Social Security for China's Migrant Workers
Wang, Zhikai, International Labour Review
China's lack of social and labour policy coherence is an increasingly serious problem which threatens to undermine labour-capital relations and, ultimately, the sustainability of the country's market transition. A particular constraint on the further development of the private sector is the absence of integrated social protection for rural migrants. These workers account for a large share of the private-sector labour force, yet many of them do not enjoy the same social security rights as urban residents. The Government has started to address this issue through tighter law enforcement but, the author argues, the solution may call for some institutional reform.
In the process of China's rural industrialization and regional urbanization, farmers from the agricultural sector have been constantly migrating to urban areas and work in non-agricultural jobs. In order to sustain the country's economic growth, urbanization and coordinated rural industrialization, Chinese society and the Government are having to tackle the issue of social security for these migrant workers.
China's existing social security system was designed for workers who were urban residents in fixed employment in state enterprises; as such, it is not appropriate for the bulk of workers in today's private firms, who are classified as migrant workers, although they are eligible if formally employed. With increasing labour mobility and the progressive integration of the rural and urban labour markets, the number of migrant workers has been increasing year on year. Yet, it is generally estimated that no more than 20 per cent of the huge number of migrant workers are affiliated to the basic social security scheme (Ministry of Labour and Social Security, 2005a).
In theory, the combination of labour market reform and the promulgation of the 1994 Labour Law (which entered into force in 1995) put an end to the traditional concept of fixed employment (known as the "iron rice bowl") and replaced it by a system of contractual employment relationships. However, migrant workers typically still have only temporary employment status; and most private firms refuse to allow them to exercise their social security rights. Indeed, as local governments have not forced employers to provide social security to legally entitled migrant workers, the overwhelming majority of them are without coverage.
Not only would a fair social security system help to protect farmers and migrant workers against a variety of social risks, but it would also maintain employment stability for private firms, helping them to accumulate human capital and enhance their capacity for independent innovation. In the long term, the protection of migrant workers' interests and the strengthening of their rights will help China to build a more harmonious society.
No integrated social protection for migrant workers in private firms
In principle, migrant workers who are formally employed (i.e. in "standard employment") are covered by China's basic social security scheme for urban workers. But most migrant workers are employed informally, in "non-standard employment" with no provision for the protection of their social security rights. Coverage of these workers is mostly limited to the jurisdictions of a few local governments that have independently established their own social security systems. Indeed, depending on local conditions, migrant workers' social security coverage can currently take three distinct forms.
The first form of coverage is affiliation to the basic social security system for urban workers. Despite slight differences across the regions, the institutional structure of the social security system is in this case essentially the same for both migrant workers and urban resident employees, with the same standard of insurance rights and the same insurance schemes for pension benefits, medical insurance, unemployment insurance, workplace injuries insurance and maternity insurance. …