them believed that ordinary schools can be turned into branch campuses of key schools (see Table 13.7). On the whole, the respondents in the four areas surveyed agreed to integrate the teachers of ordinary schools and key schools by means of post subsidies, especially in Xiamen and Suzhou where more than 80% of the respondents agreed with this measure. While to turn ordinary schools into branches of key schools is not quite recognized by respondents because it cannot fundamentally solve the problem of inequality in educational resources. In addition, it is necessary to strength the integration of the compulsory education for children of migrant workers. 77.4% of professionals and 68.8% of ordinary people interviewed believed that children of migrant workers should enter public schools for compulsory education like local school-age students, which could relieve the problem of left-behind children. Only 10.6% of professionals and 21.3% of the public maintained that migrant children should return to their hometown for education. In public schools, migrant children should be mixed with urban native students in class placement, so as to encourage more communication between the two groups as well as teachers should be allocated more reasonably as well. Migrant children should also be allowed to enter private schools when urban public education resources are tight, but the required funds should be provided by public finance through service purchasing.

13.3 The Realization of the Universal Integration …

315

Table 13.7 Measures agonized by professionals to reduce the gap between key schools and ordinary schools Total Region Xiamen Suzhou Chongqing Honghe Number (person)

995

246

250

249

250

Turn ordinary schools into branch campuses of key school (%)

30.7

32.1

29.6

24.9

36.0

Principals (vice-principal) of key schools assume the role of school leaders in ordinary schools (%)

43.4

45.9

42.4

37.3

48.0

Subsidies provided to key school teachers to 79.4 guide and encourage them to teach in ordinary schools (%)

80.5

83.2

75.1

78.8

Strict school entry based on 45.0 computer-generated waiting list and admission dicing system (%)

51.6

52.0

36.9

39.6

Increase investment in ordinary schools (%)

76.0

65.2

69.9

67.6

69.6

Secondly, it is necessary to build a more equitable higher education system. Building a universally integrated higher education system and promoting fairness in higher education is an inherent requirement for the development of higher education. It is also the will the people to have equal access to education resources. For a long time, unfairness has been existing in different types of colleges and universities. For instance, colleges and universities that are directly under departments of the State Council and its affiliated institutions as well as key universities such as the “Project 985” and “Project 211” universities have been receiving more investment. While ordinary universities and those supported by local finances, in particular higher vocational colleges have been receiving less emphasis and financial inputs. Moreover, the evaluation mechanism of higher education institutions is not scientific and fair, which is not conducive to the sustainable and fair development of colleges and universities as well as the cultivation of talents. The following are suggestions for changing this situation. The first is to carry out institutional innovation by abolishing the existing management system to let all colleges and universities jointly built by ministries and provincial governments. This can be done through the scientific calculation of the funding required for a university based on its comprehensive development, scientific research level, and numbers of teachers and students. Then the funding can be provided by both state and provincial finances with a flexible division of responsibilities based on economic conditions of each. The municipal governments can also offer financial support. In this way, colleges and universities in less developed areas can also receive adequate funding support, thereby reducing gaps in funding allocation between colleges and universities in economically developed areas and underdeveloped areas, and promoting the balanced development between key and ordinary colleges and

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universities. Under this system, the national education department manages the development of all universities in a unified manner, formulates guidelines and policies for the development of all universities and disciplines as well as rational distribution of them, and promotes regional coordination of higher education development. The second is to improve the education investment and cost sharing system. Since colleges and universities are co-constructed by the state and provinces, correspondingly it is necessary to clarify the structure of financial contribution by the two parties. To this end, the state should scientifically calculate educational costs based on economic and social development in each region as well as the cost of talenttraining in colleges and universities, and then clearly define the cost-sharing ratios among national, local finances and students themselves. Again, in underdeveloped areas, if local investment capacities cannot reach national standards or students are unable to pay tuition fees due to poverty, the central government should make up to maintain education quality in these areas. Meanwhile, appropriate subsidies should be given to private colleges and universities in accordance with numbers of students enrolled, in order to reduce the burden of private colleges and universities, mobilize their enthusiasm, and improve the quality of private colleges. The third is to allocate high-quality education resources in an equitable manner. It is necessary to increase higher education inputs in the central and western regions and establish funds for subsidizing universities and schools or disciplines with weak bases, so as to narrow gaps among regions and education institutions. It is also necessary to establish a fund system and make annual budgets to support the development of colleges and universities in underdeveloped areas. At the same time, in addition to paired assistance, it is necessary to build a mechanism for supporting the progress of preponderant disciplines and characteristic disciplines in disadvantageous places. The fourth is to establish a scientific evaluation system for colleges and universities. It is necessary to set up a relatively independent specialized institution to formulate index systems and methods for evaluation of their management and teaching qualities according to the types, levels, and goals of universities as well as their scientific research capabilities. For some highly specialized colleges and universities, the assessment should also consider the characteristics of disciplines. Thirdly, it is necessary to form a lifelong education system. The Education Law, the Action Plan for the Revitalization of Education for the 21st Century, and the Outline of National Plan for Medium- and Long-Term Education Reform and Development all proposed to establish “the system of lifelong education” from preschool education to education for older people, which requires us to integrate various education resources, implement comprehensive education and whole-staff education, and establish a more flexible and open system of lifelong education. On the one hand, we should take measures to integrate educational resources, and give full play to the active role of families, schools, communities, and other education and training institutions in lifelong education. We should combine traditional schooling and distance education to make the education network cover both urban and rural population, giving everyone the opportunity for lifelong learning, so as to improve their competence to adapt to economic and social progress. On the other

13.3 The Realization of the Universal Integration …

317

hand, it is necessary to strengthen the construction of lifelong education management institutions. Lifelong education involves many sectors such as education, human resources and social security, finance, sub-district office, culture, sports, and even medical and health. Educational resources in these sectors should be integrate to solve specific problems.

13.3.2 Indicator System The indicator system consists of indicators that can reflect, measure and evaluate the development of the education security system, promote the balanced development of various types of education, and promote the universal integration of the education security system. An indicator system is the inherent requirement of the integration of the education security system. Integration involves various aspects such as education institution types, institution management levels, financial inputs and teacher qualities as well as the integration of management organizations, implementation mechanisms, and supervision and guarantee mechanisms. This requires us to select indicators that can scientifically reveal the degree of integration and then to propose policy recommendations so as to solve problems in the universal integration of the education security system. In the 1980s, American sociologist Alex Inkeles put forward 11 indicators to measure the degree of modernization in his work Human Modernization, among which “adult literacy rate” and “percentage of college students in the school-age population” became two widely recognized indicators for measuring education modernization. Later on, in the annual report World Development Indicators 2006, the World Bank constructed 14s-level indicators and 31 third-level indicators from four aspects: “educational inputs” “participation in education” “education efficiency” and “education completion and outcomes”, to measure the development of education in various countries. In 2011, the Organization for Economic Cooperation and Development applied 29 indicators to assess the educational performance in member countries from four dimensions of “The Output of Educational Institutions and the Impact of Learning” “Financial and Human Resources Invested In Education” “Access to Education, Participation and Progression”, and “The Learning Environment and Organization of Schools”.44 Of course, some of these indicator systems might not be suitable for measuring the integration level of the education security system. But these institutions design the indicator system in the broad context of economic and social modernization as well as the all-round development of human beings, which is of great reference for us to construct the indicators for the universal integration of the education guarantee system in China.

44

OECD [42].

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In recent years, domestic scholars have conducted lots of explorations on the education indicator system with a focus on modernization and equalization of education. As early as 2001, the National Institute of Education Sciences selected four indicators of “education input” “education scale” “education achievement” and “education quality” to measure education modernization.45 Yang Dongping, then in 2003, created a four-dimension indicator system to measure the education equity. These four dimensions of “overall education level difference coefficient” “compulsory education equilibrium indicator” “senior high school education equity indicator” and “higher education equity indicator” were also refined into a number of operable secondary and three-level indicator systems.46 These explorations provided a foundation for us to construct an indicator system for the integration of the education security system. The indicator system can take the education security system as the first-level indicator, refine it into second- and third- level indicators, and then assign values to each indicator. Second-level indicators are based on an explanation of the education security system and they mainly include the preschool education system, basic education (primary education, junior high education, senior high education, technical secondary education) system, higher education system, special education system, continuing education system, and vocational education system. These six systems can represent the degree and level of education security system development. The third-level indicators are based on explanations of second-level indicators. For example, we believe the preschool education system should be gradually included into compulsory education. Therefore, we decided to introduce three indicators under it: the admission rate, the per capita financial input, and teacher qualification rate. For primary and junior high education systems, which are already part of compulsory education, we place the focus on enrollment rate, per capita financial input, teacher qualification rate, and student–teacher ratio. While for senior high and technical secondary education, which are yet to be incorporated into compulsory education, the third-level indicators also include enrollment ratio, per capita financial input, student– teacher ratio and teacher qualification rate. For higher education, indicators adopted are enrollment rate, per capita financial input, percentage of total fiscal investment in GDP, student–teacher ratio, foreign-domestic student ratio, etc. For special education, indicators are per capita financial input, enrollment rate, and student–teacher ratio, while continuing education and vocational education can be measured by student– teacher ratio and per capita financial input. To assign values to these indicators can assess the universal integration of various types of education systems. For example, through comparing the enrollment rate of children in a regions of a province can measure the coverage of preschool education in the region. Again, the comparison of enrollment rate of urban and rural children and average financial expenditure on them can help us understand the degree of integration between urban–rural preschool education. For another example, since to 45 46

Research team [43]. Yang and Zhou [44].

13.3 The Realization of the Universal Integration …

319

extend the length of compulsory education from 9 to 15 years is a gradual process, the measurement of compulsory education coverage take the 9-year as a starting point and let it be the value of 0.6 for compulsory education. Then for the next two years, each year is an increase of 0.1 in value, that is, the 10- and 11-year compulsory education will be 0.7 and 0.8. For the length of 12 and 13 years, values will be 0.85 and 0.9 respectively with each year increased by 0.05. Finally values for 14- and 15-year compulsory education will be 0.95 and 1.0 respectively, each year increased by 0.05. This method can be used to measure the level of compulsory education in various places and can be applied to measure other levels of education as well.

13.3.3 Economic and Social Support To build a universally integrated education security system and promote the balanced and fair development of the education security system requires economic and social support. Firstly, the development of education is inseparable from financial investment. For one thing, we must establish a stable growth mechanism for fiscal investment in education, and ensure that at least 4% of the country’s and provinces’ annual GDP is invested in education. This is the premise of achieving universal integration of the education security system. For another, we must establish a reasonable allocation mechanism for education expenditures on high education, so that the average education expenditure per student between ordinary universities and vocational colleges as well as between disciplines in higher education institutions is balanced. To this end, it is necessary to carry out surveys and accurately calculate the cost of talent training, clarify the needs of financial investment in various types of colleges and universities, and then make it an important basis for allocating higher education funds. This method is also applicable to basic education. Finally, a coordination mechanism among regions should be formed to narrow the current large gap in educational investment among areas. While holding the baseline of provincial educational investment of no less than 4% of local GDP, we must determine a feasible proportion of investment in all levels of education by central and provincial finances. Meanwhile, the central government should make additional expenditures on education in places with low GDP per capita and places with low per capita education expenditures, so as to reduce their disparities with developed regions. Secondly, the improvement of school-running conditions in crucial to the integration of the education security system. For preschool, basic and special education, on the one hand, we must strengthen the integration of teaching staff among different institutions and improve the qualities of teachers. We must adopt unified standards when recruiting teachers for rural and urban schools and provide training for teachers whose qualifications have not yet reached the standard. We must also guide urban teachers to teach in rural areas, and encourage high-quality school teachers to teach in ordinary schools, to strive for a balance in teaching resources between urban and rural areas as well as between high-quality schools and ordinary schools. On the other

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hand, we must strengthen the integration of school buildings and teaching facilities between urban and rural areas and among regions. It is necessary to introduce standards for the construction of school buildings and teaching facilities for urban and rural areas as well as for preschool education, primary education, secondary education, secondary technical education, and special education in different regions. Investment must be increased to institutions with poor conditions to reduce the disparities in school-running conditions between different schools. At the same time, the computergenerated waiting list and admission dicing system must be strictly implemented, and children of rural migrant workers should be allowed to receive compulsory education nearby. For those children of migrant workers who go to private schools, the government should provide subsidies to enable them to enjoy free compulsory education. For higher education, differentiated assessment methods and funding methods should be adopted among different institutions such as ordinary colleges and universities and vocational colleges. Financial subsidies should be given to private colleges and universities based on their enrollment and discipline settings to promote the balanced development of all types of higher education institutions. Thirdly, public concern is a main drive for the integration of the education security system. In recent years, the problems exposed in the development of China’s education system have aroused much public concern. For example, in terms of preschool education and basic education, our surveys in Suzhou, Xiamen, Chongqing, and Honghe Prefecture found that 66.3% of professionals and 70.7% of the public respondents expressed their expectations for the unification of education expenditures between urban and rural students. Only 4.5% of the professionals and 5.6% of the public respondents agreed to maintain compulsory education at the elementary and junior high school level, while 61% of the professionals and 61.8% of the public interviewed hoped to extend the length of compulsory education to 15 years to cover preschool education, primary education, junior high school education, senior high school education, technical secondary education and special education. They also believed that required financial investment in this process should be mainly provided by the central and provincial finances. This is key to the universal integration of the education security system and is also a feasible way to improve the scientific and cultural qualities of the people.

References 1. James, C.: The concept of equality of educational opportunity, published in Zhang Renjie. In: Classic Works of Educational Sociology, p. 187. East China Normal University Press (1989) 2. Anderson, L.W.: A Taxonomy for Learning, Teaching, and Assessing, translated by Pi Liansheng et al, p. 88. East China Normal University Press (2008) 3. Husen, T.: Social Environment and Academic Achievement, translated by Zhang Renjie, pp. 6– 8. Yunnan Education Publishing House (1991) 4. Shen, Y.„ Qiao, X.: The important value orientation of education vouchers: educational equity. Stud. Foreign Educ. (2) (2006) 5. National Center for Education Development Research: Annual Analysis Report on China’s Educational Policy, p. 76. Education Science Publishing House (2002)

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6. Lin, D.: Coleman report changes American public education. Beijing News, April 2, 2005 7. Kums, P.: Crisis of World Education, translated by Zhao Baoheng, etc.. People’s Education Press (2000) 8. Doe: Education in South Africa: Achievements Since 1994, pp. 16–19. Department of Education, Pretoria (2001) 9. Shi, Z.: The main connotation and social significance of educational equity. J. Chin. Soc. Educ. (3) (2008) 10. Yang, Y.: Lack of fair education in the high school education and thoughts on the strategies. Theory Pract. Educ. (11) (2007) 11. Hu, X., Ma, S.: Analysis and reflection on the policy environment for the development of higher vocational education in China. Vocation. Tech. Educ. Forum (12) (2006) 12. Wu, D.: Analysis of the development of China’s private higher education (I). Res. Educ. Dev. (7) (2001) 13. Zhong, B., Zhao, Y.: Characteristics of education equity in the context of its progress towards mass higher education. J. Beijing Normal Univ. (1) (2007) 14. Zhai, B.: Equality of education—new realm of modern educational development. Educ. Res. (2) (2002) 15. Wang, B.: Efforts to promote the balanced development of basic education. QIUSHI (19) (2003) 16. Wu, C.: The study on the evolvement and determinants of urban-rural fiscal expenditure gap of compulsory education in China. Educ. Sci. (6) (2007) 17. Liu, S.: Analysis of urban–rural differences in the development of compulsory education in China. Liaoning Educ. Res. (11) (2006) 18. Zhang, G.: The impact of sub-national fiscal decentralization on rural compulsory education input. Educ. Econ. (3) (2008) 19. Bao, C.: A policy review of the gap between urban and rural compulsory education in China. J. Beijing Normal Univ. (3) (2005) 20. Jiao, J.: Rural education and dual economic and social structure—comparison of urban and rural education and problems urgently to be solved in China. Study Explor. (3) (2005) 21. National Center for Education Development Research: Analysis of the current situation of balanced development of basic education and the choice of countermeasures. People’s Educ. (5) (2002) 22. Dong, J., et al.: Thoughts on school selection in compulsory education. Educ. Reform (1) (2008) 23. Gao, R.: A positive analysis current financial system of rural compulsory education in China. Educ. Res. (5) (2004) 24. Lu, H., Li, L.: Reasons for the Laggard rural compulsorily education from the perspective pf fiscal decentralization. Fin. Trade Econ. (12) (2006) 25. Wang, Y.: Analysis of the institutional obstacles to the differences between compulsory education in China’s urban and rural areas. Res. Fin. Econ. Issues (9) (2009) 26. Zhai, B.: On Educational Equality, pp. 259–260. People’s Education Press (2008) 27. Kang, K.: Summarization of educational equality development theory and empirical research. Forum Contemp. Educ. (9) (2008) 28. Yang, D.: Reform of system should be prioritized. Educ. J. (5) (2010) 29. Li, Y.: Fiscal analysis and policy choice in the advancement of balanced compulsory education. Theory Pract. Educ. (8) (2006) 30. Wang, Y., et al.: Restructuring urban and rural compulsory education investment model. Econ. Persp. (6) (2010) 31. Gong, Z.: An international comparison of impact of educational equalization policy—drawing on American and South Korean experience and analysis of Chinese problems. J. Shaanxi Normal Univ. [Philos. Soc. Sci. Ed.) (2) (2006) 32. Coleman, J.:The Concept of Equality of Educational Opportunity, published in Zhang Renjie, p. 196. East China Normal University Press (1989) 33. Statistical Bulletin on the Development of Education in China: China Education Daily, August 31, 2012 (2011)

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34. National Bureau of Statistics: China Education Fund Statistics Yearbook 2011. China Statistics Press (2012) 35. Wu, D.: Analysis of the educational development of private colleges and universities in China. Res. Educ. Dev. (7) (2001) 36. Hu, R.: Analysis of education funding gap. Studies Times, October 30, 2007 37. Statistical Bulletin on the Implementation of National Education Funding: China Education Daily, December 7, 2010 (2009) 38. Statistical Bulletin on the Implementation of National Education Funding: China Education Daily, December 30, 2011 (2010) 39. National Center for Education Statistics: The Condition of Education 2000, p. 190. US Government Printing Office, Washington, D.C. (2000) 40. Li, W., Min, W.: An analysis of the current and potential scale of Chinese higher education. J. High. Educ. (2) (2001) 41. National Statistical Bulletin on the Development of Education: China Education Daily, July 8, 2011 (2010) 42. OECD: Education At a Glance 2011: OECD Indicators, pp. 1–2. Educational Science Publishing House (2011) 43. Research team: Thinking on some indicators of the development level of basic education modernization in developed areas. Educ. Res. (10) (2001) 44. Yang, D., Zhou, J.: A preliminary study on the evaluation index system of educational equity in China. Educ. Res. (11) (2003)

Chapter 14

The Universal Integration of Housing Security System

As a basic welfare need, housing is an important component of the social security system. With market-oriented reforms to the housing system, the living conditions of urban and rural residents alike in China have improved substantively. In the meantime, however, housing prices have kept rising and become unaffordable to most residents, which calls for careful reflections on the Chinese housing security system as well as efforts to advance reforms to the system and build a universally integrated housing security system, thereby realizing the goal of “ensuring all Chinese people enjoy their rights to housing” for the sake of people’s livelihood.

14.1 The Operation of Housing Security System After the founding of the People’s Republic of China, welfare housing policies were carried out in urban areas. As a form of compensation for labor, houses were distributed to workers in the name of in-kind benefits, but workers generally were not owners of these houses. After the reform and opening-up, the traditional housing system was increasingly plagued by such problems as short housing supply and unfair distribution of welfare housing. The level of housing benefits to workers was uneven in different work units. Even in the same work unit, housing distribution based on the identity of staff members was unequal. Moreover, policies at that time failed to meet diverse housing demands of the public. Therefore, in the 1990s, the government promoted market-oriented housing reforms while accelerating the construction and improvement of the housing security system. A housing security system featuring low-rent housing, public rental housing, affordable housing and price-limited housing was basically built to solve people’s problems concerning housing security.

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_14

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14.1.1 Formation of Indemnificatory Rental Housing System We can divide the housing security system featuring low-rent housing, public rental housing, affordable housing and price-limited housing into indemnificatory rental housing and indemnificatory commercial housing. The former refers to indemnificatory houses provided to certain groups with a rent cheaper than market rent, including low-rent housing and public rental housing.

14.1.1.1

Formation of Low-Rent Housing System

Low-rent housing is a kind of indemnificatory rental housing. It refers to inexpensive ordinary houses provided to low-income urban families with housing difficulties. In as early as 1998, the State Council promulgated the Notice on Further Deepening the Reform of the Housing System and Accelerating Housing Construction in Urban Areas, establishing the supply model of indemnificatory rental housing in China: lowest-income families lease low-rent housing; low- and middle-income families buy affordable housing; and high-income families buy or rent commercial housing. Thus a hierarchical housing supply policy took shape. The Notice required local governments to formulate low-rent housing systems to provide low-rent housing for lowestincome families and the rent was defined by local authorities. In 2007, 9 ministries and commissions, including the former Ministry of Construction, jointly released the Low-rent Housing Security Measures, which specified the mode of housing guarantee, fund-raising, source of housing, application for housing, review and approval as well as supervision and regulation. The object of housing guarantee was previously defined as low-income families with urban permanent household registration, referring mainly to families within the scope of towns where municipal and county-level people’s governments were located, whose incomes and housing situation conformed to conditions specified by the peoples’ governments at the municipal and county levels.1 In the process of implementation, the object has now been gradually extended to enhance the universal coverage and inclusiveness of the low-rent housing system, covering families with minimum living allowances and low-income families with local urban household registration and having housing difficulties. In terms of the mode of housing guarantee, the low-rent housing system integrates such means as “monetary subsidy” and “in-kind distribution”. By “monetary subsidy”, it means that “the government grants applicants subsidies for rental housing and applicants rent houses on their own. “In-kind distribution” means that the government provides housing for applicants and collects rent by prescribed standards.2 The real mode of guarantee depends on the supply–demand relationship in the housing market. 1

See Article 2 of the Measures for Low-rent Housing Security issued by the Ministry of Housing and Urban–Rural Development. 2 Ibid.

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When it comes to monetary subsidy, the amount of subsidy is determined by the difference between the current housing area of low-income urban families with housing difficulties and the standard of housing guarantee area, in addition to the rental housing subsidy standard per square meter.3 The rental housing subsidy per square meter is defined by the government based on the local economic development level, average market rent, and financial capacity of tenants. For example, it is stipulated in Xiamen that families whose incomes are more than half of the upper limit of the range set for low- and middle-income families should be granted a subsidy of 70% of the rent. In cases of being less than half of the upper limit of the range set for low- and middle-income families, the subsidy should be 80% of the rent. And objects for minimum living allowances should be given a subsidy of 90% of the rent.4 Regarding in-kind distribution, the area of distributed housing should be the difference between the current housing area of low-income urban families with housing difficulties and the standard of housing guarantee area. The rent is determined by the distributed area and the standard set by the government. In where conditions permit, urban families receiving minimum living allowances could be exempted from the rent of the area for housing guarantee.5 From the perspective of benefit level, low-rent housing benefit should be grounded upon the principle of meeting basic housing demands of low- and middle-income families. The area should be defined by municipal and county-level people’s governments based on the average local family housing area, their financial capacity, as well as the number of members and demographic structure of urban low- and middleincome families with housing difficulties, with household as the unit. Because public houses were basically sold out during housing reforms, local governments have had a limited stock of housing. Together with constraints of construction capital, the number of newly built low-rent houses is also limited. Since 2008, the central government has beefed up efforts to provide lowrent housing benefits for low- and middle-income families in urban areas. Local governments have meanwhile speeded up the construction of low-rent housing and augmented the supply, so most housing difficulties facing low- and middle-income families have been eased. For example, the survey carried out by our research team reveals that as of 2011, Suzhou accumulatively collected 4007 low-rent apartments. 1506 households were distributed the houses as in-kind benefits, and 4225 households were provided rental subsidies. For another example, Xiamen had started reforms to the indemnificatory housing system and expedited the construction of low-rent housing in 1998. From 1998 to 2000, it provided 550 “apartments for solving housing difficulties”, the predecessor of low-rent housing, and released the Regulations on the Management of Low-rent Housing in Urban Xiamen. The Regulations detailed

3

Ibid. Calculation results based on materials provided by Xiamen Construction Bureau and the Office of Affordable Housing when receiving the interview by our research team in May 2011. 5 See Article 8 of the Measures for Low-rent Housing Security issued by the Ministry of Housing and Urban–Rural Development. 4

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the source of low-rent housing, conditions and procedures for application, principles for in-kind distribution, and standards for control, bringing the construction of low-rent housing onto the track of institutionalized and standardized development. From that onwards, low-rent housing construction developed rather fast in Xiamen. In 2009 only, a total of 3000 low-rent apartments were built, and 1000 more households were added to the ranks of monetary subsidy. By the end of June 2011, the Xiamen government supplied low-rent apartments to 22,900 low-income families, effectively solving housing difficulties of these groups, and Xiamen was regarded as a role model for housing security construction.6

14.1.1.2

Rise of Public Rental Housing

Public rental housing refers to indemnificatory rental housing that the government, enterprises and non-profit organizations provide as investors for special groups at a rent lower than market rent. The rental price is between that of low-rent housing and commercial housing. Public rental housing aims to address housing problems in the face of the so-called “sandwich class”, namely low- and middle-income groups which are not up to the standard of low-rent housing guarantee yet cannot afford to buy affordable housing. It also helps cities attract high-level talent. Public rental housing was launched in Xiamen in 2007,7 and gradually promoted to such cities as Beijing, Chongqing, Tianjin, Shanghai, Guangzhou, Shenzhen, Changzhou and Qingdao. It was highly acknowledged by the central government. In 2009, the then Chinese Premier Wen Jiabao first put forward the concept of public rental housing in the government work report. Beijing, Xiamen and Shenzhen even released administrative measures for public rental housing. On June 8, 2010, seven ministries and commissions, including the Ministry of Housing and Urban– Rural Development, issued the Guiding Opinion on Accelerating the Development of Public Rental Housing, raising requirements for regulating the development of public rental housing. In 2010, Shanghai, Chongqing, Guangzhou and Suzhou also unveiled administrative measures to direct the construction, supply and administration of public rental housing. Thenceforward, public rental housing entered the stage of rapid, standardized development. In universal, all cities regards public rental housing as an organic part of the housing security system. Like low-rent housing, affordable housing and other indemnificatory housing, public rental housing is considered equally capable of solving housing difficulties facing low- and middle-income families. The object of public rental housing supply is urban families with incomes below the average and having housing difficulties. Initially there were strict restrictions on household registration, but now some cities have expanded the coverage of public rental housing to newly 6

50,000 Sets of Public Rental Housing in 5 Years, Xiamen will Realize Blueprint for Home Ownership, Xiamen Evening News, September 16, 2011. 7 Xiamen took the lead in launching the first batch of public rental housing in June 2007, which were known as social security rental housing.

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employed persons, migrant workers and high-level talent introduced from other places. Public rental apartments should only be resided by tenants, and shouldn’t be lent, subleased or idled, nor serve as sites for business operation. The lease term is normally 3–5 years. The lease can be renewed after coming to an end. For example, it is stipulated in Chongqing that the area of public rental apartments should correspond to the number of family members of applicants. Families of 2 members or less are entitled to choose apartments with an area of less than 40 m2 ; families of 3 members or less shall choose apartments of less than 60 m2 ; and families of 4 members or more can choose apartments of less than 80 m2 . Beijing took family generations, gender, age structure and number of family members into full consideration and distributes public rental housing as in-kind benefits based on the combination of different factors.8 The guiding role of the government has been adhered to in the operation of public rental housing, and professional institutions are employed for market-oriented operation. Funds are raised from special funds of the central government, special funds of local governments’ budget, land-transferring fees, loans, as well as investment and financing. The government entrusts administrative departments of housing security to build, reconstruct and acquire some apartments, and manage them through marketoriented operation to improve the operational efficiency of public rental housing. In Suzhou, for example, public rental apartments are predominantly provided for university graduates with some professional skills and talent with a junior college diploma and above. Kunshan, a county-level city within the jurisdiction of Suzhou, has built public rental apartments through the government, real estate companies, collective economic organizations in villages and towns, and employers to realize centralized residence and management of migrant workers. Enterprises that have invested more than 50 million dollars and are staffed with 3000 employees are allowed to build collective dormitories by themselves. The dormitories are incorporated into the scope of public rental housing and managed by the enterprises. The two measures have solved the housing problem of more than 600,000 “new Kunshanese”. Meanwhile, hundreds of talent apartments have been constructed for qualified high-level talent.9

14.1.2 Operation of Indemnificatory Commercial Housing System Indemnificatory commercial housing is provided to special groups and sold at a price lower than market prices, including affordable housing, price-limited housing and some resettlement housing.

8 9

According to materials collected by the research team in 2012. Ibid.

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14.1.2.1

14 The Universal Integration of Housing Security System

Implementation of Affordable Housing Policy

Affordable housing refers to indemnificatory policy-related housing supplied to urban low-income families with housing difficulties. The government provides favorable policies, limits the area and selling price of the apartments, and builds them by reasonable standards.10 Back in 1994, the State Council first proposed building an indemnificatory affordable housing supply system with low- and middle-income families as the object in the Decision on Deepening Housing Reforms in Urban Areas. In 1995, the “National Comfortable Housing Project” of the social security nature was carried out. In that year, the scale of construction totaled approximately 12.5 million m2 . The current system is based on the Administrative Measures for Affordable Housing released by seven ministries and commissions, including the Ministry of Construction, in 2007, along with supporting documents those departments issued on that basis, which advanced the construction of affordable housing. Data shows that in 2009, planned affordable housing accounted for 3, 14, 2, 21, 9, 15 and 18% of the whole real estate market in Shenzhen, Guangzhou, Chengdu, Nanjing, Chongqing, Xi’an and Dalian, respectively. Affordable housing should be priced on the principle of breaking even and making meager profit. According to the Administrative Measures for Affordable Housing, the rate of profit from affordable housing projects undertaken by property developers shall be no higher than 3%. Affordable housing built directly by municipal or county-level people’s governments shall be sold at the cost price and no profit is allowed.11 Therefore, affordable housing is being sold at expressly marked prices that are detailed to the public. The selling price is forbidden from being higher than the benchmark price and the range of upward fluctuation. No other unmarked fees are allowed to be charged than marked prices. By the rule, buyers of affordable housing own limited property rights and are not permitted to trade the houses within five years after purchase. Otherwise the government would buy them back at the original price and take such factors as depreciation and price levels into consideration. If they have owned the houses for five years, they can transfer and trade the houses, but shall hand in equal amounts of land revenues to the government by a certain proportion of the price difference between common commercial housing and affordable housing in the same block.12 To those households that have bought affordable housing and other types of housing, the original affordable housing unit shall be bought back by the government according to rule and contract.13 Besides, before buyers acquire complete property rights, the affordable housing units are not allowed to be rented or used for business operation. These measures have effectively solved housing problems facing low- and middle-income families, and served as instruments for policy regulation in Chinese market-oriented housing reforms. 10 See Article 2 of Administrative Measures for Affordable Housing, [2007] No. 24, of the Ministry of Housing and Urban–Rural Development. 11 Ibid. 12 Ibid. 13 Ibid.

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With the deepening of housing system reforms and the development of the housing market, the affordable housing policy has also encountered some problems in the process of implementation. For example, affordable housing is not affordable at all; some officials and high-income groups with plenty of housing also enjoy the benefit of affordable housing; and some places have even decided to stop building affordable housing or integrate affordable housing and low-rent housing. In addition, the operation of affordable housing has not been well supervised, making the exit mechanism not smooth enough. All these need improving.

14.1.2.2

Release of Price-Limited Housing Policy

Price-limited housing is a temporary measure to supply low- and middle-income urban residents with houses. The government has limited the size and price of the houses during land supply. It is also dubbed as “housing of two limits”. Bidding for land and housing prices is adopted to determine the institution for development and construction. It doesn’t belong to affordable housing. The price-limited housing policy was released against the backdrop of rising housing prices nationwide, in a bid to stabilize housing prices, eliminate monopoly on market supply, promote the balance between supply and demand in the housing market, and solve housing problems facing low- and middle-income families which are not qualified for receiving housing benefits and cannot afford to buy commercial housing, while giving play to the government’s intervention role in the housing market and proactively controlling and stabilizing prices of commercial housing. On May 29, 2006, the universal Office of the State Council forwarded the Opinion on Adjusting Housing Supply Structure and Stabilizing Housing Prices released by 9 ministries and commissions, including the Ministry of Construction. According to Clause 6 of Article 2 in the document, in the process of land supply, the government shall, based on limiting the size and price of housing, adopt the method of land and housing price bidding to determine the institution for development and construction. The ordinary commercial houses with size and price limited belong to price-limited housing. In 2007, Beijing, Guangzhou, Nanjing, Chengdu, Fuzhou, Nanchang and Qingdao began the attempt to launch price-limited housing for groups with certain purchasing power yet unable to afford high housing prices as well as some relocation households. In February 2008, the first price-limited housing project in Guangzhou, which was also the first “housing of two limits” project in China, officially sold 843 units. It was stipulated that the houses of two limits were priced within 70% of market prices of commercial housing of the same quality and in the same region. When carrying out land bidding, the government had resorted to open bidding, size and price limiting, and housing and land price bidding to select the best developer. The Beijing government prescribed that the price of housing of two limits should fluctuate up or down by 10–15% of the average selling price of commercial housing of the same quality in the same region. The profit was restricted within the range from 2 to 10%. In other places of China, housing of three limits, and even four limits were

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developed, but they were all modeled after housing of two limits and barely different in essence. Different from indemnificatory housing, buyers of price-limited housing obtain perfect title when buying the houses. Because the government has transferred some land revenues, or granted buyers subsidies through transfer payment, price-limited housing has some attributes of indemnificatory housing, with some restrictions for exit. However, the price-limited housing policy has not only masked real housing prices, but also given rise to other problems in the process of implementation, such as housing inequality as a consequence of rising housing prices, and the awkward situations of giving up buying or refunding when housing prices head downwards. Therefore, the price-limited housing policy has been criticized by all sectors of society since the day it was released.

14.1.2.3

Implementation of Resettlement Housing Policy

Resettlement housing refers to houses built to resettle households to be relocated due to the construction of infrastructure like roads and bridges, land development, urban redevelopment, and rural urbanization. The object of resettlement is urban and rural households for relocation. The relocation covers four scenarios: major municipal engineering projects carried out by the government, such as building roads, railways, bridges and other public places; reconstruction of old residential quarters, or the so-called “reconstruction of old city”; rural industrialization and urbanization; and housing collapse or insecurity due to natural disasters like earthquake, tsunami and landslide. In whatever cases, households to be relocated need resettlement or monetary compensation to safeguard their most basic housing rights and interests. Resettlement housing is built exactly for households to be relocated. It is distributed in a targeted manner. Such houses enjoy preferential policies like reduction and exemption of government land transferring fees and related taxes. Our survey finds that by the end of 2010, Xiamen had completed 56 resettlement housing projects, with 37,500 units of resettlement housing. In 2011, it completed more than 90 resettlement housing construction projects. Among other districts of Xiamen, Huli District was home to most resettlement housing projects that covered a total area of more than 1 million m2 and provided 29,000 units of housing. To solve problems like appropriation of construction land, housing allotment and property management concerning resettlement housing, Xiamen prioritized pricing over purchase. The purchasing price of resettlement housing consisted of development costs, rent and profit. The institution for development and construction estimated and calculated the price according to the approved scope of design and construction as well as pertinent valuation rules. The result was submitted to government departments for approval. Some resettlement housing projects in Xiamen also adopted the approach of agent construction and government buyback. However, whether the Hangzhou model of “major projects driving resettlement”, the model of Huai’an in Jiangsu where the government set the stage and departments operated, the model of Nantong also in Jiangsu featuring “multiparty financing and prevention of decline

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and risks together with management of projects and capital”, or the Xiamen model of agent construction and government buyback, they involve common problems about construction land, construction fund, makeshift housing and housing property rights, as well as how to demolish old houses harmoniously and relocate to new homes happily.

14.1.3 Other Housing Benefits for Urban Residents After market-oriented housing reforms, China has transitioned from the traditional model of housing benefits provided by work units to social housing security. In the process of housing marketization, numerous Chinese cities have seen housing prices climbing, posing difficulties for people to buy homes. Therefore, the housing provident fund system has been gradually built across the nation. Some work units provide according housing subsidies and discounts for their employees or introduced talent to solve people’s housing problems from different aspects.

14.1.3.1

Housing Provident Fund

The housing provident fund refers to long-term housing deposit fund collected by state organs, state-owned enterprises, collectively-owned enterprises in cities and towns, foreign-invested enterprises, private enterprises in cities and towns as well as other enterprises and institutions in cities and towns, public institutions, private-run non-enterprise institutions and social organizations and their on-the-job workers. In 1991, Shanghai drew upon the housing security experience of Singapore, taking the lead to launch the housing provident fund system and gradually promote it across the nation. At the beginning, only a few cities took part in the pilot program, so the number of people involved was limited. The housing provident fund system was thus not unified in the nation. Local governments released regulations and opinions for implementation based on their actual conditions. The operation and management of the current housing provident fund is based on the Regulations on Management of Housing Provident Fund and supporting documents revised and promulgated by the State Council in March 2002. According to the Regulations and its supporting documents, the payment and deposit ratio of the housing provident fund of an employee as well as a work unit shall be 5–12% of the monthly average salary in the last year. The documents also place an upper limit of deposit. At present, the housing provident fund has gradually been opened to migrant workers, self-employed persons in cities and towns, and freelancers, which has rapidly expanded the size of the housing provident fund. Data released by the Ministry of Housing and Urban–Rural Development shows that the housing provident fund deposit totaled 2.069978 trillion yuan in 2008, with the balance after withdrawal amounting to 1.211624 trillion yuan. The year saw 446.9 billion yuan deposited, with the balance after withdrawal reaching 251.1 billion yuan.

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In 2008, individual withdrawal from the housing provident fund amounted to 858.3 billion yuan. Among others, housing loan withdrawal amounted to 609.4 billion yuan. The usage rate of the housing provident fund reached 72.81%.14

14.1.3.2

Implementation of Other Preferential Measures

Apart from the housing provident fund, other preferential measures like housing loan interest rate discount and deed tax breaks for housing transactions have been taken across China to support residents to buy houses and serve as major means for the country to regulate the real estate market. On one hand, the government provides certain amounts of interest-free or lowinterest loans to ease homebuyers’ pressure in paying bank loan interests. Some places, such as some colleges and universities in Shanghai, offer 10-year interestfree loans of 100,000 yuan to new teachers and administrative staff members. Some enterprises also adopt this measure to attract talent. Some departments provide certain amounts of housing subsidies for their employees. Some local government departments or enterprises even lure or reward high-level talent with the incentive of housing ownership. On the other hand, some institutions provide short-term makeshift housing or collective dormitories for employees to solve their temporary housing problems. As supplements to the housing security system, these benefits have played a very positive role. However, they have also resulted in discrepancies in housing benefits between different vocational groups and are unfavorable to the fair distribution of housing benefits.

14.1.4 Operation of Housing Security System in Rural Areas Since the founding of the People’s Republic of China, the government has adopted different housing benefit and policy systems for the countryside from those practiced in cities and towns, in a bid to adapt to urban–rural dual economic and social structures. Based on households and family members, farmers apply to collective organizations for free allocation of homesteads on which they will build houses for living and use by themselves. Current policies don’t allow rural homesteads to be leased or traded. To specially disadvantaged groups, governments at the municipal, county, township and village levels as well as rural collective organizations are responsible for solving their housing problems. Related policies include: First, when Five Guarantee Households and entitled groups in rural areas are unable to solve their housing difficulties on their own, grass-roots governments at the township and village levels and village-level collective organizations are charged with their housing guarantee, such as building houses for them or providing them 14

See the website of the Ministry of Housing and Urban–Rural Development: http://www.mohurd. gov.cn.

14.1 The Operation of Housing Security System

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with resettlement housing directly. Second, to famers who lost their original houses due to natural disasters, the state will directly grant victimized famers housing for resettlement or housing subsidies through the reconstruction of devastated areas in its disaster relief efforts. For example, in the wake of freezing rain and snow disasters in southern China and the Wenchuan Earthquake, the government provided poor rural households with subsidies for the reconstruction of dilapidated houses. Third, the government provide resettlement housing or according compensation for famers relocating from their original places of residence for the sake of ecological protection or large national construction projects, such as protecting the ecosystem of the Sanjiangyuan region, which is known as the source of the Yangtze River, the Yellow River and the Mekong River, building the Three Gorges Dam, and the South-to-North Water Diversion Project.

14.2 The Practical Analysis of Housing Security System The construction of China’s housing security system is a process from point to plane. The system improved gradually and developed increasingly fast. Initially, only a handful of cities built indemnificatory housing. As the government paid growing attention to the construction of indemnificatory housing, the pace gradually picked up. In 2011 only, the state planned to start to build 10 million units of indemnificatory housing of various types and finished renovating 1.5 million dilapidated rural houses. In 2012, 7 million units of indemnificatory housing were planned and the plan for 2013 was more than 5 million units. During nationwide construction of indemnificatory housing, some distinctive experience was accumulated, the summary of which will be conducive to improving the housing security system. Therefore, we have summed up the experience of Xiamen and Chongqing in the construction of indemnificatory housing based on our survey.

14.2.1 Xiamen’s Practices in Building Indemnificatory Housing A secure home is the premise for working in contentment. Housing is a common concern of the public. To low- and middle-income families, housing security is their ardent wish. Centering on housing security, Xiamen started to build social security housing on a full scale in 2006. In 2009, the municipal government passed Regulations of Xiamen Municipality on the Administration of Social Security Housing, the first statute on social security housing in China, with a view to enable those who cannot afford commercial housing to buy indemnificatory housing or lease rental housing, and persuade groups that can afford commercial housing to give up indemnificatory housing and buy commercial housing. As a result, Xiamen was considered

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by the Ministry of Construction as a role model in constructing indemnificatory housing and public rental housing. First, the government clarified the nature and function of indemnificatory commercial housing, defining it as indemnificatory policy housing that the government provides for local houseless families while limiting the size and price. The aim is to solve housing problems facing local residents. Therefore, indemnificatory commercial apartments are mostly small and economical to meet residents’ basic housing needs and they are characterized by uniform decoration. Second, ordinary citizens must meet certain requirements to qualify as applicants for buying indemnificatory housing. For example, applicants must be houseless and their household registration must be in Xiamen, yet not through the dependence on their children. Single residents of 35 years old and above could also apply for buying indemnificatory housing in their own names, but applicants should have paid social insurance premiums in the city for more than one year. Besides, applicants should never transfer any housing estates within five years prior to the application date. In terms of house choosing, applicants could queue in a waitlist. If they fail to choose a house or give up buying the house after choosing, they would be considered as giving up the qualification for application, but they could refile the application two years later. Later the government incorporated the “sandwich groups” between lowestincome and middle-income groups, new workers groups and introduced talent into the indemnificatory commercial housing system, allowing them to buy indemnificatory commercial apartments. As to concrete implementation, the government gave detailed stipulations on the qualification for buying indemnificatory commercial housing. From the perspective of family income, applicants were concentrated in low-income families, whose annual household incomes were below 10,000 yuan, before 2005. At that time, such groups accounted for about 10.75% of the total number of households in Xiamen. In 2006, low-income families were defined as three-member families with less than 50,000 yuan of annual income, four-member families with less than 60,000 yuan of annual income and five-member families with less than 70,000 yuan of annual income. The scope of housing guarantee was expanded to include more than 60% of all households in Xiamen. Regarding per capita living space in a family, the government raised the standard for the object of housing security, specifying that poor families whose per capita living space was no bigger than 12 m2 were qualified for applying for indemnificatory housing on the precondition that their annual incomes were up to the standard. Third, the nature of property rights of indemnificatory commercial housing was made clear. It was prescribed that buyers own limited property rights of indemnificatory commercial housing. If the ownership last less than five years, buyers are forbidden from trading the houses. If they indeed need to transfer the houses, the government would buy them back. The buyback price would be calculated on the basis of the original price of purchase and the price of commercial housing of the same quality in the same region. If the houses are to be traded when the ownership is over five years, the owners should pay the government equal amounts of land revenues that should be 60% of the difference between the original price of purchase and the

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guide trading price of social security housing in the same region. The government is prioritized in buying them back. Those who have bought indemnificatory commercial housing and acquired other housing should withdraw from the indemnificatory commercial housing system. In addition, indemnificatory commercial housing should be self-occupied by buyers and not allowed to be leased, lent, operated or transferred illegally. Except housing mortgage, buyers are prohibited from commercial mortgage of other forms. Certainly, buyers of indemnificatory commercial housing could withdraw and loan from their personal housing provident fund to enjoy discounted housing loans by rule. Fourth, the site selection of various types of indemnificatory housing, including indemnificatory commercial housing, has become increasingly reasonable. In order to provide houses for poor families and ensure that they live in a spacious and comfortable home, the government adhered to the principles of proximity and convenience when selecting sites for the construction of indemnificatory housing. By the end of 2010, all districts of Xiamen, downtown and suburban alike, had planned and built indemnificatory housing, while intensifying efforts in indemnificatory housing construction in the outskirts, giving priority to Haicang, Jimei and Tong’an districts with better environments for indemnificatory housing construction and directing poor families to live in the suburbs. As the Xiang’an Tunnel was completed and open to traffic, Xiang’an District also began to build indemnificatory housing. From 2006 to 2010, newly commenced and constructed indemnificatory commercial housing projects in Xiamen totaled 6.82 million m2 accumulatively. See Table 14.1. In order to improve the living conditions of indemnificatory houses, the government broke away from the traditional model of indemnificatory housing construction, and integrated indemnificatory housing and commercial housing projects, carrying out unified distribution, management and operation to provide guarantee for the implementation of the indemnificatory housing system. Indemnificatory rental housing in Xiamen covers five groups. The first group is low- and middle-income families with housing difficulties, which fail to meet Table. 14.1 Commencement of social security housing projects in Xiamen Year

Siming district

Huli district

Haicang district

Jimei district

Tong’an district

Xiang’an district

Total

2006

17

35

5

26

33

35

186

2007

0

32

20

18

40

19

148

2008

5

12

15

20

38

15

120

2009

5

9

15

24

20

15

103

2010

0

6

17

26

32

22

125

Total

27

94

72

114

163

106

682

Source of data Achievements of Xiamen Housing Security Construction (2006–2010), http:// xm.focus.cn/news/2006-10-24/249179.html. This table includes affordable rental housing and affordable commercial housing. Unit: 10,000 m2

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requirements for low-rent housing and cannot afford to buy commercial housing and indemnificatory commercial housing. The rent of indemnificatory rental housing is based on market rent, and the government offer rental subsidies that are 90, 80 and 70% of market rent according to family incomes. The second group consists of financially straitened employees at public and administrative institutions, mainly schools and hospitals. The government provides them rental subsidies that are 60% of market rent for three years at the longest. The third group is qualified talent at enterprises and public institutions, which is granted rental subsidies that are 60% of market rent. Fourth comes poor employees at provincial and ministerial institutions stationed in Xiamen, including colleges and universities, some large enterprises and high-tech enterprises. The rent is based on market rent. The fifth group comprises migrant workers in the development zone, industrial district and areas with a dense population of outsiders, who rent houses of the Jinbaoyin Project and Sunshine Apartment Project in a concentrated manner. Indemnificatory rental housing in Xiamen is characterized by small size, full functions and sound decoration. The size of the houses is under strict control. Supporting residential facilities and functional apparatuses for basic living, like kitchen and bathroom, are complete. And the apartments are fully decorated. All aim to meet basic living needs of the groups. Meanwhile, rental subsidies are classified. Based on market rent, the government subsidizes applicants according to their family incomes or work unit. The collection and granting of rent are separated. Additionally, living registration and surveillance are integrated to stringently restrict non-applicant family members from living, thereby playing due functions of indemnificatory rental housing.

14.2.2 Construction of Housing Security System in Chongqing According to a sampling survey of 1% of households in downtown Chongqing regarding housing conditions, which was carried out by the Chongqing Survey Organization under the National Bureau of Statistics, the permanent resident population in downtown Chongqing was estimated to reach 10 million by 2020. The downtown area needed to provide 335,000 units of public rental housing, with the scale of construction totaling 20 million m2 approximately. In light of the progress of urbanization in outer suburbs, the demand for public rental housing was expected to reach about 20 million m2 , and the total demand in the municipality was 40 million m2 . In early 2010, Chongqing thus constructed 10 million m2 of public rental housing annually for three years in a row, and built another 10 million m2 given social demand. The construction of public rental housing for 20 million m2 in the downtown area was divided into two steps: the goal for the period from 2010 to 2012 was 10 million m2 to furnish roughly 170,000 units that could house 420,000 people; and another 10 million m2

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was scheduled for the period 2013–2010.15 That was the largest-scale public rental housing construction plan in China. With the focus put on public rental housing and the objective to integrate low-rent housing and affordable housing (indemnificatory commercial housing) through the construction of public rental housing, the Chongqing municipal government strived to innovate the housing security system and created a “Chongqing model”. In the construction planning of public rental housing in Chongqing, the government doesn’t separate low-rent housing from the public rental housing system. Residents of low-rent houses and public rental apartments live in the same quarter and enjoy housing of the same quality, yet paying different rents. Meanwhile, after five years of renting, residents could buy rental housing at the cost price and translate it into affordable housing with limited property rights. If buyers need to transfer the houses, the government’s public rental housing administrative body will buy them back to rotate the use of the public rental apartments. First, the government adopts the mixed construction model and breaks barriers in household registration. On one hand, restrictions of household registration are removed to split urban–rural differences among groups covered by public rental housing. Any resident of 18 years old and above, with a stable job and source of income as well as the ability to pay rent, and whose per capita family housing space is below the standard, is entitled to apply for public rental housing, in addition to houseless singles who earn less than 2000 yuan monthly and families that earn 3000 yuan monthly. The object of enjoying public rental housing also includes university graduates and houseless migrant workers. Introduced talent, model workers and exservicemen with second-class merit could apply for public rental housing directly. On the other hand, the mixed construction of commercial housing and public rental housing was carried out, and sites were selected by the principles of balanced layout, convenient transportation, sound infrastructure and livable environment. The public rental houses were built along light rail or areas featuring convenient transportation, based on the standard of commercial housing construction with facilities like schools, hospitals, shops, banks and libraries equipped. Blending public rental housing and commercial housing in downtown Chongqing, the government allows residents of the two types of housing to share the environment of the quarter along with management and services of professional property management companies, in a bid to avoid the gap between social classes and the formation of slums, thereby promoting the construction of a harmonious society.16 Second, the rent is cheap to make sure that tenants can afford. The standard of rent was set reasonably on the basis of economic development levels of Chongqing, per capital disposable income, individual consumption ability, construction loan interest, maintenance and management fees for public rental housing and costs of vacancy and depreciation, so that it is 60% of market rent of ordinary commercial housing in the same block and of the same quality and size, accounting for roughly 15% of family incomes to ensure that all tenants could afford the rent. Calculated on the 15 16

See Huang [1, 2]. Wang and Cui [3].

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above conditions, the rent is 9–11 yuan per m2 . Moreover, the government restricts the size of public rental housing at about 60 m2 to lighten the burden of total rent on tenants. Third, the public ownership of property rights is stuck to. Governments of the municipal and district (county) levels are the subjects of public rental housing construction in Chongqing, and the property rights of the houses are owned by the state-owned Chongqing Land Group and Chongqing City Construction Investment Group or district- and county-level governmental investment companies to exercise closed operation. When tenants transfer or pledge public rental apartments after buying them, only governmental public rental housing administrative bodies are the only legitimate subject to buy them back and transfer them to new low-income groups, thereby minimizing rent and avoiding grey trade due to interest tunneling. Besides, the government appropriates land for public rental housing construction and provides various tax break policies.17 To safeguard the public ownership of public rental housing, the government also raises funds through multiple channels, such as commercial bank loan, housing provident fund loan, bond issuance and house renting and selling, with the view to gradually realize the full coverage of housing security.18 Last, the government has explored a reasonable exit mechanism to realize the benign operation of public rental housing. It is prescribed that the lease term of public rental housing is 1–5 years. After it expires, qualified tenants, particularly in terms of incomes, could renew the lease, quit the contract, or buy the rented houses. Surely, if tenants are no longer qualified for renting public rental apartments for increased incomes or for buying commercial housing, the government will take back the apartments and re-rent them to other qualified applicants. After renting for 5 years, tenants could apply for buying the public rental houses they live in based on costs plus bank interests. However, bought public rental apartments are not allowed to be rented, transferred or granted. If they are to be transferred, the government is the only legitimate subject of buyback. The price of buyback should be the original price of purchase plus interests on demand deposits of the same period. It is immune from the impact of fluctuating housing prices in the market. This is not entirely identical with the case of Xiamen.

14.2.3 Problems in Construction of Housing Security System in China Judging from the construction of the housing security system in Xiamen and Chongqing, there are a few problems in the Chinese housing security system, especially in the construction of indemnificatory housing. 17 18

See Zhang [4]. See Gu [5].

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339

First, the aim of the indemnificatory housing system is not clear enough and its institutional positioning is not accurate enough, so indemnificatory housing construction is not universal enough. Indemnificatory housing aims to solve housing problems of disadvantaged groups. Essentially the system should address basic housing problems of all residents. It should be a universal benefit. In other words, the system should target all people. As long as their incomes are lower than a certain level and as long as they run into difficulties in housing, the government should grant them the benefit. It is a basic right to life, so indemnificatory housing shouldn’t focus on limited groups. However, Xiamen and Chongqing, and most Chinese cities, regard residents with local household registration as the object of housing guarantee when formulating the indemnificatory housing system. Although Chongqing incorporates those without local household registration, strict requirements are imposed on their work years and payment of social insurance premiums during qualification examination. Hence there is still a long way to go to solve housing problems facing lowand middle-income families in cities. Second, sources of housing and fundraising channels are limited. The government plays the main part in providing indemnificatory housing, either by starting from scratch or supporting the construction. Market acquisition is seldom adopted and non-governmental entities are also neglected in the construction of indemnificatory housing. Building new houses raises high requirements for capital to the government. Fundraising through special fiscal appropriation, land-transferring fees and loans is inadequate to meet housing demands of numerous people, especially in financially weak cities. Moreover, rental subsidies of indemnificatory housing, particularly indemnificatory rental housing, are low. Only Xiamen classifies subsidies with the affordability of different families taken into consideration. Other places usually provide rental subsidies that are 70% of market rent. Such rents might still put some pressure on low- and middle-income families, hence hindering the system from functioning. Third, the system is too fragmented and should be integrated. In universal, the current indemnificatory housing system in China is fragmented in four ways. The classification of indemnificatory housing is fragmented. So far there have been a multitude of names for indemnificatory housing, such as resettlement housing, affordable housing, housing of two, three or four limits, low-rent housing, rental housing, and so forth. What’s the relationship between these types and how to differentiate them? Are they categorized by income, household registration or size? There is no scientific criterion. Besides, the nature of property rights is fragmented. It is hard to tell whether the property rights of these types of indemnificatory commercial housing are limited or unlimited, partial or complete, whether they can be traded and how to define the property rights of indemnificatory commercial housing converted from indemnificatory rental housing. Moreover, groups targeted by different types of indemnificatory housing are fragmented. Some cities try to provide housing guarantee for households enjoying minimum living allowances and those on the verge of receiving minimum living allowance, some strive to guarantee low-income families, some target low- and middle-income families, and some also incorporate talent, so

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that the entire indemnificatory housing system is fragmented. In addition, indemnificatory commercial housing and rental housing are not well connected. Renting and buying, and the size for renting and buying are not well linked, integrated and converted. Fourth, the exit and regulatory mechanism is not clear. Many cities stipulate on the exit from indemnificatory housing vaguely. It is simply prescribed that exited social security houses shall be reclaimed or bought back by municipal administrative housing security management departments by rule, but there is no detail on how these management departments should reclaim or buy back the houses. Such a stipulation cannot regulate the exit from social security housing, leading to the awkward situation of only entrance into and no exit from social security housing. Furthermore, the indemnificatory housing mechanism lacks explicit regulatory rules. There are only rules on prohibiting renting, subleasing, under-leasing, exchanging, transferring and pledging or using for business operation purposes,19 but none on how to forbid the acts. In other words, the current system is inadequate in monitoring and regulating the use of indemnificatory housing. Consequently, indemnificatory houses have been unrestrictedly subleased, rented or used for business operation, affecting the exit from social security housing. Fifth, the implementation of the indemnificatory housing system is poor. Institutional implementation is an important part of institutional construction. Poor implementation will gradually lead people to lose trust in the system and even overlook it. For example, Xiamen was the first city in China to raise the concept of indemnificatory housing in 2006, and released the first social security housing statute in China in June 2009. However, due to various factors, the system has not been effectively carried out. Although the social security housing system imposes strict requirements on the family property of housing applicants, some unqualified groups still cheated in renting and buying indemnificatory housing.20 Related functional departments are not entitled to handle such misconducts. The only thing they could do is to strip them of the right of application. That is not regulating the implementation of the system, but undermining the executive and binding forces of social security housing to a large extent instead. All these highlight the need to accelerate the improvement of the housing security system.

14.3 The Universal Integration of Housing Security System Problems arising during the implementation of the indemnificatory housing system urge us to realize the full coverage of the housing security system soonest possible, so as to ensure everyone in need enjoys housing benefit. Efforts are likewise needed 19

See Article 39 of Regulations on the Administration of Social Security Housing in Xiamen. For example, on December 26, 2012, Zhai Zhenfeng, former director of the Real Estate Management Bureau of Erqi District, Zhengzhou, Henan Province, was reported to resell the affordable housing for profit. Similar cases also occurred elsewhere.

20

14.3 The Universal Integration of Housing Security System

341

to integrate diverse housing security institutions to make the indemnificatory housing system less fragmented, and promote the fair development and improvement of the housing security system.

14.3.1 Necessity of Universal Integration Housing is the most fundamental need of humanity, and also a crucial carrier to survive in society. Housing keeps everyone company throughout their lives, while elderly care, medical care and employment are just needs of a certain stage or time of life. Therefore, it is vital to reinforce the construction of the housing security system and ensure that everyone enjoys the right to housing. First, housing is a universal basic welfare demand and right. Enjoying an important status, it is regarded as a wobbly pillar under the welfare state.21 It takes a large share of family expenses and forms the basis of human existence. Any person and country, regardless of their wealth and status, needs houses to live in, and the housing demand varies from family to family. Therefore, Jim Kemeny noted that housing is a key area in the construction of welfare states when studying the construction and reorganization of the welfare system.22 Japanese scholar Kazuo Hayakawa also held that housing benefit is most fundamental to social welfare, stressing the importance of regarding housing problems primary to the state and society. He said that welfare starts from housing and ends in housing, too.23 However, in Chinese cities, there are some groups that still cannot afford to buy commercial housing in one way or another. They cannot afford to buy indemnificatory commercial housing or rent indemnificatory rental housing. This suggests that housing problems have become a significant research topic in the field of social welfare. Exploring how to improve the housing welfare system as well as people’s living conditions have become a broad consensus in society. Second, the universal integration in the housing security system has been widely agreed upon. With prices of commercial housing climbing and the income gap widening, housing has become a major livelihood issue of common concern. All sectors of society have realized that commercialization is far from enough to realize the goal of ensuring that every resident has a home to live in. The only way out is to quicken the improvement of the housing security system, scientifically explore the quantitative and structural relationships between indemnificatory commercial housing and indemnificatory rental housing, and between indemnificatory housing and ordinary commercial housing, reasonably differentiate basic and non-basic housing needs, and focus on meeting the public’s most basic housing needs, rather than non-basic, particularly luxury housing demands.

21

Jim [6, p. 144]. Ibid. 23 Kazuo [7]. 22

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Third, improving the housing security system is of great realistic significance. With the advancement of industrialization and urbanization, large populations have been migrating to cities and towns. In 2011, the urban population in China accounted for more than half of the total population for the first time. Every year we would see millions of people migrating to urban areas continuously, which is not only indicative of growth in the urban population, but also underscores the urgent need to build large numbers of houses to solve the housing problem facing the migrant population. Besides, some cities have excessively developed upscale residential quarters, artificially raising land prices and commercial housing prices, while leaving the wage-earning class unable to buy commercial housing. In some cities, many newly built high-grade commercial housing are left vacant for exorbitant prices. It is thus essential to expedite the study of the universal integration in the housing security system and explore what housing system China needs, what housing problems to solve, and which groups to address first. Meanwhile, housing is not only a life necessity, but also a kind of wealth and commodity. We should straighten up the relationship between the two attributes and clarify the quantitative relationship between indemnificatory rental housing, indemnificatory commercial housing and ordinary commercial housing, in order to build a housing security system suited to China’s actual conditions of a large population and relatively little land and fitting in with the purchasing power of the Chinese people.

14.3.2 Goal of Universal Integration The universal integration in the housing security system requires us to, based on field investigation, make clear the construction principle for the universal integration, seek the goal of the housing security system, explore the institutional framework and policy content of the system, and promote the universal integration in the housing security system, in order to provide theoretical basis and policy suggestions for ensuring everyone has the right to housing. First it is essential to define the principle for the universal integration in the housing security system. First, the principle of right to housing should be established. The right to housing is a basic right of humanity. Defining housing as a universal and most fundamental benefit entails changing the state of “excessive commercialization” and restore the daily life function of housing from the non-commercial perspective, emphasizing that housing security is an indispensable welfare demand of every citizen and family and the most basic right to subsistence. Thus it is necessary to make clear that the establishment of the housing security system is to solve basic housing problems facing all people and regard “having a house to live in” as their basic right. On the basis of integrating diverse types of indemnificatory housing, efforts should be made to explore the structural relationship and proportion between indemnificatory housing and ordinary commercial housing, expand the supply and lower the price of indemnificatory housing, and contain the excessive development of commercial housing to enable some people to buy ordinary commercial housing

14.3 The Universal Integration of Housing Security System

343

that can meet their basic living needs, enable most people to buy indemnificatory commercial housing, and provide low-rent housing for residents that cannot afford to buy houses. Second, the principle of baseline equality should be adhered to. Housing security is a moderate benefit, rather than high welfare pursued by welfare states. It aims to meet the public’s basic housing needs, instead of non-basic needs, let alone luxury housing needs. Therefore, it should be grounded in the Chinese people’s basic living habits and residential preferences to disabuse Chinese people of the luxury consumption tendency. It should not only avoid the surplus of housing benefits, but also prevent the tendency of excessive supply of the benefits. Hence solving the public’s basic housing needs, rather than non-basic housing needs, should be the starting point to formulate the social system and related policies. It is important to align the per capital housing space, supporting living facilities and public service provision with China’s actual conditions of a large population and relatively little land, and with China’s economic growth levels and sustainable development, take precautions against the excessive supply of housing benefits, avoid falling into the “high-welfare trap”, and hold the baseline of people’s housing needs to ensure everyone enjoys the right to housing. Moreover, the principle of providing residential services should be emphasized. Residents’ needs for housing should not simply rest on the demand for the house itself, but also the need for residential service. Buildings for living only constitute the premise for housing. To turn the buildings into houses for living necessitates the improvement of various service facilities and the provision of complete, fully functional service projects for people living in the buildings, thereby gradually upgrading the service quality. Here the government should be responsible for directing all sectors of society to offer sound public services for residential quarters of indemnificatory housing, and provide public services that other subjects are unwilling to or cannot provide to meet the public’s basic housing needs. Second, it is vital to unify fragmented housing types, such as affordable housing, price-limited housing, low-rent housing and rental housing, and integrate rental subsidy systems of multiple levels to build a universally integrated housing security system that can provide housing guarantee for all people. On one hand, the government should promise and guarantee that the universal public enjoy the right to housing and ensure every family enjoys the right to live in a non-commercialized house. Particularly efforts should be made to guarantee that those who cannot afford to buy ordinary commercial housing and indemnificatory commercial housing have houses to live in and ensure their right to housing. In other words, the housing security system should address basic housing problems facing all people, instead of a certain class. It should be open to the universal public, regardless of their income and identity, and on this basis, prioritize the housing problem of lowincome groups, subsidize disadvantaged groups appropriately and enable all people to afford to buy or rent houses, rather than being manipulated by the market. On the other hand, the government should, through institutional arrangements, prevail with the groups that can afford commercial housing to voluntarily give up

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buying or renting indemnificatory commercial housing, and by releasing related policies, prevent the groups that can solve housing problems on their own from entering the housing security system, guiding them to buy ordinary commercial housing voluntarily. Therefore it is necessary to make clear that the property rights of indemnificatory commercial housing belong to the government only and cannot be transferred privately, ban the trading of indemnificatory commercial housing and ensure the “inner cycle” of indemnificatory commercial housing. While improving the residential function and living environment of indemnificatory housing, the government should reasonably define per capita housing space and size of various types of indemnificatory housing and stipulate that indemnificatory housing can only be self-occupied by applicants, and prohibited from being rented, sold or inherited.

14.3.3 Institutional Design of Universal Integration The universally integrated housing security system admits and safeguards the public’s right to housing, stressing that the government is obliged to sell or rent out indemnificatory housing to those who are unable or unwilling to buy and rent ordinary commercial housing, thereby ensuring each of them has a house to live in. It is thus significant to integrate various housing systems to meet basic housing needs of different groups. First, it is necessary to continue to build ordinary commercial housing moderately so as to set the stage for people’s need to improve housing conditions. The development of economy and society and the improvement of people’s life will necessarily be reflected in living conditions. The goal of building a moderately prosperous society contains the improvement of housing conditions. That is, integrating different housing security systems is not to inhibit people’s housing demands, nor to dampen their need to improve living conditions, but to build a functionally reasonable housing market system and foster a differentiated housing market integrating ordinary commercial housing, indemnificatory commercial housing, rental housing and low-rent housing. Efforts should be made to continue to leverage the power of the market to encourage and attract social capital to build high-quality ordinary commercial housing, and by developing ordinary commercial housing and building according residential quarters, improve people’s housing conditions and living quality, and meet their demand for private housing. Surely, the development of ordinary commercial housing should be based on the residential function of housing. The development and construction of luxury commercial housing should be firmly curbed to avoid the waste of land resources caused by the excessive development of ordinary commercial housing. To this end, the government should release policies encouraging investments in the development and construction of ordinary commercial housing that aims to meet basic housing needs or improve living conditions, while making use of levers like taxes, interests and credit and loan to restrict the development and construction of luxury commercial housing and make necessary interventions in the houses and total size of housing actually owned by households.

14.3 The Universal Integration of Housing Security System

345

Second, attention should be paid to accelerating the construction of indemnificatory housing, in order to ensure the universal public enjoys basic rights of housing security. It is essential to integrate current indemnificatory housing types, define them uniformly as indemnificatory housing, step up efforts to supply indemnificatory housing, and lower the selling price of indemnificatory commercial housing to make them far cheaper than commercial housing of the same area in the same city, even cheaper than current “housing of two limits”, so as to enable middle-income and lower-middle-income households to afford indemnificatory housing. It should be stipulated clearly that ordinary people are part-owners of indemnificatory housing after buying them, and the houses don’t have the attribute of commercial housing. Buyers can only live in the houses themselves and even live for a lifetime, but are forbidden from transferring, subleasing, selling or using them for business operation purposes, or passing them on to next generations. In case they need to transfer or trade the houses for various reasons, the government is the only legitimate subject to buy them back. The premium should be distributed by the proportion of the house payment to the price of commercial housing in the same region. Meanwhile, those people, migrant workers and other floating populations who cannot afford or are unwilling to buy indemnificatory commercial housing are entitled to lease indemnificatory rental housing and the rent should be determined by local governments. In other words, the government should put affordable housing, housing of two, three or four limits, public rental housing, low-rent housing and rental housing into the same category of indemnificatory housing and divide indemnificatory houses into housing for sale and for rent. The public will make the choice and decision. In addition, enterprises and social organizations should be encouraged to build indemnificatory rental housing by the standard of indemnificatory housing, thus expediting the construction of indemnificatory housing and solving people’s housing problems as soon as possible. Third, the management and supervision of indemnificatory housing should be strengthened. It is first crucial to formulate detailed regulatory rules to make clear the size of housing to be enjoyed by the public and standardize the procedures of applying for buying or renting indemnificatory housing. Moreover, electronic housing archives should be established to grasp information of each unit of indemnificatory housing dynamically, incorporate all types of indemnificatory housing into the housing regulatory system, execute to the letter the rule that indemnificatory housing can only be owner-occupied, increase penalties for private subletting and reselling behaviors, and practically reduce free-riding acts. Moreover, it is important to enhance the serious construction of the indemnificatory housing system and prioritize the housing needs of people with difficulties in living or housing to fully reflect the executive and binding forces of the indemnificatory housing system and strictly investigate, prosecute and crack down on illegal embezzlement and reselling of indemnificatory houses. Therefore, it is a must to investigate those who fail to live in indemnificatory houses they buy or rent by rule and establish the authority of the indemnificatory housing system.

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14 The Universal Integration of Housing Security System

Fourth, efforts should be beefed up to promote urbanization and plan the construction of housing for farmers. It is essential to regard counties as the bond, rely on townships and base on villages to scientifically plan rural housing construction projects to form a rural housing security system with complete public facilities, sound infrastructure, beautiful living environment and improved living quality. First, the principle of “one household one house” should be followed to ensure farmers’ basic land needs for building houses, and farmers will build self-occupied houses as planned and required. Second, it is important to avoid wastes of land resources resulting from a lack of scientific planning and the phenomenon of “village hollowing out”, stop forcing farmers to move to residential buildings in the name of urbanization, and take measures to direct farmers to live in villages in a concentrated manner voluntarily. For example, farmers (rural migrant workers) who have returned their original homesteads and buy commercial housing in townships can be provided interest-free loans of a certain amount and term as rewards. The amount and term of the loan should be determined by local people’s governments. Central finance should grant interest subsidies to impoverished regions. In relatively developed areas, local governments should work it out by themselves. The government should also give material rewards to farmers who have withdrawn from their homesteads to facilitate the process of turning old houses into arable land. Last, disadvantaged groups, such as rural seniors receiving guarantees of food, clothing, medical care, housing and burial expenses, and poor farmers should be provided with houses for resettlement to safeguard their right to housing. All in all, the universal integration in the housing security system should work to advance the construction of housing security for urban and rural residents, help realize the policy goal of ensuring everyone to have the right to housing, and consolidate the foundation of people’s livelihood for building a moderately prosperous society in an all-round manner.

References 1. Huang, Q.: Strengthening the construction of public rental housing and strive to expand the coverage of housing security. People’s Daily, September 20, 2010 2. Huang, Q.: Gradually realizing full coverage of housing security. People’s Forum, July 2010 (Part II) 3. Wang, J., Cui, J.: Analysis of the Chongqing model of public rental housing construction. People’s Daily, September 13, 2010 4. Zhang, D.: Chongqing practice of public rental housing construction. Reform (3) (2010) 5. Gu, W.: Can chongqing model be reproduced? Corp. Fin. 10 (2010) 6. Jim, K.: From Public Housing to Social Markets: A Comparative Study of Rental Housing Policies, translated by Wang Tao. China Construction Industry Press (2010) 7. Kazuo, H.: Residential Welfare, translated by Li Huan. China Construction Industry Press (2005)

Chapter 15

The Universal Integration of Social Assistance System

Social assistance is the oldest social security system in the history of human development that has been included in the social security systems implemented in more than 170 countries in the world. Social assistance is a baseline welfare system aimed at ensuring the minimum standard of living of members of society, and is the foundation for the universal integration of the social welfare system. The construction of a universally integrated social assistance system is the fundamental way to realize the baseline fairness in the field of social welfare. In recent years, China has made great progress in social assistance, which has played effectively the role of the last “safety net”. However, there are still a series of prominent problems, which requires us to carry out a top-level design for integrating the social assistance scheme.

15.1 The General Description of China’s Social Assistance System To build a universally integrated social assistance system, it is necessary to define clearly the connotation of social assistance, be aware of the necessity and urgency of system integration, and understand the development course, present situation and major problems in system integration.

15.1.1 Definition of Social Assistance 15.1.1.1

Concept of Social Assistance in Foreign Countries

Britain is the birthplace of the modern social assistance system. The British government promulgated the National Assistance Act in 1948, and the social assistance in Britain entered a new stage of development. Social assistance in Britain is targeted at © China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7_15

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15 The Universal Integration of Social Assistance System

individuals and families whose living standard is lower than the statutory minimum standard, including those who are unable to work and those trapped in temporary living difficulties. The fund of social assistance mainly comes from tax revenue, and it is mainly appropriated by the government according to the budget.1 Germany also attaches great importance to the construction of the social assistance system. As early as November 1881, William I stipulated in The Golden Bull that workers should be given relief to ensure their basic living conditions in case of illness, accident, disability or old age. In 1961, the country promulgated the Federal Social Assistance Act, which stipulated that the recipients of social assistance were the poor whose family income was lower than the minimum living security standard; social assistance funds mainly came from the government’s payroll tax and fuel tax, mainly borne by the local government; and social assistance could be distributed in the form of personal assistance, in-kind or cash transfers.2 Sweden established the modern social assistance system through the enactment of the Social Welfare and Social Assistance Law in 1957. Swedish social assistance is mainly targeted at the poor residents, who had no or inadequate ability to meet the minimum living needs. The recipients of social assistance could only get assistance after investigation, and the funds were appropriated by the central government to local governments, to embody the state responsibility in the social assistance system.3 The definition of social assistance in the United States is relatively flexible. According to Encyclopedia of Social Work published in 1965, “Social assistance is a supplement to the social insurance system. It is one of the most flexible and unconstrained schemes in the entire social security system to provide assistance to individuals or families with their livelihoods cut off and in urgent needs for assistance”.4 Because of this, the United States has one of the most complex social assistance system in the world, with more than 100 social assistance programs launched by the federal government alone, such as supplementary security income, medical assistance, food stamps, housing assistance, etc. Chile carried out the reform of the social security system in the 1980s, which separated the scattered measures of social assistance system from the social insurance system and created a relatively independent social assistance system. In Chile, social assistance funds also come mainly from government taxes. Applicants for social assistance shall pass the government’s economic and social status survey and qualification verification. In social assistance programs, there are special noncontributory social assistance programs for the poor, designed for all people with insufficient income to live on and no access to the social security system. The Asian Development Bank defines social assistance in two senses, i.e. the broad and narrow senses. In the broad sense, social assistance refers to the assistance for citizens unable to maintain a minimum standard of living for various reasons, which is provided in the form of cash or in-kind benefits by the nation or society in accordance with the standards defined by legal qualifications to guarantee the 1

Wang and Guo [1, pp. 298–339]. Ibid. 3 See Footnote 1. 4 Hu [2, p. 2]. 2

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minimum living standard of the recipients. In the narrow sense, social assistance refers to the assistance for citizens, unable to maintain the minimum living standard due to various reasons, which is provided in the form of cash or in-kind benefits by the central or local governments in accordance with the standards defined by the predetermined qualifications and the results of the family income investigation so as to ensure their minimum living standard.5 In Japan, the social assistance system is usually referred to as the living security system, i.e. the system that provides the minimum living standard for the poor. Japan promulgated the Life Protection Law in 1950, which after several revisions became a life security system with Japanese characteristics. Japan’s social assistance is funded by the state, also known as the National Assistance System. The living security system of Japan is based on ensuring the minimum life of poor citizens with a relatively wide scope of security, mainly including cash assistance in daily living security as well as in-kind and service assistance in living protection facilities. Through a comprehensive survey of the social assistance systems in major countries, we can summarize four common characteristics. First, there are laws enhancing the mandatory nature of social assistance. Second, the government is the main responsible party for the cost. Three, beneficiaries are mainly poor people or individuals and families living below the poverty line. Four, social assistance aims at maintaining a minimum living standard for the poor.

15.1.1.2

Concept of Social Assistance in China

By reviewing numerous definitions of social assistance in domestic academic circles, it can be found that social assistance in China can be divided into broad sense, neutral sense and narrow sense. In the broad sense, social assistance is a systematic system composed of basic living assistance, special subsidy and temporary assistance. Herein, basic living assistance includes urban minimal assurance, rural minimum subsistence security and rural five guarantees for farmers. Special subsidy includes education assistance, medical assistance, and housing assistance, etc. Temporary assistance is mainly targeted at people faced with sudden and temporary difficulties.6 Hu Wu believes that social assistance is the sum total of various assistance systems established to guarantee the basic living conditions of vulnerable groups and solve their special difficulties in life.7 The main programs include living assistance, housing assistance, medical assistance, education assistance, production assistance, legal assistance, employment assistance and accident assistance.8 Jia Nan points out that social assistance is a system that is linked to charities based on the urban and rural subsistence allowances systems, with the rural five-guarantee system, disaster relief system, medical assistance and relief for vagrants and beggars as the main 5

Zhang and Tan [3]. Liu [4]. 7 See Footnote [4]. 8 Ibid, p. 3. 6

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content, supported by housing assistance, education assistance and judicial assistance, and supplemented by temporary assistance systems.9 Lin Mingang believes that China’s social assistance system consists of four layers.10 The first is the basic living assistance for the urban and rural poverty-stricken population, and the five guarantees for people who have no ability to work or have no provider, or who have no source of income in rural areas. The second layer is the special subsidy, including education assistance, medical assistance, housing assistance, judicial assistance and employment assistance. The third layer is temporary and emergency relief, including natural disaster relief, urban vagrants and beggars relief and relief for persons who act bravely for a just cause. The fourth layer is subsidiary social assistance, including social mutual assistance, aid from non-governmental organizations and preferential policies. Social assistance in the neutral sense is mainly adopted by departments of civil affairs. In the Statistical Report on The Development of Social Services released by the Ministry of Civil Affairs, social assistance is divided into nine sub-programs, including minimum subsistence allowances for urban residents, relief of people who have no ability to work or have no provider, or who have no source of income in urban areas, minimum subsistence allowances for rural residents, support of rural Five Guarantee Households, rural traditional relief, urban medical aid, rural medical aid, temporary assistance for urban residents and temporary assistance for rural residents. The boundary of social assistance is defined by the civil affairs department from the angle of departmental responsibility with a scope subsequently narrower than that defined in the broad sense. Social assistance in the narrow sense refers to the living security system to maintain the minimum living standard of the impoverished groups. Living security is one aspect of social assistance, and social assistance is a comprehensive assistance system to meet the needs of the vulnerable groups.11 Tang Jun believes that the social assistance system is actually the minimum living allowance program, which can be defined from the perspectives of theory and practice. From a theoretical perspective, social assistance is one of the basic civil rights guaranteed by legislation in modern countries. When it is difficult for citizens to maintain a minimum living standard, the state and society provide them with material assistance to ensure their minimum living needs in accordance with legal procedures and standards. From a practical point of view, social assistance usually sets a line for minimum subsistence based on the standard of maintaining minimum living needs, and every citizen, when faced with difficulties caused by an income lower than the minimum living security, shall have the right to get cash and material assistance from the nation and society in accordance with the legal procedures and standards.12 Cao Liqian and some other scholars believe that social assistance refers to the living security system in which the state and society provide assistance to people who are unable to work or members of 9

Jia [5]. Lin [6]. 11 Jing et al. [7, p. 127]. 12 See Zheng [8, p. 204]. 10

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351

society who are unable to maintain the minimum living standard due to natural disasters or other economic and social reasons, so as to ensure their minimum standard of living”.13 Liao Yiguang and some other schoalrs believe that social assistance is a social security system in which the state and society, in accordance with the law, provide various forms of assistance for those members of society whose basic material life is in trouble for various reasons and who cannot maintain the minimum living standard by their own strength.14 This study uses the concept of social assistance in a narrow sense, that is, social assistance is the baseline welfare system guaranteeing the minimum living standard of the impoverished groups. It includes the minimum living allowance program for urban residents, the minimum living allowance program for rural residents and the rural five-guarantee system. This definition includes four meanings. First, social assistance is targeted at the impoverished group. Here, the impoverished group mainly refers to the people in absolute poverty rather than in relative poverty. They are people who have not yet had enough food and clothing. Also, the recognition of this group is based on the status of poverty regardless of the causes of poverty. Second, the subjects of social assistance provision are the government. The government has inescapable political, legal and moral responsibilities for social relief, whose funds should mainly come from the government’s budget and financial allocation. Only in this way can the stability, sustainability and vitality of social relief be guaranteed. Of course, this does not exclude resource support from nongovernmental entities, but such support is a variable that cannot be determined or predicted in advance. Third, the goal of social assistance is to maintain the minimum living standard. In other words, social assistance is a “life-saving system”, which is different from the social insurance system which guarantees the basic living standard of members of society and the universal welfare system which improves the quality of life. Four, social assistance is positioned as a baseline welfare system. It is the “minimum program” of the social welfare system, the “last safety net” of the social welfare system, and a rigid welfare system that cannot be further broken through.

15.1.2 Status Quo of Social Assistance System in China Since the social assistance system is understood here in a narrow sense, it is divided into the minimum living allowance program for urban residents, the minimum living allowance program for rural residents and the rural five-guarantee system.

13 14

Cao [9]. Liao [10, p. 3].

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15.1.2.1

15 The Universal Integration of Social Assistance System

Minimum Living Allowance Program for Urban Residents

The minimum living allowance program for urban residents is a social assistance system to ensure the basic living of urban residents whose per capita income is lower than the minimum living allowance standard of local residents. The program in China originated from the pilot program of local governments. In June 1993, Shanghai took the lead in establishing the minimum living allowance program for urban residents, and in December of the same year, Xiamen became the second city in China to implement the program. By the end of 1995, 12 cities had established the system. In May 1997, the number increased to 206, accounting for about one third of cities in China.15 In September 1997, the State Council issued the Notice on Establishing the Minimum Living Allowance Program for Urban Residents Nationwide, requiring the accelerated construction of the system. By the end of September 1999, the system had been established in all 668 cities and 1638 towns where people’s governments at the county level were located, covering more than 2.6 million people nationwide.16 In September 1999, the State Council promulgated the Regulations on the Minimum Living Allowance for Urban Residents, which marked the establishment of the minimum living allowance program for urban residents, and the program went on the track of standardization and institutionalization. By the end of 2000, a total of 4.026 million urban residents have received minimum living allowance, and 2.72 billion yuan had been spent on the minimum living allowance for urban residents.17 From 2001 to 2011, the program gradually covered all qualified households, effectively ensuring the basic living conditions of the urban poor. By the end of 2011, a total of 11.457 million households and 22.768 million people had received urban subsistence allowance, and the government at all levels had spent 65.99 billion yuan on urban subsistence allowances. The national average standard for urban subsistence allowances was 287.6 yuan per person per month, and the average monthly subsidy for urban subsistence allowances was 240.3 yuan per person,18 as shown in Table 15.1.

15.1.2.2

Minimum Living Allowance Program for Rural Residents

The minimum living allowance program for rural residents was also first piloted by local governments. On December 11, 1995, Wuming County in Guangxi Zhuang Autonomous Region promulgated the Relief Measures for Rural Minimum Living Security Line in Wuming County, which was the first county-level rural minimum living guarantee system document issued in China and it went into effect in January 1, 1996.19 In 1996, the Ministry of Civil Affairs issued two guiding documents, 15

Jing et al. [11, p. 132]. Liao [10, p. 54]. 17 Ministry of Civil Affairs of PRC [12]. 18 Ministry of Civil Affairs of PRC [13]. 19 Liao [10, p. 146]. 16

15.1 The General Description of China’s Social Assistance System

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Table 15.1 Development of China’s urban subsistence allowance in 2001–2011 Year

Population (per 10,000)

Annual growth rate (%)

Monthly average standard (yuan/person)

Monthly actual subsidy (yuan/person)

Annual financial expenditure (hundred million yuan)

2001

1170.7

190.8

–

–

–

2002

2064.7

76.4

–

52

108.7

2003

2246.8

2004

2205

2005 2006

149

58

151

− 1.9

8.8

152.0

65.0

172.7

2234.2

1.3

156.0

72.3

191.9

2240.1

0.3

169.6

83.6

224.2

2007

2272.1

1.4

182.4

102.7

277.4

2008

2334.8

2.8

205.3

143.7

393.4

2009

2345.6

0.5

227.8

172.0

482.1

2010

2310.5

− 1.5

251.2

189.0

524.7

2011

2276.8

− 1.5

287.6

240.3

659.9

Source Ministry of Civil Affairs of PRC, Statistical Bulletin on the Development of Civil Affairs in 2001–2009, and Statistical Communique on the Development of Social Services in 2010–2011

namely, the Opinions on Accelerating the Construction of the Rural Social Security System and the Guiding Plan for the Construction of the Rural Social Security System, proposing that the construction of the rural subsistence allowance system should be taken as the focus in all places in the process of constructing the rural social security system. At the end of 1997, the rural subsistence allowance system was initially established in 997 counties and cities.20 In 2002, the 16th National Congress of the CPC proposed to “develop social relief and welfare programs in urban and rural areas. Wherever conditions permit, we should try to establish systems of old-age pensions, medical insurance and subsistence allowances in rural areas”.21 In 2003, the Decision of the CCCPC on Some Issues Concerning the Improvement of the Socialist Market Economy proposed that “the rural old-age security must be based on families and must be combined with community security and state relief. Where possible, we should explore the establishment of the minimum living allowance program for rural residents”.22 By the end of 2005, the minimum living allowance program for rural residents had been established in 13 provinces and 1308 counties and cities, providing minimum living allowances for 4.061 million households with 8.250 million villagers. By the end of 2006, the minimum living allowance system had been established in 23 provinces and 2133 counties and cities, providing minimum living allowance for 7.772 million 20

Jing et al. [7, pp. 28–29]. Jiang [11, pp. 28–29]. 22 Reference [14]. 21

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Table 15.2 Development of the rural subsistence allowance in 2007–2011 Year

Population (per 10,000)

Annual growth rate (%)

Monthly average standard (yuan/person)

Monthly actual subsidy (yuan/person)

Annual financial expenditure (hundred million yuan)

2007

3566.3

123.9

70

38.8

109.1

2008

4305.5

20.7

82.3

50.4

228.7

2009

4760.0

10.6

100.84

68

363.0

2010

5214.0

9.5

117.0

74

445.0

2011

5305.7

1.8

143.2

106.1

667.7

Source Ministry of Civil Affairs of PRC, Statistical Bulletin on the Development of Civil Affairs in 2007–2009 and Statistical Communique on the Development of Social Services in 2010–2011

families covering 15.931 million people.23 In July 2007, the State Council issued the Notice on Establishing the Minimum Living Allowance Program for Rural Residents, and decided to establish the minimum living allowance program for rural residents throughout the country, elevating the rural subsistence allowance system to the level of national policy. Since 2007, the rural subsistence allowance system has developed rapidly, with the number of beneficiaries increasing year by year. The financial input and subsidy standards of governments at all levels have steadily increased. By the end of 2011, there were 26.728 million rural households receiving subsistence allowances, covering 53.057 million people. The government at all levels spent a total of 66.77 billion yuan on subsistence allowances in rural areas. Details are shown in Table 15.2.

15.1.2.3

Five Guarantees Granted to Farmers

As a social assistance system with Chinese characteristics, the system of five guarantees granted for farmers plays an extremely important role in ensuring the basic life of the vulnerable households, maintaining social stability and realizing fair social development. It was established in 1956 in Article 53 in the Standard Charter for Advanced Agricultural Production Cooperatives that “agricultural production cooperatives shall provide the old, weak, orphaned, widowed and disabled members lacking the ability to work, being in total disability or having nothing to depend on in production and daily life, with proper arrangements and care to ensure that they have adequate supply of food, clothes and firewood, that the young have access to education and that the dead are properly buried, that is, enabling them to be supported over the life cycle.”24 This provision became the origin of the current rural five guarantees system. 23 24

Ministry of Civil Affairs of PRC [15]. Reference [16].

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In the era of planned economy, the system of five guarantees in rural areas belonged to the rural collective welfare undertaking, and rural collective economic organizations were responsible for providing the funds and materials needed for the program. After the reform and opening-up, the rural areas implemented the household responsibility contract system, and the traditional rural collective economy was weakened, thus leading to a series of problems in the work of the five guarantees. In January 1994, the State Council promulgated the Regulations on the Five Guarantees for Rural Residents, which for the first time clearly defined the recipients, nature, contents and forms of the five guarantees for rural residents, and promoted the legalization of the program. Since the beginning of the twenty-first century, with the implementation of rural reforms of taxes and fees, the five guarantees scheme in rural areas are faced with many problems including shortage of funds and low rate of centralized support. To this end, in January 2006, the State Council promulgated the newly revised Regulations on the Five Guarantees for Rural Residents, which included the five guarantees for rural residents in the scope of public finance. The funds for the five guarantees were then arranged by local people’s governments in their budgets, and the central government shall provide appropriate subsidies for the five guarantees for rural residents in financially difficult areas, forming a system combining state guarantee, collective subsidy and assistance from the masses. In 2006, 4.68 million rural households, or 5.033 million people were covered by the scheme. From 2007 to 2011, the number of rural residents under centralized support by the five guarantees system increased steadily and the annual average of centralized support increased accordingly. The number of people supported under scattered support has been decreasing year by year, with the annual average level raised step by step. The details are shown in Table 15.3. Table 15.3 Statistics on the development of the five guarantees granted to farmers in 2006–2011 Year

Total household (per thousand households)

Total population (per thousand people)

Centralized support (per thousand people)

2006

468

503.3

2007

499

531.3

138.0

1953

393.3

1432

2008

521.9

548.6

155.6

2176.1

393.0

1624.4

2009

529.4

553.4

171.8

2587.49

381.6

1842.71

2010

534.1

556.3

177.4

2951.5

378.9

2102.1

2011

530.2

551

184.5

3399.7

366.5

2470.5

–

Annual average of centralized support standard (yuan/person) –

Scattered support (per thousand people) –

Annual average of scattered support standard (yuan/person) –

Source Ministry of Civil Affairs of PRC, Statistical Bulletin on the Development of Civil Affairs from 2006 to 2009 and Statistical Communique on the Development of Social Services in 2010–2011

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15.1.3 Main Problems of Social Assistance System in China China has established a relatively complete living assistance system for urban and rural residents, as well as five guarantee households in rural areas. However, it is undeniable that the following problems still exist in the implementation of the existing social assistance system.

15.1.3.1

Low Standard and Narrow Coverage

In general, the level of social assistance in China is not high. In 2011, the annual per capita disposable income of urban residents nationwide was 21,810 yuan, and the monthly per capita disposable income was 1773.33 yuan. At then, the standard of the basic living allowance for entitled urban residents was only per capita 287.6 yuan per month, equivalent to 16.59% of the monthly per capita disposable income, while in implementation, the actual subsidy for urban residents entitled to basic living allowances monthly was per capita 240.3 yuan, equivalent to 13.86% of the monthly disposable income. Studies have shown that the minimum standard of living security for urban residents in many areas of the country is lower than the actual local poverty line (the line of guarantee to maintain a minimum living standard). In most places, the standard is only 80% of the poverty line, while in some places, the ratio is even lower than 60%.25 In 2011, the annual per capita net income of rural residents nationwide was 6977 yuan, and the monthly per capita net income was 581.42 yuan, while the monthly average per capita standard for rural subsistence allowances was only 143.2 yuan, equivalent to 24.63% of the monthly per capita net income. The monthly per capita actual subsidy for rural residents entitled to subsistence allowances was 106.1 yuan, or 18.16% of the monthly per capita net income of rural residents. In 2011, the average annual standard for the centralized five-guarantee support in rural China was 3399.7 yuan, equivalent to 48.73% of the annual per capita net income of rural residents. The average annual standard of decentralized five-guarantee support in rural areas was 2470.5 yuan, which is only 35.41% of the annual per capita net income of rural residents nationwide. As a result of the low standard of social assistance, the number of people covered is small and the universality of the social assistance is insufficient. Together with complex application procedures and strict family livelihood surveys, some urban and rural low-income families who need social assistance are in fact excluded from the program. Taking the year 2011 as an example. The total number of people receiving urban subsistence allowances, rural subsistence allowances, and rural five-guarantee assistance was 81.335 million, accounting for 6.04% of the country’s total population (1347.35 million). Among them, 22.768 million people enjoyed urban subsistence allowances, accounting for 3.29% of the total urban population (69.079 million) and 5305.7 people enjoyed rural subsistence allowances, accounting for 8.08% of the total rural population (656.56 million). According to the latest national poverty 25

Zheng [8, p. 5].

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alleviation standard of 2,300 yuan per capita per year, the country’s rural poverty alleviation target at the end of 2011 would be 122.38 million people. In that year, the total population receiving rural minimum living security and five-guarantee support was 58.567 million, that is, a mere proportion of 47.86% of the total rural poverty alleviation target. Compared with developed countries, the social assistance ratio in China is still low. Although poverty in developed countries is lower than that in developing countries, the percentage of people receiving social assistance in the total population is higher. For example, the percentage in New Zealand is 25%, in Australia 17.8%, in Britain 15.9%, in the United States 10%, and in Canada 9.9%.26

15.1.3.2

Insufficient Institutional Integration

There are two prominent disparities in the social assistance system. The first is the urban–rural disparity. The urban–rural separated governance is a prominent feature of China’s urban–rural dual social structure. Urban areas have been given priority in many social affairs, and the social assistance system is no exception. The establishment of the national subsistence allowance system was 10 years earlier in cities than in rural areas. So far, no unified national minimum subsistence guarantee regulations have been issued for farmers, and no uniform minimum subsistence guarantee policies for urban and rural residents have been formulated. For the assistance system under the urban–rural dual system, there is a clear gap between urban and rural areas in terms of financial inputs and standards. In 2011, the monthly per capita subsidy standard for urban subsistence allowances was 240.3 yuan, and for rural residents it was 106.1 yuan, that is, the former was 2.26 times of the latter. What’s more, considering the superimposed benefits of housing benefits and employment aid, etc., the gap between the urban and rural minimum living assistance may be more than 2 times or up to 3 times. Although urban–rural dual social assistance system has certain historical reasons and realistic rationality, this situation has led to the unfair distribution of resources in urban and rural areas, further expanding the urban–rural disparity. With the urbanization accelerating, more rural residents are transformed into urban residents, and the improvement in the country’s financial strength, the urban–rural dual social assistance system is increasingly antagonistic to the basic requirements of integrated urban–rural development. Thus, it’s necessary to accelerate the coordination and integration of urban and rural social assistance systems. The second is the division of administration. With the increasing number of the social assistance projects and the expansion of the special social assistance system, the number of competent authorities for social assistance administration is increasing. The civil affairs departments are in charge of minimum living security, rural fiveguarantee support, medical assistance, disaster relief, and homeless beggar assistance nationwide. Employment assistance, education assistance, housing assistance and legal assistance are under the governance of the social security department, education 26

See Footnote 25.

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department, housing department and judicial department respectively. This division of administration has led to the division and disconnection between the government and society, between policies, and between departments. It has also resulted in the dispersal of information resources and the lack of information sharing mechanisms for social assistance. At the meanwhile, there are overlapping and blank areas in social assistance supply as well as mayn other chaotic situations, which will waste the limited social assistance resources.

15.1.3.3

Incompetent Operating Mechanism and Frequent Moral Hazard

During the implementation of the urban and rural minimum living guarantee system, a series of moral hazards have occurred due to the incompetent operating mechanism, especially the entry, monitoring and exit mechanisms. The existence of moral hazards not only departs from the original intention of social assistance, but also runs counter to fairness in social assistance. There are three problems in the operating mechanism. The first is that the screening mechanism is not rigorous. In the process of deciding on urban and rural minimum living guarantee objects, for various reasons, many “free-riding” behaviors occurred. As a result, the poor who are qualified for the scheme are not included while the “rich” have the chance to be entitled. What’s more ridiculous, some people are still granted assistance benefits even after they died. These phenomena are not uncommon in urban and rural minimum living security systems. The second is the lack of incentives, resulting in “poverty trap” and “welfare dependence”. The standard of social assistance in China has always been low. There should have no “poverty trap” or “welfare dependency”. As stipulated that the amount of assistance is equal to the government’s assistance standard minus the applicant’s actual income, some recipients intend to enjoy state security for free, rather than increase income through their labor, thus generating the phenomenon of “poverty trap”. This has been revealed by numerous studies, including ours. In addition, due to deficiencies in policy design, some subsistence allowance recipients are granted benefits from more than one social assistance schemes. This also blocks their initiative to works and leads to “welfare dependence”. The third is that the monitoring mechanism is not sensitive. The minimum living guarantee system was originally designed with a dynamic monitoring mechanism, which ensures that the benefits will be stopped after the objects die. However, in operation, benefits are continued to be given out to those who have passed away. In addition, according to policies, those households whose income exceeds the poverty line will be disqualified. Nevertheless, some beneficiaries do not report their real income and continue to receive subsistence allowances, treating it as a free lunch.

15.1 The General Description of China’s Social Assistance System

15.1.3.4

359

Insufficient Professional Staff

With the social assistance projects and the number of beneficiaries increasing, the workload of this career has also greatly increased. However, the social assistance working team has been growing slowly and is far from meeting practical needs. In China, the social assistance work especially for the project of the urban and rural subsistence allowance, mainly depends on the staff from the civil affairs departments. At the community level, there are the most work in this regard but equipped with the fewest workers. Therefore, a staff member are often overwhelmed by multiple functions. For example, in Jinping County of Honghe Hani and Yi Autonomous Prefecture, Yunnan Province, at the end of 2011, there were 88,000 receivers of rural subsistence allowances, accounting for 43% of the county’s rural population. However, the civil affairs bureau had less than 5 people who were specialized in this area of work, and they were seriously overloaded. In addition, social assistance is a policy-oriented professional service that should be handled by professional institutions and specialized personnel. However, most people involved in the management and provision of social assistance have not received professional training. They have not grasped the basic knowledge and basic principles of social assistance, and are not familiar with the regulation and policy requirements of social assistance either. In particular, the staff for the management of minimum living security in grassroots are mainly the cadres of sub-districts, local communities and village committees. They usually have a low level of education and lack relevant professional knowledge and skills. Moreover, their working environment and facilities equipped are outdated and in some places the manual statistics is still in use.

15.1.3.5

Low Level of Legal System

It is clearly stipulated in the Constitution that the country should establish a social security system that is commensurate with the level of economic development. People have the right to obtain material assistance from the state when they encounter difficulties. On October 28, 2010, the 17th Meeting of the Standing Committee of the National People’s Congress passed the Social Insurance Law, which provided a solid legal foundation for the operation of the social insurance system. For the same reason, if China is to establish the social assistance system in a modern society, it is a must to legally define the social assistance rights of the people as well as the various rights and obligations for various parties in the operation of social assistance through the law. However, China has not yet formulated and promulgated the a nationally unified law on social assistance. In 2009, the Ministry of Civil Affairs submitted the Draft of the Social Assistance Law to the Legislative Affairs Office of the State Council. The draft went through the stage of soliciting opinions from the whole people. But, because the content included was too complicated, the draft was not passed by the State Council, nor has it entered the legislative process of

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the National People’s Congress.27 At present, the social assistance work is mainly administrated by various regulations, decisions and notices issued by the central and local governments, representing a prominent feature of “policy governance”. Due to the lack of uniform legal norms, relevant government departments understand and implement the social assistance policy from their own standpoints. The randomness and fragmentation in the social assistance management have weakened the effect of the system. The solution to the above problems lies in accelerating the universal integration of the social assistance system. Through universal integration, the social assistance system can be improved in terms of uniformity, standardization, fairness and efficiency, so that it can contribute to the baseline equality of the social welfare system.

15.2 The Idea and Ways of the Universal Integration of Social Assistance System To realzie the universal integration of the social assistance system, it is necessary to have clear ideas and choose feasible ways.

15.2.1 Ideas of Universal Integration of Social Assistance System 15.2.1.1

Change Ideas and Protect Civil Rights

In essence, social policy is a scheme of social value distribution formulated by authorities, which contains certain value concepts, value choices and value trends. The social assistance policy, as a social action of poverty alleviation and relief, embodies certain values as well. To build a universally integrated social assistance system, it is more urgent to decide the value underpinning behind the policy rather than the design or implementation of schemes. As the social assistance in China develops, the value concept is also changing, and there appear some inappropriate values needing to be updated. First, we must change the idea of bestowing blessings to guaranteeing fundamental rights. Traditionally, a considerable number of social assistance practitioners often expect and ask the recipients to be “thankful” or even “grateful”, which seriously deviates from the real intention of social assistance. According to the value concept of modern social assistance, the right to survival is the most fundamental right of members of society, the right to receive social assistance is the basic right of the poor, and providing social assistance is the obligatory duty of the state and society. 27

Zheng [17].

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361

Second, we must change the material-oriented concept into people-oriented concept. Traditional social relief emphasizes the provision of financial or in-kind assistance to the poor, ignoring the potential and capacity building of the beneficiaries to some extent. Modern social assistance should explore the advantages of beneficiaries and tap resources from the environment they are in. Third, we must transform the concept of individual poverty into the concept of social poverty. The concept of individual poverty attributes poverty to individual factors and holds individuals fully responsible for their situation. While according to the social poverty view, poverty is mainly caused by the social structure, and should be solved from the social perspective. In traditional Chinese culture, the concept of individual poverty has always held a dominant position, influencing not only the behavior of the donor but also the psychology of the recipient. Only by changing the view of individual poverty to the view of social poverty can we provide a solid ideological foundation for the construction of a universally integrated social assistance system.

15.2.1.2

Establish a Baseline and Prioritize Social Assistance

Social assistance is a baseline welfare system that guarantees the minimum living standard of poor groups. It is an important aspect of ensuring the right to subsistence of poor groups and the cornerstone of other social welfare systems. In this sense, the social assistance system is recognized as the last “safety net” of social security. “If the foundation is weak, the earth will shake.” In the construction of the social welfare system, the social assistance system should have undoubted priority, which has been proved by historical experience at home and abroad. In the current world, great importance is still attached to the social assistance system even in Western developed countries where the social insurance system is at the core of the social security system. We can even say that a developing country can do without a social insurance system or an inclusive public welfare system, but it cannot do without a social assistance system. How to give priority to the development of social relief system that bears the function of baseline equality? Three types of priorities need to be achieved. The first is basic living needs. Social assistance is a social welfare system that provides assistance in time of need. We should place the minimum living allowance program for rural and non-working urban residents at the top of the social welfare system, and those programs putting icing on the cake at the back, so as to give priority to solving people’s most basic needs. The second is financial input. Public financial input for social welfare expenditure should prioritize social assistance spending and ensure timely and full funding of the minimum living allowance, so as to ensure that the survival of poor groups is not threatened by insufficient inputs. The third is improvement in standards. In recent years, although the standard of minimum living allowances for rural and non-working urban residents has been raised year by year, the absolute amount is still quite small. In 2011, the monthly

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standard of basic living allowances per capita in cities was 287.6 yuan, with only 9.59 yuan per day on average. The monthly per capita standard for basic living allowances in rural areas was 143.2 yuan, that is, 4.77 yuan per day on average. The report of the 18th National Congress of the CPC called for completing the building of a moderately prosperous society in all respects. But without the three priorities mentioned above, it is difficult for the current 81.335 million recipients of social assistance to make a leap from poverty to adequate food and clothing and then to a well-off society within eight years.

15.2.1.3

Government Predominance and Social Participation

The government is the primary responsible body for the universal integration of the social assistance system. It assumes legal, political, responsibility and ethical responsibilities. Government predominance means it has unshakable “rigid responsibility”, which is mainly embodied in the following three aspects. The first is to enact laws about social assistance. It is a common practice in the history of social welfare development in the world to promote the establishment and improvement of the social assistance system through national legislation. The British government issued the Poor Law in 1601 and in 1834 twice to establish a governmentled social assistance system. The Swedish government passed the Social Welfare and Social Assistance Act in 1957, thus establishing the modern social assistance system in the country. The legislation of social assistance in China is lagging behind, so it is necessary to speed up the legislative process of social assistance and to issue and implement the law on social assistance at an early date. The second is to formulate social assistance policies. Since the founding of the People’s Republic of China, the government has formulated and implemented a series of policies on social assistance, which has promoted the development of the career. In the process of building a universally integrated social relief system, there are still a series of problems that require the government to formulate new policies to regulate and standardize, such as the integration of the rural minimum subsistence scheme and rural five-guarantee program, as well as policies for the connection and overall planning of urban and rural minimum living standards and so on. The third is to provide funds for social assistance. Along with the development of the national economy and the increase in fiscal revenue, the government should establish an linkage mechanism between financial income and the minimum living standard. It is necessary to promote the formation of a scientific proportion among the minimum living standard, unemployment insurance and the minimum wage standard, and enhance the scientific nature and sustainability of social assistance on the basis of increasing funding for social assistance, so as to ensure that social assistance recipients can share the fruits of economic development. The government shall shoulder the main responsibility of social assistance, but it is not the unitary subject of benefits provision. Non-governmental entities shall be encouraged to participate in the process, and non-profit organizations including voluntary organizations, charities and others shall be particularly mobilized to play a role, in order to enhance the

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comprehensive strength of social assistance supply, enlarge the coverage of social assistance, and improve the quality of social assistance services.

15.2.1.4

Urban–Rural Integration

Due to the urban–rural dual economic structure and the policy of prioritizing urban over rural areas, social assistance systems with the subsistence allowance system at the core in urban and rural areas have been presenting large disparities for a long time, such as in the allocation of resources, management system, operation mechanism, scope, level and operation mode in the subsistence allowance system. The urban– rural gap in social assistance has created new social inequities, which goes against the value concept of baseline fairness. From the perspective of realizing baseline equality in social welfare, a balance between urban and rural social assistance systems should be a breakthrough point of balancing urban and rural social welfare systems, which proposes the least difficulty as well. The key task of balancing urban and rural social assistance systems is to integrate the urban and rural minimum living allowance programs. Two specific ways have been concluded based on our research. One way is to implement “one system, two standards”. In July 2008, the 3rd Standing Committee of the National People’s Congress of Chongqing passed the Regulations on Minimum Living Allowance for Rural and Non-Working Urban Residents in Chongqing, which proposed to establish the minimum living allowance program for residents in urban and rural areas. Security standards with urban–rural differences will be implemented to gradually narrow the gap between urban and rural security standards. The other way is to implement “one system, one standard”. For example, Suzhou not only established the minimum living allowance program of urban–rural integration, but also realized the unification of the urban and rural standards. The minimum living allowance programs for urban and rural residents were set up in Suzhou in 1996 and 1998 respectively. The efforts of integration began in 1998. In 2005, Suzhou Industrial Park took the lead in realizing the merger of urban and rural subsistence allowance standards in the province. Kunshan City in 2008, and Wujiang City, Wuzhong District, Xiangcheng District and High-Tech Zone in 2010 successively realized the urban and rural integration in subsistence allowance standards. Since July 2011, the urban and rural minimum living allowance standard has been raised to 500 yuan per month, which marks the realization of the urban–rural integration of the program. From July 1, 2012, the subsistence allowance standard for urban and rural residents in Suzhou was further raised to 570 yuan per month.

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15.2.2 Ways of Universal Integration of Social Assistance System The universal integration of the social assistance system is rich in content and programs, including the universal integration of the subjects, resources, mechanisms and channels.

15.2.2.1

Integration of Social Assistance Provision Subjects

The subjects of social assistance provision include the government and nongovernmental entities. The government is the primary responsible entity, so the integration is firstly within the government system, which mainly contains two aspects. The first is vertical integration. From the vertical perspective, the government system in China is composed of five levels: the central government, the provincial (municipal) government, the municipal (prefecture) government, the county (district) government, and the township and sub-district governments. Governments at different levels are all the responsible subjects of social assistance, bearing distinct responsibilities respectively. The vertical integration within the government system is, in essence, to define the responsibilities of governments at different levels. In this process, the key lies in the sharing proportion of fiscal responsibility, that is, a balance point and reasonable range of fiscal responsibility sharing between the central government and local governments must be determined. The second is horizontal integration. From the horizontal perspective, it is necessary to realize the integration of multiple government departments at the same level. The civil affairs departments are the competent department of social assistance in China, but others, such as departments of human resources and social security, education, health, housing and judicial administration also bear the responsibilities in social assistance supply. Mass organizations with quasi-government nature, such as trade unions, communist youth leagues, women’s federations, and disabled persons’ federations play roles in assistance supply as well. Due to the existence of functional division and departmental interests, horizontal integration is both imperative and difficult. The government assumes the primary responsibility for social assistance, but it is not the only responsible entity. Non-governmental entities should also be given full play in this undertaking. The integration among non-governmental entities should be the second key point of integrating social assistance responsible parties. Two points should be stressed here. First, the social responsibility of enterprises should be emphasized. Companies of different ownership types should take the initiative to assume the responsibility of social assistance, among which large and mediumsized state-owned enterprises are especially obligatory. Enterprises mainly provide in-kind and cash assistance. Second, it is a must to give full play to the role of social organizations. There are three types of social organizations in China, namely, social

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groups, private non-enterprise units and foundations. They all have a fine tradition of shouldering social assistance responsibilities. The nation should vigorously develop social organizations and rely on their natural advantages and provocative roles in social relief.

15.2.2.2

Integration of Social Assistance Resources

Social assistance resources mainly include financial, material, human capital and cultural resources. It is necessary to realize the effective allocation of these four kinds of resources, improve the efficiency of resources and reduce resource waste. In terms of financial resources, it is necessary to integrate government financial funds and funds donated by non-governmental entities effectively, implement financial regulations and policies strictly, allocate social assistance funds reasonably, improve the transparency and openness of the use of relief funds, strengthen the supervision of social assistance funds, and ensure the maximization of the effectiveness of financial resources. Regarding material resources, relief materials provided by governments at all levels and donated by non-governmental entities should be comprehensively coordinated, sorted according to the contents and needs of relief recipients, and given to meet the urgent needs of assistance recipients first so as to make the most of their usage. In terms of human resources, it is necessary to continue to expand the number of full-time and part-time social assistance teams, give full play to the respective advantages of government workers, personnel of specific agencies and non-governmental volunteer teams, and strengthen the synergy among them, to provide convenient and efficient social assistance services. With regard to cultural resources, they are the “spiritual force” for the development of social assistance. Social assistance is deeply rooted in cultural tradition. The Chinese nation has a profound and long-standing tradition of helping people in need, and the folk society has rich experience in mutual assistance. It is necessary to publicize and promote the spirit of social mutual assistance, improve the public awareness of mutual assistance, and enhance the initiative and consciousness of mutual assistance. When it comes to the integration of the four types of assistance resources, it is necessary to establish flexible and diversified resource combination forms according to the actual needs of receivers, form specific and feasible resource combination plans, and provide targeted “resource combination support”, so as to reduce imbalance in resource allocation.

15.2.2.3

Integration of Social Assistance Mechanisms

There are various assistance mechanisms in social relief activities. The organic integration of them can not only enhance efficiency, but also improve the fairness of social assistance.

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First, it is necessary to combine the mandatory mechanism with the voluntary mechanism. The former is an administrative mechanism, which has special advantages and can improve the relief efficiency under special circumstances (such as disaster relief). Through administrative orders and commands, it can quickly mobilize assistance resources, concentrate relief forces, timely transport and distribute assistance materials, and meet temporary living needs of beneficiaries. The latter mainly relies on the charity and volunteer spirit of members of society to provide cash, in-kind or service support for recipients voluntarily and gratuitously through charities or non-voluntary organizations. The voluntary mechanism is rooted in urban and rural local communities, and is worth advocating due to its understanding and familiarity of the real needs of the lowest social class. Second, it is necessary to combine entry mechanism with exit mechanism. The specific situation of social assistance recipients is dynamic and developmental, and universally there are no permanent assistance recipients, so it is normal to have replacement of assistance recipients. In the entry link, it is necessary to establish accurate identification and screening indicators to effectively prevent “opportunists” who do not meet the conditions. Also, it is necessary to establish a dynamic monitoring mechanism to timely grasp the changes in the situation of recipients and timely adjust the “relief reservoir” and clean up those who no longer meet the conditions, so as to reduce the “relief burden” and “relief waste”, and ensure that assistance resources are really used where it is needed most, so as to maximize the effect of social assistance. Third, combine incentive mechanism with punishment mechanism. The incentive mechanism is to encourage recipients to develop the spirit of self-improvement and self-reliance. We should provide employment skill training for those with the ability to work, create employment opportunities, provide jobs, increase the source of income, and help them get out of life difficulties. The punishment mechanism is to take effective measures to prevent and punish all kinds of moral hazards and reduce individual recipients from falling into welfare traps and welfare dependence.

15.2.2.4

Integration of Social Assistance Channels

The situations of social assistance recipients vary greatly, and their diverse needs give rise to the diversity of social assistance means. Different assistance methods have their own advantages. They should be integrated to form joint efforts. There are mainly five channels of social assistance provision. The first is cash transfer. The biggest advantage of this channel is that it can provide the recipients with the choice and flexibility of living arrangements. By directly delivering cash subsidies, the receivers are allowed to solve pressing living difficulties according to their actual needs. The second is vouchers. Some assistance recipients may not be able to apply for relief funds. At this point it is a more effective way to give out vouchers to meet their specific needs. Departments in charge of social assistance can design and issue vouchers with specific purposes, such as for education, transportation and

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food, according to the actual needs, with which recipients can directly buy goods or services, so as to improve the pertinence and effectiveness of social assistance. To use voucher assistance, it is necessary to establish a prevention mechanism, so as to avoid the possible misappropriation of funds and welfare corruption. The third is in-kind transfer. Some relief recipients may be in need of specific goods or services urgently. They can be directly provided with food, medicine, oil and salt, clothing, quilts, houses and tents. The fourth is work-relief. For those who have the ability to work, assistance may be in the form of posts for public good or other work positions so that they can earn wages or work remuneration. Work-relief is the most suitable for living relief and disaster relief. It can not only help recipients to increase income, but also can cultivate their enterprising spirit and reduce their psychological stress caused by relying on subsistence allowance, so as to reduce social discrimination or social exclusion. The fifth is service assistance. For people with low or no ability to take care of themselves, what they need most may not be cash or material objects, but services such as daily living care for disabled elderly, daily living care and rehabilitation training for people with disabilities. For such assistance recipients, providing services is the most humane and effective way of assistance. The government can directly provide services or purchase services to meet their basic needs.

15.3 The Steps and Countermeasures of the Universal Integration of Social Assistance System The universal integration of the social assistance system cannot be accomplished in one move, but should be carried out step by step.

15.3.1 Procedures of Universal Integration To realize the universal integration of social assistance system mainly includes three steps, each with different tasks and requirements. The first step is to establish the universally integrated minimum living allowance program for urban and rural areas. The second step is to establish the living security system based in the integration of basic medical insurance for urban employees, urban resident as well as the new rural cooperative medical scheme.” The last step is to promote the universal integration of the social assistance system with relevant systems.

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15.3.1.1

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Establish Urban–Rural Integrated Minimum Living Security System

The basic goal of the first step is to establish the urban–rural integrated minimum living allowance program with the following four tasks. First, scientifically measure the minimum living standard and accurately calculate the number of low-income households. “Setting standards and checking quantity” is the basis for universal integration. In September 2012, the State Council issued Opinions on Further Strengthening and Improving the Minimum Living Security Work, proposing to “strive to build a working pattern of minimum living allowances featuring scientific standards, accurate objects, fair treatment and orderly entry and exit.” Scientific determination of minimum living standards is the premise to improve the scientific nature of the program and also an important basis for defining the scope of the program, verifying beneficiaries, determining subsidy level and arranging subsidy financial funds. At present, there are still quite a few regions in China lacking solid investigation, necessary verification and scientific measurement in the process of determining urban and rural subsistence allowance standards. Some areas simply refer to the national poverty alleviation standard, some directly use the national average subsistence allowance standard, and some are even in a state of chaos. Unscientific and unreasonable measurement of basic living allowance is bound to result in either too wide or too narrow scope of population covered, which goes against the basic principle of “letting the recipients receive the benefits to which they are entitled.” Scientific measurement of the subsistence allowance standard involves many factors and has considerable difficulties, but it is not impossible to accomplish. The key is to choose the right measurement method. At present, there are three commonly used methods, each based on basic living expenses, Engle’s coefficient and consumption expenditure ratio respectively. They all have distinct advantages. We should combine these three methods and let them verify each other to decide on unified, reasonable standards of basic living allowances.28 Second, optimize public financial investment and strengthen fund management for subsistence allowances. Public financial input is the economic foundation for the stable operation and sustainable development of the subsistence allowance system. As the country’s economic strength and fiscal revenue increase, and the number of people benefiting from subsistence allowances and the standard of subsistence allowances continue to improve, increasing and optimizing public financial input has become a “rigid task”. Therefore, a linkage mechanism should be established to ensure the subsistence allowance standards grow in step with national income and fiscal income, so as to clearly specify the minimum proportion and growth mechanism of subsistence allowances in public financial expenditure. It is necessary to form a unified special fund for urban and rural residents entitled to subsistence allowances by integrating regular subsistence allowances, price subsidies, holiday subsidies and other temporary or one-time living allowances. At the same time, it is necessary to 28

The research group calculated the minimum life guarantee standards in Xiamen as an example.

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strengthen the management of funds for subsistence allowances, improve the efficiency of their use, and strictly implement the Measures for Administration of Urban and Rural Minimum Living Security Funds. This can be realized in the following four aspects. The first is to ensure scientific and sophisticated budget management. It is necessary to rationally compile scientific, complete budgets for urban and rural subsistence allowances. It is also necessary to strengthen the implementation of budget management, focus on performance evaluation, improve methods for allocating funds, and make budgetary expenditures more balanced and effective. The second is to guarantee dynamic adjustment of security standards. It is a must to adjust the subsistence allowance standards in a timely manner in light of economic and social development and changes in prices. It is reasonable to synchronize the increase and decrease of urban and rural minimum living standards with CPI. The third is to ensure open and transparent information. Relevant policies, data and other information shall be made public in accordance with the law. And the system of publicizing the evaluation and approval of the recipients of subsistence allowances as well as the release of funds shall be strictly implemented, so as to ensure that the subsidy funds are used for the disadvantaged groups. The objective is to realize the goal of “letting the recipients receive the benefits to which they are entitled, and making the recipients unentitled withdraw timely”. The fourth is to ensure safe and standardized fund management norms. It is necessary to standardize the procedures for fund management, improve the supervision mechanism, and ensure that the urban and rural funds for subsistence allowances are properly managed, accounted for, and earmarked. The funds for urban and rural subsistence allowances should be included into in the fiscal budget of governments at the corresponding level, and be raised through multiple channels. For example, non-governmental entities should be guided and encouraged to provide donations and subsidies through preferential fiscal and tax policies. For fund allocation, the central government shall show policy inclination to regions of deep poverty, arduous security task and good work performance. Local governments and civil affairs departments shall allocate funds according to the number of receivers, difficulty degrees of local finance, as well as policy arrangements. A fund performance evaluation system should be set up to assess funds arrangement and management, budget implementation, safeguard measures, as well as the actual effect. In terms of distribution, we should ensure funds to be directly distributed to entitled households through banks, credit cooperatives and other financial agencies. Third, adhere to just, fair and open principles to standardize the operation of subsistence allowances. We should improve and perfect the procedures for providing basic living allowances, open up channels for the participation of rural and nonworking urban residents, and make more policy information available to them, to guarantee the open and transparent operation process, and fair and equitable results. The first aspect is to standardize application procedures. The applicant should apply for minimum subsistence allowances with the family as a unit, submit relevant data according to the regulation, and provide written statement of family income and property condition. Township people’s government (sub-district office), as the

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responsibility party for verification of the application for minimum living security, shall carry out detailed verification of the authenticity and completeness of the application materials and various declarations under the support of village authorities. The second aspect is to standardize democratic appraisal, that is to establish and perfect the subsistence security system and standardize the evaluation procedures, methods, contents and participants based on the authenticity evaluation of the applicant’s stated family income, property status and household survey results. The third aspect is to standardize the approval process. The civil affairs departments of the people’s governments at the county level are the responsible subjects of the examination and approval of subsistence allowances. It is necessary for them to adhere to democratic participation, openness and transparency of the approval process, ensure that the examination and approval results are in line with policies and regulations, and ensure that all allowances are guaranteed on the basis of strict standards. The fourth aspect is to standardize the publicity process. It is necessary to strictly implement the system of examining, approving and publicizing the minimum living standard allowances, standardize the contents, forms and time limits of public announcements, and ensure the authenticity and accuracy of public announcements. Also, we should establish and improve the information inquiry mechanism and objection review system for recipients of the subsistence security allowances and accept the supervision of the people. The fifth aspect is to standardize the dispatching process, that is to carry out social distribution of the minimum living allowance through banks, credit cooperatives and other financial institutions directly to the guaranteed family account to ensure the full amount of the minimum living allowance to be paid in a timely manner. Four, formulate the Social Assistance Law, and propel the legalization process. The Social Insurance Law has been promulgated and implemented, and the legislative process of social assistance should be accelerated. Legislation of social assistance in China has basically met two basic conditions. First, rich practical experience of social assistance has been accumulated. For example, the rural Five Guarantee system has been implemented for over 50 years, the minimum living allowance program for urban residents has been practiced for more than 10 years, and the minimum living allowance program for rural residents has been in operation for 5 years. These three social assistance programs have been continuously revised, adjusted and improved in concrete practice, and have accumulated experience and lessons. Second, the system of policies and regulations for social assistance has taken initial shape. Since the 1990s, relevant state departments have formulated and promulgated a series of social assistance policies and regulations to provide strong support for social assistance legislation, among which some are listed below: Notice on Establishing the Minimum Living Allowance Program for Urban Residents across the Country (1997), Regulations on the Minimum Living Security for Urban Residents (1999), Notice on Further Strengthening the Minimum Living Security for Urban Residents (2001), Regulations on the Work of Providing Five Guarantees (2006), Guiding Opinions on the Construction of Rural Five Guarantees Support Service Institutions (2006), Notice on Establishing the Minimum Living Allowance Program in Rural Areas

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across the Country (2007), National Provisional Evaluation Standards for the Standardization of Basic Living Allowances at the Community Level (2008), Measures for Identification of Urban Low-Income Families (2008), Notice on Further Strengthening the Identification of Urban Subsistence Allowances Recipients (2010), Guidance on Further Standardizing the Development and Adjustment of Minimum Living Security Standards for Rural And Non-Working Urban Residents (2011), Opinions on Further Strengthening and Improving Minimum Living Guarantee Work (2012), Measures for the Administration of Urban And Rural Minimum Living Security Funds (2012), Interim Measures for Grade Evaluation of Rural Five Guarantee Support Service Institutions (2012) and Measures for Examination and Approval of Minimum Living Security (Trial Implementation) (2012). These provide an important policy basis for the formulation of the Social Assistance Law.

15.3.1.2

Establish Living Security System of “Three Guarantees in One”

The system of “Three Guarantees” refers to three schemes of urban employee basic medical insurance, urban resident basic medical insurance and the new rural cooperative medical scheme. The goal of this step is to integrate the urban and rural subsistence allowance and the five guarantee system, and establish the “Three Guarantees in One” life security system with the following three specific tasks. First, narrow the urban–rural gap of standards of subsistence allowances and unify the system of subsistence allowances in urban and rural areas. Statistical analysis shows that between 2007 and 2011, the gap between urban and rural areas in the monthly per capita security standard and monthly per capita subsidy level of the recipients had been growing. From 2007 to 2011, the per capita monthly income gap between urban and rural residents increased from 112.4 yuan to 144.4 yuan, with an increase of 32 yuan. The monthly per capita subsidy gap between urban and rural areas increased from 63.9 yuan to 134.2 yuan, with an increase of 70 yuan. Details are shown in Table 15.4. Serious problems are reflected in Table 9.3. The widening gap between urban and rural subsistence allowances has generated the emergence of new social inequity within the two baseline welfare systems. This trend and phenomenon must be resolutely reversed. After realizing the integration of urban and rural subsistence allowance and system, it is necessary to increase the financial input in rural subsistence allowance, narrow the gap between the urban and rural subsistence allowance standards, finally realize the integration of urban and rural subsistence allowance standards, and ensure the realization of equal national treatment of subsistence allowance between urban and rural recipients. Second, integrate urban and rural subsistence allowances with Five Guarantees, and realize the unity of “Three Guarantees in One” system. The co-existence of the rural Five Guarantees, the urban subsistence allowance and rural subsistence allowance was caused by many reasons. But, with the development of economy and society, can this pattern be changed? We believe that this pattern complies with the

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Table 15.4 Statistical table of the urban–rural gap in subsistence allowances from 2007 to 2011 Year

Monthly per capita security standard (yuan)

Monthly per capita subsidy level (yuan)

Urban subsistence allowance

Rural subsistence allowance

Urban–rural gap

Urban subsistence allowance

Rural subsistence allowance

Urban–rural gap

2007

182.4

70

112.4

102.7

38.8

63.9

2008

205.3

82.3

123

143.7

50.4

93.3

2009

227.8

100.84

126.96

172.0

68

104

2010

251.2

117.0

134.2

189.0

74

122

2011

287.6

143.2

144.4

240.3

106.1

134.2

Source Compiled according to the statistical bulletin of the Ministry of Civil Affairs on the development of civil affairs in the current year

requirement of universality, but it is contrary to the need for integration, and more importantly, it is inconsistent with the national conditions that great changes have taken place in the basic living standards of rural and non-working urban residents. From the perspective of integration, this pattern is actually the “fragmentation” within the baseline welfare system. From a long-term perspective, it is inevitable to realize the integration of the three systems and establish an integrated life security system. Firstly, the target groups of the three systems have characteristics in common. In essence, the recipients of urban subsistence allowance, rural subsistence allowance and rural Five Guarantees are the poor and the difference lies in the fact that the objects of urban and rural subsistence allowance are families, and those of rural Five Guarantees are single elderly persons and orphans. Secondly, the three systems share the same money raising model. Urban subsistence allowance, rural subsistence allowance and rural Five Guarantees are all mainly dependent on the public finance support of the government and they differ in the responsibilities borne by governments at all levels. However, this difference is about the responsibility sharing within the government system but does not affect the government as a whole shouldering the main responsibility. Thirdly, the three systems have the same logic orientation in guarantees. They all follow the logic of “consequentialism” instead of “causationism” and include whoever suffers from poverty regardless of the causes involved. Finally, the three systems have the same competent government departments. Urban subsistence allowance, rural subsistence allowance and rural Five Guarantees are all managed by civil affairs departments, so the integration of the three is an “internal” issue rather than an “external” one for the civil affairs department. Therefore, it is not only necessary but also feasible to realize the integration of the three systems and establish a unified subsistence guarantee system. Third, narrow the gap in subsidies for the three systems and integrate them into one standard. According to the statistical analysis, there are two distinct phenomena in the monthly per capita subsidy level of the three systems from 2007 to 2011. The

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Table 15.5 Statistical table of monthly per capita subsidy gap of “three guarantees” from 2007 to 2011 Year

Urban subsistence allowance

Rural five guarantee

Rural subsistence allowance

Gap between urban subsistence allowance and urban Five Guarantee

Gap between five guarantee and rural subsistence allowance

2007

102.7

93.80

38.8

8.9

2008

143.7

76.55

50.4

66.45

16.15

2009

172.0

132.51

68

39.49

64.51

2010

189.0

146.95

74

42.05

72.95

2011

240.3

184.06

106.1

56.24

77.96

55

Source Compiled according to the statistical bulletin of the Ministry of Civil Affairs on the development of civil affairs in the current year Unit: yuan

first one is the “differential” phenomenon. The monthly per capita subsidy level of the urban recipients of subsistence allowance is the highest, followed by the rural recipients of the Five Guarantees, and the rural recipients of subsistence allowance are the lowest. The other is the trend of “differential expansion”. From 2007 to 2011, the monthly per capita subsidy gap between urban and rural recipients of subsistence allowances increased from 8.9 yuan to 56.24 yuan, with an increase of 47.34 yuan, while the monthly per capita subsidy gap between rural recipients of subsistence allowances increased from 55 yuan to 77.96 yuan, with an increase of 22.96 yuan with the details shown in Table 15.5. The phenomenon reflected in Table 15.5 can be summed up as stratification of the poor. In reality, there is stratification within the poor group, but the system of living security for the poor should not continue to “protect” and “solidify” this stratification, especially for the three systems who all belong to the baseline welfare system and strive to achieve baseline equality.

15.3.1.3

Promote the Integration of the Social Assistance System with Related Systems

The universal integration of the social assistance system includes not only internal integration but also external integration between the social assistance system and related systems. The first aspect is to promote connection between the social assistance system and the poverty alleviation system. At present, the rural subsistence allowance and poverty alleviation in China are managed by different departments, resulting in a lack of policy synergy. After the integration of the two systems, the recipients of subsistence allowance and beneficiaries of poverty alleviation can be distinguished. Farmers who have lost their labor force will receive subsistence allowance and those

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with the ability to work will receive poverty alleviation help, so as to raise the income of the latter to exceed the subsistence allowance standard. The second aspect is to integrate the subsistence assistance system with the employment insurance system. In the era of market economy, unemployment is the main cause of poverty, and re-employment is the cure to get rid of poverty. Therefore, for the recipients of subsistence allowance of with the ability to work, the most important thing is to strengthen vocational skill training, improve their employment skills, provide jobs, and help them return to employment again. Reducing one “zero-employment family” has more value than increasing one “low-income family”. The third aspect is to promote the connection between the social assistance system and the retirement pension system. Recipients of subsistence allowances include both the middle-aged and the elderly, and the two groups have different labor capacity and income potential. For recipients over 60 years old, it is feasible to combine the subsistence allowance system with the retirement pension system, and raise the subsistence allowance standard to the level equal to the basic old-age security standard. The fourth aspect is to promote the connection between the social assistance system and the education security system. Low-income families are also the families with the lowest educational affordability. The basic education for children of poor families is the fundamental way for the family to get rid of the “poverty cycle” or “poverty transmission”. Therefore, for children of low-income families, education assistance should be intensified. While maintaining the minimum living standard, public education should be provided for them, so as to enhance their poverty alleviation ability and potential of the whole family, and prevent “poverty trap”.

15.3.2 Countermeasures for Universal Integration of Social Assistance System 15.3.2.1

Unification of Management Bodies

The unification of management agencies means to make one government department manage social assistance affairs in a unified way. In this study, social assistance is defined as the baseline welfare system to guarantee the minimum living standard of the poor group, which provides a theoretical basis for the unification of management institutions. According to the current function division of government agencies in China, the conditions for the unification of management agencies are relatively mature. At the central government level, the Ministry of Civil Affairs is the competent authority, and within the ministry of civil affairs, the social assistance department is in charge of social assistance. In view of the actual situation in China, the following three problems need to be solved to realize the unification of management agencies. The first aspect is the independence of social assistance management agencies. The independence here does not refer to the establishment of a ministry of social assistance at the level of the central government, but to the fact that the Department of

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Social Assistance must be completely preserved as an independent agency whether it is located in the current Ministry of Civil Affairs or other ministries after the institutional reform in the future. Because in the social welfare system of modern society, social assistance, as the baseline welfare system, is the indispensable life security system. The construction of China’s social welfare system cannot be achieved without the social assistance system. The second aspect is the professionalization of social assistance management institutions. It is the basic condition for the scientific development of social assistance and the only way to improve the service quality of social assistance. To enhance professionalization, it is necessary to transfer the urban and rural medical assistance now in the charge of civil affairs departments to other government departments. Medical assistance belongs to the scope of medical security, and its operation logic is different from that of the urban and rural subsistence allowance system. In areas where the new rural cooperative medical scheme and the basic medical insurance for non-working urban residents have not yet been integrated, rural and urban medical assistance can be transferred to the health sector. In areas where the new rural cooperative medical scheme is integrated, with the basic medical insurance system for urban residents, rural–urban medical assistance can be transferred to the human resources and social security departments (e.g. Kunming, Yunnan and Chongqing). The third aspect is the specialization of special social assistance management. Education assistance, housing assistance, legal assistance and employment assistance are in the charge of education departments, housing and construction departments, judicial administration departments, and human resources and social security departments respectively.

15.3.2.2

Legal Construction for Management System

It is a citizen’s right to receive social assistance, which is endowed by law and can only be guaranteed by law. To realize the legalization of social assistance management system not only meets the objective requirements of building a legal society, but also guarantees the legal status of the social assistance system. For a long time, due to various reasons, China’s social assistance mainly depends on regulations and policies. “Policy governance” is the necessary stage of social assistance governance in China, but it cannot stay at that level forever. After many years of practice, the legislative conditions of Social Assistance Law has been basically mature, so it is necessary to formulate and promulgate the law as soon as possible, to clarify the nature and positioning of social assistance, the relationship between social assistance and social insurance, the relationship between social assistance and public welfare, system framework, internal relations of social assistance, government responsibility, funding guarantee, civil rights and responsibilities, supervision mechanism, incentives and constraints, handling mechanism, social assistance procedures, legal liability, etc., and provide legal basis for the universal integration of the social assistance system. It is necessary to give full play to the resultant effect of law management and policy management comprehensively with the social assistance law

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as the foundation, combining the social assistance regulations of the state council, department laws and local regulations.

15.3.2.3

Dynamic Adjustment Mechanism for Assistance Standards

The basic purpose of social assistance is to solve the problem of the poor people’s need for a minimum standard of living, which is a variable rather than a constant. With the change of economic and social conditions and the improvement of the overall quality of life, especially the continuous increase in the price level, the connotation and extension of the minimum standard of living are also changing. Throughout the history of the world, the minimum living allowance line has a distinct “rigid” feature, which needs to be adjusted timely according to changes in the level of economic and social development. In recent years, there are some prominent problems in the formulation and adjustment of China’s urban and rural subsistence allowance standards. For example, some regions lack necessary argumentation and scientific measurement, and simply refer to the poverty alleviation standard or the national average subsistence allowance standard to formulate and adjust local subsistence allowance standard, which cannot truly reflect the basic living needs of local residents and even leads to too wide coverage and affects the benefits of the recipients. In some other areas, the government failed to take the changes in the prices of daily necessities and the improvement of people’s living standards into consideration to adjust the subsistence allowance standards in a timely manner according to economic and social development and financial affordability. In May 2011, The Ministry of Civil Affairs, the National Development and Reform Commission, the Ministry of Finance and the National Bureau of Statistics jointly issued the Guiding Opinions on Further Regulating the Development and Adjustment of Minimum Living Security Standards for Urban and Rural Residents, proposing to “establish and perfect the linkage mechanism between urban and rural minimum living standards and pickup in price, and adjust the urban and rural minimum living standards on a regular basis as the prices of the bare necessities of life and the living standards increase.” From 2007 to 2011, the average monthly allowance for urban residents rose from 182.4 yuan per person to 287.6 yuan per person, with an increase of 105.2 yuan per person or 57.68%. The average monthly subsidy for urban subsistence allowances was raised from 102.7 yuan per person to 240.3 yuan per person, with an increase of 137.6 yuan per person or 133.98%. From 2007 to 2011, the average monthly subsistence allowance for rural residents increased from 70 yuan per person to 143.2 yuan per person, with an increase of 73.2 yuan per person, or 104.57%. The average monthly subsidy for rural subsistence allowances rose from 38.8 yuan per person to 106.1 yuan per person, with an increase of 67.3 yuan per person or 173.45%. Details are shown in Table 15.6.

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Table 15.6 Statistical table of dynamic adjustment of subsistence allowance standards in urban and rural areas from 2007 to 2011 Year

2007

2008

2009

2010

Average monthly subsistence allowance standard for 182.4 205.3 urban residents

227.8

251.2 287.6

Year-on-year growth rate (%)

7.55

12.55 10.96

Average monthly subsidy level for urban subsistence 102.7 143.7 allowances

172.0

10.27

2011

14.49

189.0 240.3

Year-on-year growth rate (%)

22.85

39.92 19.69

Average monthly subsistence allowance for rural residents

70

82.3

9.88

Year-on-year growth rate (%)

–

17.57 22.53

16.03

Average monthly subsidy level for rural subsistence allowances

38.8

50.4

74

Year-on-year growth rate (%)

–

29.90 34.92

27.14

100.84 117.0 143.2

68

8.82

22.39 106.1 43.38

Source Ministry of Civil Affairs, Statistic Bulletin on the Development of Civil Affairs for 2006– 2009 and Statistical Bulletin on Social Services Development for 2010–2011 Unit: yuan

15.3.2.4

Sustained Increase in Government Inputs

Public financial input is the main source and economic pillar of social assistance funds, which is statutory and mandatory, and the investment belongs to the second distribution of social wealth. From the perspective of economics, the rigid increase of the minimum living standard requires the government to increase public financial input year by year to prevent the minimum living standard of the poor population from decreasing. “Progressive increase of financial input” is not only an objective law for the social assistance development in China, but also an inevitable requirement for the construction of a universally integrated social assistance system. From 2006 to 2011, GDP in China increased from 21,613.4 billion yuan to 47,156.4 billion yuan, an increase of 25,543 billion yuan or 118.00%. National public revenue rose from 3876 billion yuan to 10,374 billion yuan, with an increase of 6498 billion yuan or 167.65%. From 2006 to 2011, the total public financial expenditure on urban subsistence allowance, rural subsistence allowance and rural Five Guarantees increased year by year, from 30.98 billion yuan in 2006 to 144.93 billion yuan in 2011, with an increase of 113.95 billion yuan and an increase of 2.68 times in five years. From 2006 to 2011, the proportion of government spending on the three systems rose steadily, from 0.8% in 2006 to 1.40% in 2011, as shown in Table 15.7.

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Table 15.7 Statistical table of financial expenditure for social assistance from 2006 to 2011 Year

2006

National gross domestic product

216,314 265,810 314,045 340,903 401,513 471,564

Year-on-year growth rate (%)

12.7

14.2

9.6

9.2

10.4

9.2

National public revenue

38,760

51,322

61,330

68,518

83,102

103,740

Year-on-year growth rate (%)

22.5

32.4

19.5

11.7

21.3

24.8

Expenditure on urban subsistence allowances

224.2

277.4

393.4

482.1

524.7

659.9

Expenditure on rural subsistence allowances

43.5

109.1

228.7

363.0

445.0

667.7

Expenditure on rural Five Guarantees

42.1

59.8

73.7

88.0

98.1

121.7

Total expenditure of “Three Guarantees”

309.8

446.3

695.8

933.1

1067.8

1449.3

Year-on-year growth rate (%)

–

44.06

55.90

34.10

14.44

35.73

0.87

1.13

1.36

1.28

1.40

Proportion of expenditure on “Three 0.80 Guarantees” in public finance revenue (%)

2007

2008

2009

2010

2011

Source Ministry of Civil Affairs, Statistic Bulletin on the Development of Civil Affairs for 2006– 2009; Statistical Bulletin on Social Services Development for 2010_2011; National Bureau of Statistics of China, National economic and social development statistical bulletin 2011 Unit: billion yuan

15.3.2.5

Accelerate the Informatization of Social Assistance

The fact that the information construction of social assistance in China is relatively backward has been an important reason leading up to a series of “illegal behaviors” (such as local protectionism and malfeasance in approval of social assistance beneficiaries). According to the Audit Results of National Social Security Funds released by the National Audit Office on August 2, 2012, by the end of 2011, there were 1657 counties in China that had not implemented information-based management of urban and rural subsistence allowances, accounting for 58.08% of the total number of county-level administrative units of 2853. Data and information of urban and rural subsistence allowance provided by civil affairs departments in some areas are incomplete and of low quality. In most areas, the information communication mechanism between civil affairs and other departments of public security, industry and commerce and local tax has not been established, which is unfavorable to the supervision and management of the work.29 Therefore, it is necessary to strengthen the information construction of social assistance as soon as possible.

29

Refer to the Audit Results of National Social Security Funds released by the National Audit Office, http://www.gov.cn/zwgk/2012-08/02/content_2196871.htm.

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First, it is conducive to improving the scientific level of social assistance decision-making. Through the information system, relevant data and information can be collected comprehensively, timely and accurately. Through data analysis and processing, the information system can quickly provide real and reliable data basis for policy-making and improve the scientific level of decision-making. Second, it is conducive to enhancing the transparency of social assistance work. Through the access to the information system of social assistance, people can directly inquire about the personal and family conditions of social assistance receivers. Also, the information system can regulate and restrain the behaviors of cadres at the community level, and effectively prevent malfeasance in social assistance. Third, it is beneficial to improve information sharing in social assistance. The information system can fully integrate resources at all levels within a administrative region, and improve information sharing among relevant departments, which has completely changed the situation that there are too many channels for assistance, so that various social assistance resources can be scientifically and rationally integrated and allocated. Four, it is beneficial to enhance personnel quality and work efficiency. The construction of social assistance informatization can not only effectively improve the ability of related personnel to use modern information technology, but can also save a lot of time, human and financial resources, management costs, and improve work efficiency.

15.3.2.6

Improve the Professionalism of the Work Force

Specialization is the development trend of modern social assistance management, which requires higher professional quality for social relief managers and service providers. To a large extent, it can be said that the professional level of social assistance team determines the effect of social assistance work and the benefits of social assistance recipients. Meanwhile, the proportion of administrators and service providers engaged in social relief work in China with educational background of majors like social security, social policy, social welfare and social work is relatively low. The vast majority of practitioners have not received systematic and complete professional training, and mainly learn through short-term business training and practice. Their professional knowledge and skills are far from meeting the requirements of specialized social assistance work. There are three basic approaches for the professional construction of social assistance work force. The first approach is to improve the professionalism of existing staff. Targeted training should be provided to relevant personnel on different posts and the training should focus on the learning of regulations and policies, basic theories, professional knowledge and skills of social assistance. The second one is to take in university graduates of relevant majors. In the annual recruitment exam of new personnel of state organs and government organs, it is necessary to set a certain proportion to recruit undergraduates and postgraduates from social work, sociology, social security, psychology and other majors, so as to

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enrich the social assistance work team and improve the professional level of the whole team. The third one is to transform civil affairs work into social work. Civil affairs work in China follows the concept of “putting the people first, solving difficulties for the people and serving the people”, and social work follows the value of “putting the people first, helping people to help themselves”. They have a lot in common. In the professional construction of social assistance team, it is an inevitable choice to introduce social work methods in the civil affairs work, update the social service concept, enrich the connotation of social service, improve the level of social service, and achieve the transformation of traditional civil affairs work to modern social work.

References 1. Wang, W., Guo, Q.: Social Assistance. Qunyan Press (2007) 2. Hu, W.: An Introduction to Social Assistance. Peking University Press (2010) 3. Zhang, L., Tan, Z.: Strategic thinking of constructing China’s universal social assistance system. Theory Reform (1) (2009) 4. Liu, X.: Development and institutional changes of china’s social assistance in the past 60 years since the founding of PRC. J. Central China Normal Univ. (4) (2010) 5. Jia, N.: China Social Assistance Report, p. 1. China Economic Publishing House (2009) 6. Lin, M.: Integration of China’s social assistance system. Acad. Bimestris (4) (2011) 7. Jing, T., Bi, T., Gao, H.: Thought and System of Social Welfare in Contemporary China. China Society Press (2011) 8. Zheng, G.: Changes and Evaluation of China’s Social Security System. China Renmin University Press (2002) 9. Cao, L.: Social Assistance and Social Welfare, p. 2. China Ocean University Press (2006) 10. Liao, Y.: An Introduction to Social Assistance. Peking University Press (2009) 11. Jiang, Z.: Build a Well-off Society in an All-Round Way and Create a New Situation in Building Socialism with Chinese Characteristics. People’s Publishing House (2002) 12. Ministry of Civil Affairs of PRC: Statistical Report on the Development of Civil Affairs (2000). http://cws.mca.gov.cn/article/tjbg/200801/20080100009395.shtml 13. Ministry of Civil Affairs of PRC: Statistical Report on the Development of Social Services (2011) 14. Decision of the CCCPC on Some Issues Concerning the Improvement of the Socialist Market Economy, p.28. People’s Publishing House (2003) 15. Ministry of Civil Affairs of PRC: Statistical Bulletin on the Development of Civil Affairs in 2005–2006 16. Selected Important Documents since the Founding of the People’s Republic of China, vol. 8, pp. 422–423. Central Party Literature Press (1994) 17. Zheng, G.: The Strategy of Social Security System Reform in China. People’s Publishing House (2011)

Chapter 16

The Universal Integration of Social Service System

Social welfare projects such as old-age care, medical care, employment, income distribution, education, housing, and social assistance are an organic whole that includes in-kind benefits, cash benefits and social services. The universal integration of the social welfare system naturally comprises improvement of social services.

16.1 Concept and Conditions of Social Service System Social services are different from economic guarantees such as in-kind and cash benefits and are now being highlighted and strengthened in the social welfare system. Targeted at needs of special groups, social services are also gradually covering the entire population and bringing more convenience to the people’s lives of all aspects. The development of social services in China is now at an unprecedented stage driven by growing demands nationwide.

16.1.1 Concept The notion of social service has long existed in the academic community at home. People initially understood it as services provided to the society, for example paid services offered by college and university libraries to the general public. In the field of social welfare, the concept of social services was initiated by Professor Peng Xizhe in his article “Old Age Security and Social Services in Sweden”.1 In recent years, the term social service in the sense of social welfare has been appearing more and more frequently in government and academic research reports, illustrating its increasingly prominent role in social development. Nevertheless, since the concept of 1

Peng [1].

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social services in the sense of social welfare came later and was somewhat overlapped with concepts such as public services and community services, it is necessary to clarify its basic meaning.

16.1.1.1

Origination in the West

Social services in the modern sense emerged as a practical activity in Britain in the nineteenth century. According to the Poor Law Amendment Act of 1834, the British authority provided vocational training to the poor in vocational training institutions and introducing jobs to job seekers. This practice was followed by other European countries, and then it spread to America, Australia and East Asia. Social services were fully developed especially in northern Europe. Social services at that time focused more on social assistance services for the poor. Social services as an academic concept was first initiated in 1951 by Richard Titmus, a professor at the London School of Economics and Political Science. In previous studies, social welfare was basically defined as education, housing, income security and health. Tittmus said that “In addition to the four benefits, there is a service that exists independently, that is, social services”. Social services have thus become an important part of the social welfare system. Sainsbury added that social services are services provided according to the different needs of human beings (Fig. 16.1). According to Sainsbury, “Social services for individuals are for people in need and difficulty, because difficulties prevent him or her from exerting the greatest social energy as a member of the society. Difficulties also prevent him or her from developing his personality and realize his or her aspirations through contact with the

Fig. 16.1 The notion of social services in the West

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outside world. This need traditionally has been solved by individuals and families, and now it is by social services. It is a process of society providing a higher level of help. Social services adapt to the different needs of individuals and groups rather than provide a unified type of services for everyone.”2 As early as 1970, the United Kingdom established the Local Department of Social Services and announced to provide a community-based and family-oriented service for all citizens. This new department will do more than just discover and heal social disease, but will endeavor to benefit the whole society. It will maximize the number of individuals involved in the act of giving and receiving services.3 Developed countries have different areas of emphasis in social services as manifested in coinages. In the United Kingdom, they are personal social services, which stress individual needs. In Northern Europe, they are called social care services, while in the United States, they are called health and human services, paying more attention to medical assistance, public health, rehabilitation care and so forth. Social services emerged as a new phenomenon in social structure and constitute an important part of the social welfare system. They have grown rapidly to become an independent part of public utilities in terms of financial investment, organizational management, production procedures and control process. It is the area that progresses the fastest in Western countries in the 1970s and 1980s.

16.1.1.2

Domestic Exploration

Since the founding of the People’s Republic of China, social services in the country have taken unique forms, such as social assistance, disaster relief, and rehabilitation services for the disabled, which provide basic guarantee for social development and the social welfare of the people. After the reform and opening-up, with the development of urban and rural economy and society, the people’s living standards have been improved and their demands for social services have increased gradually, serving as a momentum driving the development of social undertakings in China. In 1987, the Ministry of Civil Affairs for the first time initiated community services to facilitate the lives of community residents. Since then, community services and community construction in Chinese cities have developed significantly. At the same time, the government set about strengthening the construction of rural communities and providing related services to rural residents. Practice promotes theoretical innovation, and in turn, theoretical progress puts forward new requirements for social services and thereby promotes social service practice. The content and channels of social services have been continuously expanded. But, in general, the current conception of social services is still not separated from the concept of public services. To clarify the definition of social services, in this volume, we hold that social services are the general terms for various social activities, social work and social affairs carried out by the state and society to address 2 3

Sipila [2]. Young [3, p. 206].

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the basic living needs of all members of society, especially of vulnerable and disadvantaged groups, to ensure and improve their living standards.4 There are three layers of meaning embodied in this definition. For one thing, social services are social actions that meet basic needs of members of society in the form of labor (material and spiritual activities). As a type of social action, social services have functions irreplaceable by financial (in-kind) services. Therefore, they play a unique role in the lives of the people. For another, social services have both general objects and special objects. The socalled “general objects” refer to all members of society, and social services provided are “universal services”. The so-called “special objects” mainly refer to socially disadvantaged groups, and social services provided are “special services”. According to the logic of giving high priority to vulnerable groups, social services for the vulnerable groups should be developed first and the basic social service needs of vulnerable groups should be met first. Moreover, subjects of benefits provision for social services are diverse, including governments at all levels, urban and rural grass-roots autonomous organizations, social organizations, and other social forces. From the perspective of content, social services involve various areas of the basic lives of the people, such as social assistance, social support, welfare services, services for entitled groups, community services, social work, and special social affairs services. It contains pension, health, education, employment, housing, and other services related to basic lives. With economic and social development as well as the increasingly diversified needs of the general public, the contents of social services will continue to expand and grow.

16.1.1.3

Relationship Between Social Services and Other Benefits

In practice, social services are used interchangeably with concepts like public services and community services. Commodity circulation services and some production services are also sometimes recognized as social services. Here, we would like to clarify the relationship between social services and similar notions in the follow aspects. The first is between social services and social welfare. Social welfare includes social services, and social services are part of social welfare. Social services have the characteristics of social assistance that meets the basic needs of individuals. The focus is on care and improvement in the quality of life. For example, the free compulsory education the youth receive in school is social welfare, while the assistance that out-of-school children receive in the community more belongs to social services. At the same time, the help offered by social workers to troubled teens in schools also belongs to social services. In addition, social services stress actions or activities rather than cash benefits. 4

Research team of the Academic Division of Social, Political and Legal Studies at the Chinese Academy of Social Sciences, Research Report on the Construction of China’s Social Service System, August 2010.

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The second is between social services and public services. Social services place more emphasis on providing basic services to individuals or special groups, especially in arenas of living or work. The scope of public services is relatively broad, including all public affairs, such as traffic services, business registration, and various services provided by administrative service centers. Social services are basically restricted within the sphere of social welfare with limited extension, and are for protecting and improving basic social rights of the people. It is in this sense that Titmuss pointed out that public services include social services and social services are part of public services. The third is between social services and social work. Social work provides professional and trained social services, and social workers are professional social service providers. The social work team in China is in its infancy and has not yet become the main force of social service delivers. Therefore, the social service cause needs to strengthen the training of professional teams, increase the number of social workers, and improve qualities of social workers. At the same time, it should attract compassionate people to join the undertaking to provide convenience for the people. The fourth is between social services and social assistance as well as community services. Social service and social assistance are different in forms but overlap with each other in terms of content. In many places, social services have the function of social assistance. Most of these social assistance projects are in communities, and hence people sometimes confuses social services with community services. In Europe, social services are often used as synonyms for community services. In this way, communities constitute the specific context and channel of social service provision. For example, in the United Kingdom, some caring services are transferred from hospitals to communities. According to Titmuss, social services are “different from medical care that requires long stay in hospitals. They are part of the caring services provided in the community to meet the basic needs of different groups of people. In discipline of social policy, they are called social services.”5 The fifth is between social services and commercial services. In some places, commercial outlets for consumption and entertainment, such as shops, restaurants, and hotels established in communities are recognized as social services. This type of social services in fact distorts the original intention of social services. Social services in communities in its real sense refers to nursing homes, nursery schools, as well as care services for disabled people, chronic patients and the elderly. In other places, people simply regard community services as to gather all service programs in a building without a top-level design and professional management. In fact, mixed in this building are both social services that are for public good and commercial services purely for profit.

5

Titmuss [4].

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16.1.2 Status Quo of Social Service System Social services are provided to improve people’ quality of lives. They are mainly oriented towards soldiers and their families, the aged, the disabled, women and children, and other special groups. Social services provision can improve the welfare and living qualities of members of society,

16.1.2.1

For the Elderly

China’s old-age care is undergoing a transition from relying on families to universal, basic old-age insurance and services. In 1996, the Elderly Rights Law was promulgated which stipulated provisions for family support and social security for the elderly. China has the largest aging population and is still aging at the fastest pace in the world. Following population aging, and the kernelization of family structure, the number of empty nesters is increasing and the family’s old-age caring function is steadily weakening. Family-based care for the elderly is hard to support the needs of living and medical care any more. There is an urgent need for an elderly service model that is compatible with the changing population and family structures. An oldage service system based on families, supported by communities and supplemented by agencies is the way out.6 The Elderly Rights Law revised in August 2012 affirmed this new type of old-age care and further added social services to this model. Families, communities and old-age care institutions are complementary to each other and constitute a systematic project of old-age care. We should adhere to the fundamental role of family-based old-age care and ensure that all that people enjoy their rights to old-age care. We should also give full play to the supporting role of communities and strengthen the supplementary role of agency services for the elderly, so that the elderly requiring special services are taken care of. Social services should provide assistance to the elderly with different economic status and living abilities, especially for advanced elderly. In recent years, the state has strengthened the construction of adoption and nursing elderly care agencies, focusing on elderly care services for elderly with no family, low income or with special difficulties. More has been invested to build social welfare institutes for providing elderly care services as well as building apartments, nursing homes and elderly-care homes for seniors. Also, efforts have been made to explore social policies to support family-based elderly care, daytime care services and other social services. In rural areas, endeavors are concentrated in strengthening the construction of nursing homes and providing services for elderly from five guarantee families as well as mutual assistance among empty nesters and left-behind elderly.

6

Li [5].

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For the Disabled

According to statistics from the second national sample survey of persons with disabilities conducted in 2006, the total number of persons with various types of disabilities in China is 82.96 million, accounting for 6.34% of the country’s total population. After the rehabilitation of people with disabilities started in China 20 years ago, a total of 13 million people with disabilities have received systematic rehabilitation training services.7 As of 2010, 831 municipal districts and 1676 counties (cities) had provided community rehabilitation services, 145,000 community rehabilitation stations had been established equipped with 329,000 community rehabilitation coordinators.8 34 provincial-level rehabilitation institutions for children with autism had been built benefiting 5620 autistic children. The Chinese authority revised the Law on the Protection of Disabled Persons in 2008 specifying provisions for the rehabilitation, education, employment, cultural life, social insurance and social assistance of the disabled. According to it, local people’s governments at various levels and the departments concerned shall support the establishment of rehabilitation institutions for disabled persons, and “mobilize and give guidance to urban and rural community service organizations, medical treatment prevention and healthcare institutions, organizations and families of disabled persons and other sectors of society to carry out community-based rehabilitation work.”9 People’s governments at various level shall provide, through multiple channels, social relief and subsidies for disabled persons who really have financial difficulties, who have no ability to work or have no provider, or who have no source of income. Moreover, the Regulation on the Construction of Barrier-Free Environments came into effect on August 1, 2012. According to the 12th Five-Year plan for the development of the programs of persons with disabilities, China will standardize the employment service system for people with disabilities through increasing investment in employment services and vocational training for disabled people with employment needs, for the purposing of providing jobs for 1 million urban disabled people and practical technical training for 1 million rural disabled people. At the same time, the state shall establish a system of entrust services which can provide assistance for 2 million persons with intellectual, mental and severe physical disabilities.

7

China Disabled Persons’ Federation, Outline of the 12th Five-Year Plan for the Development of the Cause of Chinese Disabled Persons, http://www.cdpf.org.cn/index/2011-06/09/content_3034 0867_9.htm. 8 China Disabled Persons’ Federation, Statistical Bulletin on the Development of the Cause of China’s Disabled Persons in 2010, http://www.cdpf.org.cn. 9 See Article 15 of Law of the People’s Republic of China on the Protection of Disabled Person.

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For Women and Children

In 2005, the state revised and promulgated the Law on the Protection of Rights and Rights of Women, specifying provisions for protecting women’s political rights as well as rights and interests relating to culture and education, work, social security, property, marriage and family. In terms of culture and education, the law requires that schools shall, in line with the characteristics of female adolescents, take measures in respects of education, management and facilities so as to ensure female adolescents’ sound development in body and in mind.10 People’s governments at various levels and departments concerned shall take measures to organize women in receiving vocational education and technological training. In terms of work and social security, the state shall develop social insurance, social assistance and other social security programs to ensure that women in poverty can obtain fertility assistance services. In terms of marriage and family, the state must take measures to prevent and stop domestic violence. Other social organizations and social groups shall provide relief services within their respective duties for female victims of family violence.11 At the same time, governments shall protect the health and safety of the woman receiving any birth-control operation. In a narrow sense, social services for women mainly include single-mother support, anti-domestic violence, and employment services. Now they have extended to include services indirect benefiting women such as elderly and child care. Social services for women and children are often linked together, so the earliest legislation was the Law on the Rights and Interests of Women and Children. Then with the progress in social development and legal system, separate laws have been introduced. In December 2006, the Law on the Protection of Minors was promulgated, stipulating responsibilities and measures for the protection of minors by the family, the school, the society, and the judicial organ as well as legal responsibility in this regard. Social services for children cover impoverished children, orphans, rural left-behind children, migrant children, homeless children, and all the other children under various conditions. In 2009, 115,000 children were adopted by various institutions across the country. 303 independent child welfare agencies with 44,000 beds were built. In 2009, altogether, there were 44,260 registered adoptions. As of the end of 2009, there were 116 orphan protection centers in China, with 4000 beds. Around 145,000 orphans were helped by these centers in 2009.12 Children’s homes for left-behind children have been established in towns and villages across the country. In 2009, there were more than 6500 left-behind child care centers, and more than 30,000 home-based education and service institutions for left-behind children in rural areas. According to the first national survey of minors who lost their parents, or orphans, carried out 10

See Article 17 of Law of the People’s Republic of China on the Protection of Women’s Rights. Ibid. 12 Ministry of Civil Affairs, Statistical Report on Civil Affairs Development in 2009, www.mca. gov.cn. 11

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in 2005, there were a total of 573,000 orphans, and of this number, about 69,000 lived in state-owned child welfare institutions, and 294,000 received assistance (of which 53,000 received urban subsistence allowances, 125,000 received rural fiveguarantee subsidies, and 116,000 received assistance for rural destitute families). In 2005, there were still 200,000 orphans nationwide who had not received regular institutional assistance.13 The state encourages the family- and community-based care for orphans and disabled children with more affection involvement. It also supports the development of other models such as adoption by citizens, custody by relatives, entrusting children to other families, and social support, to help orphans and disabled children return to family lives and integrate into society through multiple channels. Educational institutions and communities have also developed some social service projects for children, including school bus pick-up services, after-school custody services, and off-campus boarding services. Of course, there are still areas of social services for children that need exploration, such as the construction of teams for education and protection of left-behind children as well as teams of acting parents and professionals, and the construction of volunteer service teams for left-behind children to make them be loved, protected, and supported.

16.1.2.4

For People with Mental Disease and AIDS

China is gradually incorporating services for people with mental illness and AIDS into the community health service system, and strengthening the construction of community rehabilitation institutions. The government has vigorously promoted the mental illness prevention and rehabilitation work characterized by socialization, comprehensiveness and openness. It is a trend in mental health services to shift the prevention and rehabilitation of mental illness from professional hospitals to communities and it is also one of the means to protect the personal rights of mental illness patients. According to statistics, in 2010, a total of 1818 cities and counties across the country carried out the prevention and rehabilitation of mental illnesses, benefiting 4.952 million patients with severe mental disorders. The monitoring rate reached 84, and 68.4% of patients presented significant improvement, and the social participation rate was 54.5%, and the rate of disturbance-causing was reduced to 0.3%. In addition, 5477 patients were lifted off the lock-up, and medical assistance was provided to 366,000 impoverished patients with mental health problems. For example, according to statistics from the Mental Illness Prevention Office of the Public Security Bureau in Suzhou, by the end of 2009, there were 89,522 psychiatric patients and the total prevalence rate in the region was 14.02‰. 39,789 severe psychiatric patients were registered, with a detection rate of 6.37‰. Among them, 27,852 were schizophrenics, accounting for 70% of the total patients; 3979 were patients with manic depression, accounting for 10% of the total; 3183 were with major depression, accounting for 8% of the total; 1989 were with 13

Ministry of Civil Affairs, The Status quo and Dilemma of Orphans in China, www.mca.gov.cn.

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bipolar disorder, or about 5% of the total patients; 1194 patients presented symptoms of epilepsy, accounting for 3% of the total, and 798 were with other mental disorders, accounting for about 2% of the total.14 Moreover, the government started the community-based rehabilitation of mental patients nationwide. Community-based rehabilitation institutions are funded by local governments to provide services to people with mental illness. The National Development and Reform Commission, the Ministry of Civil Affairs, and the Ministry of Health jointly formulated the Plan for the Construction and Development of the Mental Health Problem Prevention and Control System. This is a system for the prevention, treatment and rehabilitation services of mental illness, and it was based on community health service centers and supported by third-tier specialist hospitals. The disabled persons’ federation at all levels and local medical and health departments jointly promoted the community rehabilitation of persons with mental health conditions, and methods adopted include medication, special nursing and psychological rehabilitation, etc. Patients were also enabled to learn life skills and participate in recreational activities. For instance, Suzhou takes community health service centers (stations) as a carrier to strengthen prevention services for patients with mental problems and give guidance on rehabilitation through making the rounds and delivery of medicines to patients’ home, in order to reduce recurrence and readmission. Through this mechanism, psychiatrists in Suzhou provided treatment or guidance to 99,866 persons in 2008, of which 10,885 were patients who were prone to relapses or disturbance-causing, 2997 were visited specially, 83,153 were paid routine visits, 48 received mandatory treatment, 198 received medical assistance, and 89 cases of hidden dangers by mentally disordered persons were eliminated. The services provided to patients with mental illness have contributed to maintaining social stability and promoting social harmony.15 With the increasing population flow, the number of AIDS patients and HIVinfected population in China is also growing. Nearly 800,000 cases of people with AIDS or infected with HIV have been reported nationwide. For example, as of October 31, 2011, a total of 93,567 patients were reported, including 67,869 infected with HIV and 25,698 with AIDS.16 The spread of AIDS epidemic is unbalanced in different regions. In areas where AIDS outbreaks are severe, the government has generally established a mechanism for the prevention and treatment of the epidemic which is based on family and community support as well as under the guidance of professional agencies. The AIDS service system is integrated into the community’s health service system. Preferential policies in living, education, medical care, rehabilitation, housing and employment are implemented in these areas. For example, Honghe Hani Autonomous Prefecture in Yunnan Province is a place with a high rate of AIDS. Local government have formulated special work programs for orphans infected with HIV by means of 14

Source: Report made by Suzhou Public Security Bureau and Suzhou Health Bureau at the forum organized by Suzhou Civil Affairs Bureau on July 16, 2010. 15 See Footnote 14. 16 Yunnan’s New Data on HIV-infected Patients, Yunnan Daily, December 1, 2011.

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social assistance programs such as subsistence allowance, five guarantee benefits, medical assistance and temporary assistance. Altogether, 12 persons from 11 households and 2 children from 1 household who were infected with HIV are brought into the coverage of urban and rural five guarantee projects respectively. They were also provided with subsidies to join the basic medical insurance for urban residents and the new rural cooperative medical scheme. Moreover, counties with conditions have established rehabilitation centers for orphans with AIDS to provide centralized support and assistance. In this way, social services and social assistance can be effectively integrated.

16.1.3 Contents and Modes of Social Services Social services aim at facilitating people’s lives, and improving their living standards and well-being. They include welfare programs that are generally needed by all sectors of society, such as elderly care, subsistence allowance, medical are and public health, disaster relief, employment, education and housing services, as well as services for the disabled, entitled group and homeless people. Some social service projects can be in-kind or cash benefits while others are pure service supply. Of course, these supply channels can be combined together. The above-mentioned various social service projects are all related to the daily life of the people. In the following section, we are going to analyze social service projects taking place in communities.

16.1.3.1

Community Care Services

Community care services are for the elderly, the disabled and children with special needs. Services provided include accommodation, daytime care, assisted living, doorto-door service and emergency rescue. According to the 2009 civil affairs development report, as of the end of 2009, there were 175,000 community service centers of various types in the country, including 10,003 comprehensive community service centers. There were 53,000 community service stations, 112,000 other community service facilities, and 693,000 service outlets for the convenience of the people in cities.17 In 2011, the total number of community service facilities provided to all residents reached 147,966 nationwide. China’s total social service expenditure was 272.65 billion yuan. There were 41,364 institutions providing social services, and 3.672 million beds available for adoption use, or 2.75 per 1000 people.18

17

Ministry of Civil Affairs, Statistical Report on Civil Affairs Development in 2011, www.mca. gov.cn. 18 Ibid.

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Taking the elderly care as an example. Services provided include living necessity supply, daytime care and emotional comfort. In order to meet the diversified service needs of the elderly, China is developing an old-age care system based on home care, community service and institutional care. In 2009, there were 1.32 service institutions every sub-district office for urban elderly residents, and one service institution or agency for urban elderly residents every 9.8 communities. Through means of doorto-door services, on-site services, and itinerant services, elderly-care service institutions in communities provide free or low-paid services of living care, housekeeping services, and emergency relief for the elderly. For example, Suzhou City launched a new type of home care service for the elderly called “virtual nursing homes”, to serve as a supplement to home care and institutional care. Virtual nursing homes enjoy government subsidies. Unlike traditional nursing homes, the virtual nursing homes do not provide beds but only home care services for senior citizens. When elderly residents call the service hotline, operators can see their location and arrange for service staff to go to their homes and provide the services they need, such as cleaning, buying daily necessities, chatting with the elderly and emergency assistance. Virtual nursing homes in Suzhou can receive about 250 orders daily, which meets the diverse needs of social services for elderly.19

16.1.3.2

Health Service

The health service in communities is mainly about providing services of disease prevention, medical care and heath, rehabilitation, and health education for women, children, the elderly, chronic patients, the disabled, and other community members, through a community health service network on the foundation of community health centers (stations), so that some health-related problems can be resolved in communities. According to statistics on the development of health services in China released by the Ministry of Health, as of the end of 2011, 32,860 community health service centers (stations) had been established nationwide, among which 7861 were community health service centers and 24,999 were community health service stations. Altogether, there were 329,000 staff members in community health service centers, that is, 42 people every center, and 104,000 people in community health service stations, that is, averagely 4 people in one station. In 2011, the number of consultations provided by community health service centers nationwide was 410 million, with an average annual treatment of 52,000 in each center and 14 consultations per day by each physician. Annual consultations in community health service stations were 140 million, with an average annual treatment of 5600 in each station and 13.8 consultations per day by each physician. Community health services can provide treatment, health care, nursing, rehabilitation and other health services in an effective, convenient and economical manner to 19

Source: The research team went to the Civil Affairs Bureau of Canglang District, Suzhou, for research in August 5, 2010 and collected the data.

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residents. For the elderly, medical institutions at the community level can offer doorto-door services, home care, daytime care, hospice care and other services meeting the special needs. While for the disabled, community health service centers (stations) can expand the traditional medical rehabilitation to vocational rehabilitation and educational rehabilitation, supplementing the roles of professional rehabilitation institutions and home-based rehabilitation.

16.1.3.3

Extension of Social Assistance Service

The social assistance service offers not only material and financial assistance to special groups in difficulty, but also services such as psychological assistance and legal assistance as well as social worker intervention. It covers areas like medical care, elderly care, employment and student aid. New explorations in social assistance services are mainly manifested in the establishment of the social assistance center, mutual assistance center, volunteer service center, elderly assistance center, living assistance center and other service platforms. The social assistance service here is in its narrow sense which mainly refers to urban and rural subsistence allowances, five guarantee services for rural residents, etc. The standards of these schemes have been raised nationwide according to local economic conditions and the beneficiaries of these schemes have been increased. For example, in Honghe, the number of people enjoying subsistence allowances increased from 103,000 in 2008 to 113,000 in 2010. In 2009 alone, 6094 people were brought into the coverage of subsistence allowances, and the standard of subsistence allowances was increased by 30 yuan. The number of rural residents living by subsistence allowances grew from 280,000 at the beginning of this scheme to 379,400 in 2010.20

16.1.3.4

Educational Service

Providing educational service in communities is also an important means to improve the quality and ability of the people as well as a tool to enrich the lives of community residents. Many places have set up training centers, community schools (universities), community forums and distance education schools. They offer vocational training to migrant workers, laid-off workers, etc., and survival skills training for people with disabilities. They also organize social and cultural educational activities for the elderly, holiday training courses for children, and health lectures for women. Other services like popularizing policies, scientific knowledge, safety knowledge, cultural and financial knowledge, living skills, as well as housekeeping consultation aim for benefiting all the residents in a community.

20

The research team went to Honghe Prefecture, Yunnan Province for research in June 2010 and collected the data.

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Services Facilitating Residents’ Convenience of Living

Under this category are services that can facilitate the convenience of living for community residents, especially the elderly, the disabled and groups in need. It covers living assistance, such as housing maintenance, realty management, housekeeping services, and employment services, as well as purchasing agent services and goods delivering. Unique to China are civil services such as civil mediation and services for marriage, funeral and other important occasions for a family. In rural areas, it also covers the establishment of commercial outlets, supply and marketing cooperatives for agricultural production materials, and so forth. In short, social services are to meet various needs of residents in local communities through the provision of various services to solve their problems.

16.2 The Problems of Social Service System In China, both the content and supply channels of social services have make significant progress with the growing economy and public demands. Many social service projects have emerged and expanded in coverage. Nevertheless, there are still many imperfections.

16.2.1 Insufficient Coverage On the one hand, social service projects are not enough. The development of economy and society as well as the improvement of people’s living standards will inevitably generate the diversified and multi-layered demands for social services. In addition to services for material well-being, people are now demanding more services for health and cultural life. In other words, people pay increasingly more attention to social interaction and self-development. In this regard, social service projects are inadequate. On the other hand, social services for the poor are still yet to be cultivated. According to the Annual Report of Urban Development of China 2011, the povertystricken population in urban areas have been on the rise since the 1990s, and in 2009, the number reached about 50 million.21 Also, unemployment has aggravated the situation, and in 2010, the urban and rural unemployed population reached 200 million.22 In addition to services such as living assistance, they also expect vocational training and help in job seeking. Moreover, social service projects should take into consideration their request for equal opportunities to social and cultural resources as well as the right to live a healthy and decent life. 21 22

Niu and Pan [6]. Wen [7].

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Furthermore, social services of other special groups are insufficient. For example, according to the Child Welfare in China-Stocktaking Report 2011, the number of orphans nationwide reached 710,000 in 2010, with an increase of about 24% in five years. And, there were 58 million left-behind children in rural areas.23 These children should have rights to services such as living care, education, medical care and mental health, but they are not all covered by these programs. Also, for the elderly, social services are inadequate. According to data from the National Bureau of Statistics, in 2010, there were 14.7 million disabled elderly who were 60 or above that need caring, but current social service projects are far from enough to cover all of them.24

16.2.2 Visible Fragmentation Fragmentation of social services is reflected in the following three aspects. First off, the coverage of social service projects is not universal. For a universally integrated social service system, programs designed for a certain group should cover all qualified individuals, but in reality this is not the case. For example, only 35.61% of people with disabilities in the country have received medical services, that is, the majority of the disabled have no access to such services. Again, only 8.45% of people with disabilities in China have received rehabilitation training services and 7.31% of disabled people are equipped with assistive devices, that is to say, over 90% of people with disabilities who have the right to but have not received these services. As another example, in 2010, the total number of beds in elderly care institutions in China was 3.123 million, only capable of accommodating 1.72% of the elderly population.25 According to statistics, there were 1.317 million elderly people over 60 years old in the Suzhou City in 2010, while beds available were less than 17,000.26 This is far lower than the ratio of 3–7% beds to the total elderly population in developed countries. Besides, the implementation of social service projects between urban and rural areas and among regions exhibit disparities. In general, systems of professional nursing have been basically established in cities, while the vast rural areas, especially in the western regions, have no nursing services. Women have no place to receive maternal health knowledge and care, and left-behind elderly, women, and children lack access to necessary social services. The elderly are more often than not taken care of by their daughters, daughters-in-law and other family members after falling ill, and many of them never heard of the term of nursing. Our research team found the difference in benefits of social services between local residents in Suzhou and those new comers to the city. While in Honghe Prefecture, Yunnan Province, 23

Department of Social Welfare and Philanthropy, Ministry of Civil Affairs, Child Welfare in China-Stocktaking Report 2011, www.mca.gov.cn. 24 Zhao [8]. 25 See Footnote 24. 26 Website of Suzhou Civil Affairs Bureau, Suzhou Civil Affairs Undertaking Report 2010.

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there is an apparent southern-northern gap. The northern region of Honghe is more developed than the southern part in terms of economic, social and cultural development. Therefore, the northern region occupies more than 60% of economic, social and educational resources in the prefecture with relatively complete social service systems in old-age care, medical care and education. In the Xiamen City of Fujian Province, social services of education, medical care, elderly care, and rehabilitation for the disabled are more sophisticated in two administrative regions on the island, namely Siming and Huli districts, than in other four districts of Jimei, Haicang, Tong’an and Xiang’an. Moreover, the social service management among sectors is fragmented. The construction of social service system is a systematic project, which requires the joint force of related departments and nongovernmental entities. Nevertheless, we found the coordination and integration between these parties are not adequate. For example, for the medical assistance services for the poor, the civil affairs department itself alone cannot fulfill all the responsibilities hence needing the collaboration from the health care as well as human resources and social security departments. In practice, there are overlaps in the social service work of related departments such as health, education, civil affairs, women’s federation, and human resources and social security. As a result, some social service projects involve the management by more than one department while some are left unattended. Under this mechanism, it is hard to form a joint force and make full use of all resources. For example, because of the lack in coordination between the civil affairs department and the health system, the community health care for the elderly is making slow progress. Also, though the services for the prevention and treatment of HIV infection by hospitals and other institutions are paid attention to, psychological rehabilitation services as well as living assistance and employment services for AIDS patients and their families are inadequate. Finally, the supervision mechanism for social service is not satisfactory. The goal of social services is to meet the basic living needs of the vulnerable groups. Supervision on service givers, receivers, service programs and content, as well as methods of service provision is crucial to ensure the realization of this goal. However, the present social service supervision mechanism is relatively weak. For example, due to lack of supervision, some bodies of service provision fail to perform their responsibilities and the consequence is that many orphans and disabled children are homeless without basic guarantee of living. Also, in some places, social service projects are seriously lacking and the single means of service delivery cannot meet the diversified needs.

16.2.3 Problems in Social Services as an Industry As a component of the tertiary industry, the social services industry have several shortcomings in development.

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Firstly, the social services industry is not gaining due attention. Traditional services are concentrated in entertainment consumption, such as tourism, shopping malls and recreation facilities, and they still make up the largest proportion in the whole industry. On the contrary, services that are related to the basic needs of the people are relatively underinvested, especially those designed for the elderly, women and children, and the disabled. For instance, the construction of community care centers for the elderly, rehabilitation centers for the disabled, orphanages, etc., is in shortage.27 Inputs in basic education services for non-verbal or deaf-blind persons as well as persons with intellectual disabilities are insufficient. What is imperative now is to adjust the structure of the existing tertiary industry and shift the focus onto the establishment of community-based social services. Secondly, a large amount of surplus labor has not been devoted to the social service industry. Economic and social progress, the acceleration of population aging, and the development of social welfare services all call for more personnel engagement in the field of social services to further promote the well-being of the people. According to the criterion for the post-industrial era, in a developed country, the proportion of the population engaged in the service industry is usually higher than 50%, and in some countries it even exceeds 70%, while the work force in the first sector is usually lower than 10%. However, the output value of China’s service industry accounts for less than 50% of total GDP, and service industry employees occupy less than 30% of all the employment. China is rich in work force but a large number of surplus laborers are not drawn into the social service industry. Thirdly, there is significant urban–rural imbalance in the development of community service industries. China’s community service industry stems from the socialization of social welfare after the reform of state-owned enterprises, when laid-off workers had to return back to local communities for social service support. Since then, community services began to grow and benefit more and more residents. However, in rural areas, community services are still in its infancy. Most often than not, during the stage of policy planning, social services are mixed up with economic services such as rural finance, trade, commerce, and insurance. People’s basic needs of education, medical care, basic living care, rehabilitation, transportation, social assistance and other services are ignored. Institutions and staff engaged in these services are scarce, expanding the gap between urban and rural community service development.

16.2.4 Inadequate Support from Social Service Organizations The participation of non-governmental entities in social service provision is conducive to meeting the multi-layered and diverse social service demands of the people. It also helps to increase the coverage of social service projects, hence, this 27

The death of 7 orphans in Chengguan Town of Lankao County, Henan Province, caused by a fire in a residential building on January 4, 2013, reflected the lack of basic services. The 7 orphans were adopted by a resident named Yuan Lihai in that locality.

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is the common practice in the world to promote the equalization of social services. However, in China, social service supply has long been governed by the government. Social organizations generally have not developed the awareness and lack competence in providing social services. On the one hand, the number of nongovernmental entities is relatively small. In 2011, the number of social organizations was 255,000, while private non-enterprise units were only 204,000,28 with an average of less than two social organizations and private non-enterprise units per 10,000 population. In Honghe Prefecture, Yunnan Province, according to our survey, there are only two private elderly-care service agencies, which are in cities of Gejiu and Mengzi of the prefecture, and there are no voluntary service organizations for old-age care. For employment services, there are no private employment agencies in some cities or counties, except for the government-led employment management centers. On the other hand, the capacity and standard of services provision vary among non-governmental entities. Some sophisticated social organizations can offer professional social services with high qualities while other less sophisticated ones can only provide simple services and the qualities are not always satisfactory. For example, some private aged-care institutions in Suzhou are unable to provide round-the-clock observation and care for the elderly, needless to say personalized care services, especially for disabled elderly. Sometimes, the elderly cannot even get regular three meals a day in these institutions.

16.3 The Realization of the Universal Integration of Social Service System In view of the status quo of social services development in China and existing problems, we advocate social service contents and projects, and on this foundation expand the team of community workers and volunteers, in order to enhance the level of social service development.

16.3.1 Construction of Universal Integration Since China began the reform and opening-up, rapid economic development has generated a widening gap between the rich and the poor while social services are insufficient in meeting the ever-growing needs of the people. For this reason, in outlining the 12th Five-Year Plan, the Ministry of Civil Affairs proposed to improve the social service system and promote the all-round development of social services.

28

Ministry of Civil Affairs, Statistical Report on Social Service Development in 2011, http://cws. mca.gov.cn/article/tjbg/201210/20121000362598.shtml.

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Social services are geared to solve the basic living needs of the people. This is a logic must be recognized before the integration of the social service system. Social services are not for vulnerable groups only. They are for any people in need. Of course, the social service system being built by the government is generally targeted at basic service needs of the elderly, the disabled, chronic patients, women, children, rural migrant workers and other groups with difficulties. Other non-basic needs of the people require more involvement of nongovernmental entities. The universal integration of the social service system includes improvement in service projects and expansion in service contents, so that the people’s needs of living assistance, health care and nursing, entertainment, education, vocational training, legal aid, psychological counseling, spiritual comfort, etc., can be met through social services. To this end, some conventional social service projects need to be popularized and strengthened: cultural life and entertainment services for the elderly; living and emotional support for the elderly empty nesters; nursing and spiritual comfort for the disabled elderly; health and medical care for women and children; mental health counselling and employment guidance for adolescents; community rehabilitation, skills training and mental health counselling for the disabled; living assistance for the poor; prevention, treatment and rehabilitation of people infected with HIV or with mental illness as well as drug addicts; vocational training for laid-off workers, graduates and rural migrant workers; employment guidance, entrepreneurship training and psychological support for college graduates; old-age care and reemployment services for farmers losing their land in urbanization; resettlement services for farmers losing residents in urbanization; and transportation, safety, and health services for rural elementary schools. In short, the universal integration of the social service system requires expanding social service contents, improving social service programs, and increasing social service receivers, so as to solve difficulties of the people and help their development.

16.3.2 Goal of Universal Integration Places with social service development in urban communities that in full wing are also active in piloting social services in rural communities. In developed areas, the notions of government purchase of services and diversified services have also been introduced. However, the overall framework of social service development in the country is still immature which affects the understanding and implementation of specific policies in practice. The social service system needs universal integration and the goals are as follows. The first is to realize both the vertical and horizontal integration. Vertically, it is necessary to improve social service projects in the fields of old-age care, medical care and public health, employment, education, housing, and social assistance to form a sound social service system that covers all contents. Horizontally, we should clarify respective functions and responsibilities of social services for government organs and non-governmental entities, and rationalize their relations. Also, we should integrate

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resources of various subjects of social service provision to create a social service system with internal cohesion. In particular, a system of multiple subjects of social service provision should be developed by giving full play to the role of various social organizations who have their own unique advantages in the provision of social services. Their exploration and experience of social service supply can serve as reference for the formulation of policies and regulations by the government. Also, they are more easily accepted by special groups such as drug addicts and AIDS patients in offering psychological counseling and rehabilitation nursing services. Therefore, governments at all levels must support the establishment and development of social service organizations through providing preferential policies, for instance, in areas of taxation land use, and loans. In addition, social organizations should be helped in improving selfmanagement capabilities so as to become the major strength to engage in aged care, health, education, housing, employment, child care, and other social services areas. The second is to increase the number and coverage of social service receivers. Social services provided by a local government should be able to be accessed by all the people living or working in this area as well as their family members rather than limited to the permanent residents or residents with local hukou. The third is to enrich the content and improve the quality of social services. The two aspects complement each other. Without improvement in quality, the expansion of social service contents would be confined to increase in quantity, while quality improvement needs to be supported by accumulation of service practice. For example, existing old-age services are composed by home-based care, community care, institutional services, social insurance, and virtual nursing homes, etc., basically comprising all types of pension services. The enhancement of the whole elderly care system requires improvement in quality. In addition to meeting general needs of all the elderly, we should take into consideration the specific circumstances in different families and communities as well as interpersonal relationships and social connections the elderly involve, so as to provide customized and professional social services. The fourth is to integrate social service projects and increase the fairness in social service supply. Social services have been standardized and professionalized in Western countries after the World War II, while in China, social services started relatively late. Many projects are still taking shape and facing the problem of localization, namely how to adapt to the culture and living of the Chinese people. To this end, we should focus on the service needs and strengthen the construct of the system of social service projects. For example, we can combine community services with social management, urbanization, vocational training, public health and so forth, to form a comprehensive approach of social service supply. We should also work out unified standards, eliminate gaps between urban and rural areas and among social classes and promote the equality in social service supply. Moreover, we should realize the balanced development of social services and build a social service system with Chinese characteristics by endeavors in areas like institution construction, financial inputs, resource cultivation, and environment fostering.

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16.3.3 Channels of Universal Integration The universal integration of the social service system is aimed at improving the coverage of social service projects and fairness in distribution of social services. It gives full play to the government, enterprises, social organizations, families and other entities. Channels of realizing this goal are as follows. The first is to develop the mentality of improving social welfare through strengthening social services, and make it a major contributor to building a harmonious society. Social welfare includes material welfare and service welfare with the former focusing on in-kind or cash benefit and the latter focusing on service supply. We should take the initiative to improve social management through the supply of highquality and comprehensive social services and diversify social service providers. Based on people-oriented social services which are aimed at improving the selfassistance of and mutual assistance among the people, the universal integration of the social service system can enhance social service capacities, enable all the people to enjoy the fruits of economic and social development, and increase the happiness and satisfaction of the people. To this end, relevant government departments must strengthen the communication, coordination and integration in the cause of the people’s well-being. They should adjust social service projects according to changes of people’s needs. The second is to strengthen the construction of social service team and raise social services qualities. Upgrading the level of social services depends on a wellstructured, capable, dynamic and professional social service team. In addition to increasing the number of social service workers, it is also necessary to improve their skills of providing customized, professional and quality services for different classes and groups. They should also keep pace with economic and social development and cater for special social service needs. One issue needing attention is to increase the salary of social service workers especially those who are willing to attend to the older, the young as well as go to remote and impoverished areas. Also, social workers with qualifications should be granted priority in getting into the social service arena. The development of social services is not only determined by the quantity of social service personnel, but also by their qualities, professional competence and division of work. In China, the number of people receiving professional training in social services is relatively small. It is now imperative to strengthen the professional training of social service personnel through higher education and training institutions, so that they provide expert services in employment, community living care, housing, public environmental improvement, social mutual-assistance network building, public health and other area to improve the capability and quality of social service supply. The third is to develop social organizations and mobilize non-governmental entities to participate in social services to diversify subjects of social services provision. To this end, the government should formulate policies to encourage the growth of various social service organizations, especially professional service organizations, such as agencies of services for the elderly, adolescents, drug addicts, persons infected

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with AIDS or with mental illness, as well as psychological counselling and rehabilitation institutions. Services provided by these professional organizations can promote equal opportunities in social services for people of every age, gender, class, ethnic group and culture. Also, the volunteer team for social service provision can be enriched by deploying people secured by subsistence allowances, retirees, unemployed persons and other groups who are enthusiastic about social services, so as to improve the capacity of service provision of the whole society.29 To mobilize social forces to engage in the social service cause requires us to proactively explore the industrialization of social services. As a social welfare undertaking, the social service is not only an organic part of the social welfare system, but also a special non-profit social product. The industrialization of social services especially the industrialization of aged care, medical care and rehabilitation care, can on the one hand raise more funding and on the other hand boost the tertiary industry which in turn promotes industrial transformation and upgrading. The fourth is to increase funding for social services and strengthen supervision of the industry. The universal integration of social services is to a large extent to effectively integrate various types of social service supply agencies, subjects of services provision, as well as social service programs and contents to form joint efforts to increase the supply of service items and coverage of objects as well as the fairness of social service provision. For one thing, while strengthening fiscal inputs, we must mobilize social resources to invest in social services. Policies should be geared to guide social funds into the most basic social service projects to ensure that the most basic needs of the people are met, and on this basis, to gradually upgrade the quality of social services. For another, we must remove institutional and policy obstacles to create a good institutional and policy environment. It is necessary to strengthen the collaboration and integration of resources among different government organs as well as within a department, by clarifying their respective responsibilities and adjusting the distribution of interests among them. Also, unified standards for social service provision should be formulated and adopted by different social service provision departments to realize the greatest efficiency of social services. Finally, the authority should formulate standardized social service supervision regulations and set up an effective supervision mechanism, in order to correct phenomena uncalled for and ensure the most effective use of social services funds. The ultimate goal is to increase the quality of social services and efficiency of social service provision.

29

Denney [9, p. 18].

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Afterword

The Universally Integrated Welfare System is modified based on the results of a major tender project of the National Social Science Fund of China “Research on the Basics and Design of the Universal Social Welfare System” (approval number: 09 & ZD061). It examines the universal integration of China’s social welfare system from perspectives of model choice and institutional construction. The chief expert is Jing Tiankui, research fellow at the Institute of Sociology, Chinese Academy of Social Sciences (CASS). Since the project was proved in early 2010, all members of the research group exerted themselves in accomplishing various tasks of the research which turns out to be a full success. Moments of our endeavours still remain clear and distinct. A two-day symposium was held by the research team in Beijing shortly after the project was approved. Chief expert Jing Tiankui expounded the research content, progress, methods, as well as focus and difficulties of the project. All team members exchanged views and carried out discussions around their respective tasks. “Welfare system” and “universal integration” are two core concepts as well as focal points of this topic. In order to accurately understand their connotation and extension and clarify their status in the construction of China’s social welfare system, on April 4–9, 2010, the research team held the second seminar. Jing explained the necessity, background, academic and practical values of the proposed “universally integrated welfare system”. Team members reached broad consensus concerning these topics after ample discussion. Two guests of Chen Hongxia from Suzhou University, and Pan Yi at the Institute of Sociology of CASS, shared their thoughts on social welfare studies, which further consolidated team members’ understanding on this issue. The research team organized or participated a number of academic conferences to draw academic resources and exchange the results in a timely manner. For example, the team organized the Cross Straits Social Welfare Forum, sponsored the National Social Welfare Forum for three consecutive years, and attended the first Cross Straits Symposium on Urban Social Insurance Theories and Practice as well as the 6th, 7th,

© China Social Sciences Press 2021 T. Jing, The Welfare System of Universal Integration in China, Understanding China, https://doi.org/10.1007/978-981-16-4839-7

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and 8th Forum on Social Policies. Team members delivered speeches on these occasions on the topics of Social and Human Relationship and Welfare Models: Reflections on the Exploration of Social Welfare Models in Mainland China, Connotation of a Universally Integrated Social Welfare System, and Towards a Universally Integrated Social Welfare System, Emphasis should be Placed on Universal Integration of Social Welfare System, Tasks of the Integration of China’s Social Welfare system from the Perspective of Big Welfare, Implementation and Universal Integration of China’s Unemployment Insurance System, and Integration of China’s Urban and Rural Residents’ Pension Insurance Systems. They conducted extensive academic exchanges with colleagues at home and abroad, and the research results were widely acknowledged. The results of this project are out of collective wisdom. After the first draft was completed, Jing gathered team members twice to carefully examine the views and contents in it. At last, Jing together with Bi Tianyun, Gao Herong and Li Wei finalized the manuscript. The authors and their responsible chapters are as follows: Preface: Jing Tiankui Part I: Model Construction Chapter 1: Jing Tiankui Chapter 2: Cui Feng Chapters 3, 4 and 5: Bi Tianyun Chapter 6: Gao Herong Part II: System Construction Chapter 1: Jing Tiankui Chapters 2, 4, and 7: Gao Herong Chapter 3: Cui Feng Chapter 5: Yang Yiyong, Gao Yan and Gao Herong Chapter 6: Yang Yiyong and Gao Yan Chapter 8: Yang Xiangqian, Gao Herong Chapter 9: Bi Tianyun Chapter 10: Pan Yi The completed work was submitted to and selected into the National Achievements Library of Philosophy and Social Sciences in 2013 (approval number: 13KSH001). This is not only a recognition of our efforts and achievements but also an encouragement. The research team revised, supplemented and improved some chapters based on opinions of evaluation experts. Jing Tiankui and Gao Herong read through the manuscript again before it was presented as an academic work of excellence. One thing worthy notifying is that Zhao Chunyan, Associate Professor of Beijing Institute of Petrochemical Technology contributed his valuable opinions to this work and participated in all the discussions the research group held in Beijing, though he was not directly researching on or writing this book. The publication of this book owes much to the Scientific Research Bureau of CASS as well as the China Social Science Press, to whom we shall express our heartfelt gratitude. Our research has a time limit but the scientific research at large has not. A research project can only take perfection as the goal of pursuit. Endeavours should

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be continued in the research on social welfare in step with the changing economic and social development, to answer all the questions encountered by social welfare construction and actively promote the construction of a generally integrated social welfare system. Team of the “Research on the Basics and Design of the Universal Social Welfare System” Author: Gao Herong October 26, 2013

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