SCIO briefing on China's employment and social security

0 Comment(s)Print E-mail, February 29, 2016
Adjust font size:

Yin Weimin, minister of human resources and social security

Hu Kaihong, vice director-general of the Press Bureau, State Council Information Office

Feb. 29, 2016

Hu Kaihong:

Good morning ladies and gentlemen. China's employment and social security has been attracting wide attention for a long time. To help you better understand the situation, today we are happy to have Mr. Yin Weimin, minister of human resources and social security, here to describe the situation of employment and social security in 2015 and answer your questions. Also joining us today is Mr. You Jun, vice minister of human resources and social security. Now we give the floor to Minister Yin.

Yin Weimin:

Good morning friends from the press. Today, I'm very happy to attend this press conference. I would like to extend my gratitude to all the press members for their care and support of our works on human resources and social security. Employment and social security are very important for the people's livelihood, and are important pillars to support economic and social development. The CPC and the central government have paid great attention to these topics. Since the launch of the 12th Five-Year Plan (2011-2015), especially since the 18th National Congress of the Communist Party, the central committee of the CPC and the State Council have made a series of significant decisions and deployments, and adopted a series of significant policies and approaches. As a result, the employment and social security works have made significant progress. In the last five years, the scale of employment has continued to expand and the employment structure has been optimizing constantly. The employment situation was maintained in a general stable status. Also in these five years, the building of a social security system made great progress and the groups of people who are covered by the system have increased rapidly. Their welfare has been continuously improving and system building has also continued to be perfected. The achievements in employment and social security works not only efficiently safeguard and improve the people's livelihood, but also create positive effects for a steady overall situation of China's reform and development. Today, I would love to exchange with you regarding the relevant issues of employment and social security, and answer your questions. Thank you.

Hu Kaihong:

Thank you, Minister Yin, for your brief introduction. Now you may raise questions.


I just saw that there is a datum which says under the circumstance of economic downturn in 2015, the number of new employees in urban areas has reached 13.12 million people. How was it realized? How do you understand the current and future employment situation? What will you do to boost employment for this year? Thanks!

Yin Weimin:

Employment is the basis of people's livelihood and it relates to every household. Employment is not just a way for one man to make living, but also a reflection of the man's value. The CPC and the central government have always take the promotion of employment as a priority goal for the development of both the economy and society. They implement the employment priority strategy and active employment policies, especially under the circumstance of increasing pressure from the economic downturn.They adopted a series of targeted polices and approaches to maintain the general stability of the employment situation.

As the reporter just mentioned, the number of newly increased urban employees has reached 13.12 million people, 0.8 percent lower than the number of last year on a year-on-year basis. However, the figure still managed to stay above the 13 million mark. Since 2013, the number of newly increased employees has been staying above that mark. At the end of last year, the urban unemployment registration rate was 4.05 percent, 0.04 percent lower than that of 2014 on a year-on-year basis. And key groups have seen a relatively stable employment. In the last year, 7.49 million students graduated from colleges, and their employment rate was basically even with 2014's data. Compared to 2015's figure, there were 209,000 more people being hired than last year’s statistics. At the same time, the employment transfer of rural migrant workers also expanded. By the end of last year, the total number of migrant workers reached 277 million, 3.52 million people more than in 2014.

Under the circumstances of the increasing pressure of the economic downturn, the situation of employment has still managed to stay steady, so that some media and individuals are suspecting the accuracy of the employment data. However, I can say to you with great responsibility that the situation of employment, whether good or bad, is not just reflected in the data available, but can also be observed by you in your neighborhood and from the market. If the employment situation really had a problem, I believe the media would act faster than what we would react. As to why the employment situation has had such good results, or has been "better than expected," I feel it benefited from the following three aspects.

Firstly, it mainly benefited from China’s economic medium-high growth, and the growth rate was still in a reasonable scope. As a result, it’s possible to create enough job opportunities. Last year, China’s GDP grew by 6.9 percent, which was fairly high across the world. With the economic aggregate becoming fairly large, its contribution to employment has increased. During the 11th five-year plan period (2006-2010), the increase of one percentage point of the GDP provided about 1 million job opportunities, while during the 11th five-year plan period (2011-2015), the number of newly added urban employees reached 1.7 million with the increase of one percentage point of the GDP. Since the economic pie is becoming bigger, the capacity for employment is expanding.

Secondly, it owed much to the optimization of the economic structure and dividends of reform and innovation. Last year the added value of the tertiary industries made up over 50 percent of the country's GDP for the first time, and the contribution of the service industry to employment was 20 percent than the secondary industries. In the meantime we have promoted the transformation of government functions, grassroots entrepreneurship and mass innovation, and the reform of business systems to release social energy. In 2015, the number of newly registered enterprises topped 10,000 a day on average. We all know that the entrepreneurial spirit brings greater employment opportunities and the release of dividends of reform also increases the rate of employment.

Thirdly, it profited from a proactive policy for promoting employment and the improvement of the employment service system. Last year, the State Council issued new policies of employment and entrepreneurship as well as improving existing policies. In this process public employment service agencies at various levels made great efforts to make sure that various policies of employment were fully implemented, which helped to improve employment.

Concerning the employment situation in 2016, I think it would be as complicated as the domestic and international economic situation is. It will be an arduous task to address the issue. In my opinion, this year’s employment situation will be influenced in the following three respects: Firstly, relieving the over-capacity of production will result in a partial number of employees being laid off. Secondly, with downward economic pressure, partial enterprises will experience difficulty in production and operation, which will result in reduction of jobs. Thirdly, the growing number of young graduates will continue to put pressure on employment. This year, we’ll have 7.65 million of college graduates, rising by 160,000 from last year, and a similar number of secondary vocational graduates, middle and high school graduates who will not continue their schooling. These add to 15 million of young job seekers. The pressure is obviously heavy.

However, we still feel confident in maintaining a stable job market. One important reason is that China’s economy continues to maintain sustained and sound development and in the process new modes and new drivers for economic growth are taking shape with structural adjustments, which will create a supportive environment for employment. We’ll adopt following policies this year to promote employment: First, macro-economic and industrial policies will be coordinated to create more job opportunities. Second, various measures will be adopted in an effort to resettle workers laid off while relieving production overcapacity. Third, we will continue to provide college students with more career services. Forth, vocational training will be strengthened to help job seekers improve their professional skills. Fifth, we will continue to promote entrepreneurship to expand employment, which has a great potential. And sixth, we will continuously offer good public employment services, online services in particular, to better serve the target population. Thank you.

Phoenix TV:

Minister Yin, you just mentioned that addressing the overcapacity issue will result in a few laid-off workers. Have you any idea about the projected number? And what measures will be adopted to boost their reemployment? Thank you!

Yin Weimin:

As I said just now, addressing overcapacity is the priority of supply-side structural reform this year. During the process, the resettlement of laid-off workers is the key aspect. The State Council has made arrangements regarding how to resolve overcapacity by issuing “1+8” documents, namely, the guidelines and eight related supporting documents. One of them concerning opinions on the resettlement of workers was formulated by the Ministry of Human Resources and Social Security and other relative departments. In this document, we have defined a few principles, channels, and requirements of resettlement, that is, guided by local governments, enterprises should take the leading role in accordance with laws and regulations.

Regarding the specific resettlement channels, there are four aspects. First, encouraging enterprises to tap their potential to resettle the workers within themselves. This means the enterprises should create new jobs for those laid-off with the present equipment and technology. Second, supporting workers to find new jobs or start their own businesses. We will launch employment support programs covering vocational training, job agency services and employment guidance. Third, implementing internal retirement. That means employees who will reach the statutory retirement age within five years can choose to retire based on their wishes and their companies’ approvals. Fourth, creating public service posts for those who cannot find jobs in the market. Both the central government and local governments will provide support in funds and policy. The central budget will grant 100 billion yuan (US$15.27 billion) as awards and subsidies to support this channel. Meanwhile, unemployment insurance and employment special funding will provide capital for those who are qualified. Also, we will properly deal with the employees’ labor relations as well as their social insurance transfer and continuation during the process.

We have also defined a very important principle that each employee’s resettlement plan must be studied and approved by the workers’ congress. This means that the employee is not only a receiver of the plan but also an active participant in this process. As for the good experience and successful practices in some regions, we will spread them in time all over the country.

You just asked how many workers on earth need to be resettled. Now, we take the steel and coal industries as the breakthrough point for resolving overcapacity. Preliminary statistics show that about 1.8 million workers need to be resettled. More specifically, 1.3 million are from the coal industry and 500,000 from the steel industry. Although this task is very difficult, we have the confidence to complete it actively and steadily with joint efforts from all concerned parties.

China News Service:

Several schedules on the delaying retirement age have recently circulated online. I want to ask Minister Yin if there is such a schedule. Why should China launch the delayed retirement policy? You mentioned last year that a draft plan on the issue will solicit public opinion this year. To what extent does the work proceed? When will the policy be implemented? Could you give us some hints? Thank you.

Yin Weimin:

People are very concerned about the progressive delay of the retirement age policy and there are also many interpretations of the issue. I remember that I made a special reply to this question at the press conference at last year’s two sessions of the NPC and CPPCC, but l’d like to share more of my opinions with you today. First of all, why should China delay the retirement age? To put it simpler, the existing statutory retirement age of China can hardly meet the needs of the current situation in the context of an aging population. The existing statutory retirement age was formulated in the early days after the founding of the People’s Republic of China, 60 years ago when the life expectancy was still very low. In the past 60 years, both the economy and society have changed dramatically and life expectancy has been greatly increased. Moreover, the aging of the population will grow faster in the future. As of last year, the number of senior citizens over the age of 60 reached 220 million, accounting for more than 16 percent of the total population. Therefore, either the development of human resources or the sustainable sound operation of pensions and medical funds demands change to the statutory retirement age. It is also a common practice around the world. People in developed countries basically retire between the ages of 60 and 65 or higher. So, I think we should look at the issue in response to the trend of aging population, on which social consensus is being formed after discussions in recent years.

We have a basic plan in formulating the policy on progressively delaying retirement age. First, we will delay the retirement age for a few months year-by- year until it reaches the target retirement age in a fairly long time. For example, you are supposed to retire at the age of 60 in five years, but when the policy is implemented, you probably have to retire at the age of 60 years and 3 months. This is more acceptable. Another person is supposed to retire the next year and he/she may have to retire at the age of 60 years and 6 months. This is the first point. Second, from a practical standpoint, we will classify people into different groups by their existing retirement ages and implement the policy step-by-step. Third, once the draft plan comes out, we will solicit public opinion widely as it involves the fundamental interests of citizens. All the policies involving public interest shall solicit opinion from the public and embody a social consensus.

Now, we have made a draft plan, but we have to submit it for approval by related procedures before soliciting public opinion. We mentioned a schedule earlier and will work out a plan this year. Thank you.

Ta Kung Pao:

The media have more than once reported on the top-level design of the pension system carried on by the Ministry of Human Resources and Social Security and other relative departments. Could Mr. Yin please introduce the design? Also, how is it going? Thank you.

Yin Weimin:

The pension system is considered a safe network for the people’s livelihood and a stable factor of society, because everybody expects to be cared for when as they become old so that their worries can be alleviated. The pension system in our country was established in the 1990s, which has, generally speaking, made huge progress in three aspects over the past more than 20 years.

First, the framework has taken shape. Our country’s pension system consists of dual platforms -- urban and rural.

Second, the population incorporated in the system has been expanding. The twin platforms have presently covered 850 million residents. The system is designated for a certain group of people whose number is estimated at about 1 billion, excluding preschool and school children and teenagers, rather than for full coverage. The pension system currently covers 850 million people with a coverage rate of 85 percent is the largest single pension plan in the world.

Third, the benefit has increased. The urban pension insurance for the retired working class has increased for 11 years in a row from 700 (US$106) in 2005 to 2,200 yuan in 2015.

I believe the achievement made in the building of the pension system in our country over the past two decades is marvelous compared to the evolution of the systems in developed countries over a span of dozens of years or even more than 100 years. However, we still need an objective view concerning the pension system which requires institutional improvements in pursuit of fairness and sustainable development. Moreover, a graying society is the biggest challenge posed to the system. Different from the social insurance which has run in reciprocal ways, the pension insurance for retired people is afforded by the payment of the present employees. However, with the ratio of the present labor force to retired people declining from 3.3 to 1, to 2.9 to 1, the sustainability of pension insurance has been challenged in view of the severe prospect affecting not only China, but also the rest of the world. As things stand, reforms are inevitable for all of us. We are now engaging in making a top-level design of pension insurance to push for the reform of the pension system.

The reform revolves around a number of aspects. First, the overall population eligible for the pension system is encouraged to join the insurance plan. Pension insurance can generally cover all, including, particularly, the migrant workers and those with flexible occupations which account for 100 million people in the country, for the purpose of fairness.

Second, we’ll continue to balance the distribution of pension insurance across the country as we shift from the present provincial management to unified national operation in order to address surpluses and deficiencies on a wider scale and fend off risks.

Third, we’ll improve personal accounts to make it work better with incentive and restrictive plans.

Fourth, we’ll roll out policies to postpone the retirement age in phases.

Fifth, we’ll manage the investment of pension funds to maintain and increase their values.

Sixth, we’ll collect the pension funds from a variety of areas. In particular, we’ll transfer state-owned assets to the pension pots to pay off the historical debts owed to the funds covering very old retired people and people retired amid the establishment of the pension systems. The pension of those people should be financed by fiscal revenues or state-owned enterprises to cover debts.

Seventh, we need to build a multilayer pension system. Apart from pension insurance, we can also introduce annuities, occupational annuities and commercial insurances for a multilayer pension system. Some of those reforms have been carried out, such as the “Measure on the Investment and Operation of Pension Funds” issued by the State Council, followed by a number of other policies to be implemented one after another.

I believe those will be our comprehensive reforms with a slew of policies which are crucial to the sustainability of the pension insurance, safety of operations and a guarantee for the livelihood of the people as they get old.

There is one more point I want to add. If those measures can be taken into effect, the rate of the social insurance premiums can be lowered as long as the payments guarantee distribution. Thank you.

China Daily:

My question concerns China’s Labor Contract Law. Recently, some have argued that the current Labor Contract Law should be adjusted, since it has undermined the flexibility of the Chinese labor market and decreased labor productivity. Minister Yin, what’s your position regarding this issue? Thank you.

Yin Weimin:

Labor Contract Law is an important law on adjusting labor relations in China. Since first being put into effect eight years ago, it has played an active role in regularizing employers, ensuring lawful rights for employers and employees, and establishing harmonious labor relations. It also has some problems, mainly two aspects, namely, a lack of flexibility in the labor market and high labor costs for employers. Of course, there are other issues, but these two aspects are the main problems.

Meanwhile, as both the economy and society develop, a range of new commercial activities and employment forms have emerged, which didn’t exist when creating the current Labor Contract Law. Therefore, in order to deal with such problems, as the authorities, we are busy with our research. We will widely listen to public opinion, including what you mentioned regarding adjustments of the current law, conduct thorough research, and provide advice in good time. Thank you.

China Xiaokang Magazine:

I have a question for Vice Minister You. Could you talk about this year’s general plan for building a unified basic medical insurance system for urban and rural residents by integrating the medical insurance system for urban residents with the new rural cooperative medical care system?

You Jun:

China has set up a new rural cooperative medical care system for rural residents and a basic medical insurance system for non-working urban residents, which played a great role in ensuring basic medical care for the two groups of people. As China’s medical care systems are covering over 1.3 billion people, we have ushered in a new era of universal health care. With deepening urbanization and the mobility of the people, division between the new rural cooperative medical system and the medical insurance system for non-working urban residents has caused institutional imbalances and a disparity of resources. Therefore, the State Council issued a specific document early this year, requiring the unification of the basic medical insurance system for both urban and rural residents. It refers to the unification in six aspects mainly on the policy level, including coverage, financing policies, medical benefits, the directories of insured drugs, the management of designated hospitals and the management of insurance funds. Before the State Council released the document, many places around the country, like Tianjin Municipality, Shandong Province, Guangdong Province and Zhejiang Province, had been exploring means of institutional unification of the two medical insurance schemes. Generally speaking, the result is quite good. The new adjustments have given urban and rural residents a sense of fairness, and the benefits of medical insurance have improved.

The Ministry of Human Resources and Social Security is actively implementing the requirement of the State Council. After the release of the document, we immediately held a conference on this matter, distributed related guidelines and supervised its implementation in a regular manner. We hope different parts of the country can implement the plan by June and complete the unification of the two schemes by the end of the year. Thank you.

Health News:

Recently, there have been rumors that many provinces have seen deficits in medical insurance funds. Previously, there were also media reports that a new policy might be adopted to ask retirees to pay medical insurance premiums. Will the government put this policy on its agenda? According to the materials I just received, in the next step, the government will probe into the practice of long-term care insurance. Is there any specific plan regarding this issue? Thank you.

Yin Weimin:

I will answer the first question and leave the other two to Vice Minister You Jun.

Basically speaking, China’s medical insurance system is running well. It has adopted the pay-as-you-go approach. This is different from the old-age pension, under which part of the fund needs to be accumulated. Concerning medical insurance, on the national level, there is no deficit. Our problem is that medical insurance is managed separately at lower levels. The highest authorities with power to allocate the funds are prefecture-level governments. Therefore, some particular regions have seen deficits. There are many reasons behind this situation. For one thing, the population structures in different regions differ from each other. For example, in some regions, retirees account for a large portion of the regional population. A case in point is the old industrial bases. For another thing, in some regions, people might receive excessive medical treatments. We will take comprehensive measures to address these problems.

Now, I’ll leave the floor to Mr. You.

You Jun:

We have also noticed that the news about retirees paying medical insurance premiums had sparked public discussion. We believe that the discussion will help all circles in the society better understand China’s social security system. It will also help us collect public opinion and advice, so as to further improve social security policies.

As you might know, the rules on retirees in the medical insurance system for urban workers were designed during the reform according to old conditions. It evolved from the labor insurance system in enterprises. Under the system of the planned economy, state-owned enterprises’ income and expenditures were under unified state control. There was no accumulation of funds. At that time, the task of distributing old-age pensions to retirees was very difficult. Therefore, there was a rule that retirees could enjoy the benefits of medical insurance without paying premiums. This practice showed our respect to the great contributions the retirees had made to our country.

The system has been running for almost 20 years. It is basically running well. It effectively protects the rights of workers enjoying medical care. We are able to continue to provide you with the service, so you may rest assured. However, as the old saying goes, preparedness ensures success, and unpreparedness signals failure. Even though our current work has gone well, we should study the situation and work to foresee problems concerning medical insurance.

The old Chinese saying goes, “a man with no thoughts for the future will surely have trouble close at hand.” Currently, the biggest challenge has come from the ageing population. The Chinese population is getting old at a faster rate and on a larger scale. It definitely imposes great pressure on the long-term operation of medical insurance. You mentioned that in some particular regions, there were deficits in medical insurance. Minister Yin just explained the issue. The deficits were seen in regions where more people were enjoying the benefits of medical insurance, while less people were paying the premiums. This is a reminder to us. According to statistics, retirees’ medical expenses are generally about four times that of the workforce. Currently, about 25 percent of all those participating in the medical insurance system are retirees, so their medical expenses account for 65 percent of the total. It’s natural that elderly people spend more on medical treatments. We established the system to provide the elderly with care and help promise them a healthy, happy life. This should be the consensus of society.

However, China’s current health insurance system runs on a pay-as-you-go (PAYG) basis, which raises funds from society, and achieves mutual aid through mutual assistance. In order to ensure medical care payment and guarantee basic medical needs for insured participants, rights and obligations should be balanced. It requires an even sharing of the responsibilities by the government, employers and individual. That is the essential attribute of social insurance. It’s not fair to place all the pressure that results from an aging population in the future only on employees, which is unsustainable and undermines economic and social development. Thus, the difficulties the current health insurance system has to face in future are mainly about fairness and sustainability.

There are two ways to solve the problem, to increase income and reduce expenditure. To increase income, we should strengthen management, deepen health-care reform, cut medical costs, and keep residents’ life-savings secure. Meanwhile, in response to future pressures, we should work out strategies to ensure the long-term balance of healthcare insurance funds, and provide better and more sustainable guarantees for participants. The research requires time. During the process, we will widely solicit public opinion and conduct thorough research before the reform suggestions finallyintroduced.

What I want to explain is that there are multiple choices for the reform paths and implementation methods. However, no matter how it is reformed, one thing won’t be changed. The reforms are made to better protect participants’ interests, and giving participants a feeling of satisfaction about the healthcare system. To increase peoples’ welfare has always been the priority of our work.

Long-term care insurance is an important measure for us to deal with the aging population. The statistics show that the number of disabled and half-disabled elderly people in China has reached40 million, and the number is on the rise. The increasing number of disabled elderly caused by the aging population will bring serious risks for families, individuals and society. According to the requirements of the fifth plenary session of the 18thCPC Central Committee, the Ministry of Human Resources and Social Security has set up a panel to research long-term care insurance. Until now, pilot projects have been launched in Qingdao of Shandong Province, Shanghai, and Changchun of Jilin Province. We will sum up experiences, actively expand pilot projects to the whole country, and release policies in good time. Thank you.

China National Radio:

My question is about pension funds. Recent reports claimed there is a gap in China's pension fund, resulting in a difficulty in issuing pension in some areas. I would like to ask how big the gap is and how we should deal with the situation.

Yin Weimin:

The gap in pension funding has attracted wide public attention and stirred up many discussions. First, on the national level, the operation of pension funds has been stable, and there is no such a gap. Last year, the total income for pension funds stood at 2.7 trillion yuan (US$413.24 billion) and its expenditure was 2.3 trillion yuan (US$352.02 billion), so the annual balance was more than 300 billion yuan (US$45.92 billion) and the overall balance was 3.4 trillion yuan (US$520.37 billion). The figure shows that no gap exists across the country, given that our ability to pay will last for 17 months.

Second, as for different provinces, an imbalance does exist and the disparity varies from province to province. Since the pension fund is conducted individually by different provinces, many factors, primarily the demographic structure, have resulted in these differences. Some provinces are capable of issuing 40-50 months' pensions, whereas others could sustain only 1-2 months. Last year's statistics show that seven provinces' pensions were experiencing a deficit for the past year alone, though they still had a surplus as to the total fund. It is like a household. This month you made 1,000 yuan but spent 1,100, so the monthly deficit was 100. However, you don't have to borrow money since you still have a deposit of 10,000 yuan, which is enough to pay off all the expenditures. Even when the seven provinces had to draw money from their total funds, there was still no deficit created.

Third, from the long-term perspective, this issue is indeed worth mentioning, and we should make preparations for future difficulties, especially the aging population. This calls for stronger sustainability of the pension fund. As for specific measures, I have already talked about them just now. The abovementioned seven to eight measures are all centered on the pension fund's sustainability.

With regard to the reform of the pension system, the basic principles are fairness and sustainability. I think the public can relax on this issue, since we will implement a series of reform measures to ensure the sustainability of pension plans. There is no problem there. Thank you.

Beijing TV:

Some people have pointed out that the "the more you contribute, the more you reap" stimulus mechanism in the pension system is not noticeable enough, and that the pension funds for newer retirees are reduced year after year, attributing these to certain people's suspension of pension contributions. How would you comment on this, and would more payments ensure more benefits? Thank you.

Yin Weimin:

In designing China's pension system, we followed a basic principle of more benefits for more and longer contributions. The system combines social contributions with personal contributions. Years of practice show that the system is sound overall. For social contributions, we pay more attention to fairness to allow secondary distribution to play a part. For personal accounts, we stress each person's own contributions to their pension plans. The more they contribute, the more they will reap in the future. The system has been developing throughout the years. As I mentioned above, we have a plan to improve personal accounts, in which we will stress the role of stimulation and restriction. We will roll out concrete measures for this undertaking. Thank you.

Hu Kaihong:

This marks the end of today's press conference. Thank you, Minister Yin, Vice Minister You, and our friends from the press.


Follow on Twitter and Facebook to join the conversation.
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:    
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from