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Safety net for unemployed and retired
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CHINA is to set up the world's largest social security system to provide a much-needed safety net for millions of workers laid off as the country pushes forward with economic reform, State media said on Saturday.
But unlike the current cradle-to-grave system in which State-owned enterprises were responsible for their workers for life, the new system would involve people making voluntary or compulsory contributions to their pension or unemployment insurance, the Xinhua News Agency said.
The move comes as China's population is rapidly ageing, raising the demand for pensions while poorly performing State-owned companies are unable to pay pensions.
China's jobless rate is also expected to jump from 3.1 per cent or about 5.95 million registered unemployed last year to five per cent within the next five years as more unprofitable companies close.
Under the existing system, many retirees and laid off workers have not been paid or are still awaiting remuneration by the companies. In many cases, the ailing companies either lack the money or managers have siphoned the funds, leading to frequent, large protests.
The heavy burden on State-owned companies has also made it harder for them to restructure and compete with foreign-funded enterprises, said Li Rongrong, newly appointed minister of the State Economic and Trade Commission (SETC), at a news conference during the ongoing session of the National People's Congress.
The new system is expected to cover about 200 million people, but not the majority of the population -- more than 800 million peasants.
“In rural areas, ... the main form of insurance is still provided by families, which completely conforms to the national condition and ethics of China," said Zhang Zuoji, minister of labour and social security.(SD-Agencies)
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