VIII. Constantly Raising Living Standards and Improving

the Social Security System

It is an important task for the government in the next five years to raise living standards substantially and gradually enable the people to lead a more comfortable life.

Improving the social security system at a faster pace. This is a major issue concerning reform, development and stability. We need to ensure that basic living allowances for laid-off workers from state-owned enterprises and basic pensions for retirees are paid in full and on time. At the same time, we need to accelerate the formation of a social security system that is independent of enterprises or institutions and supported by funds from diversified sources, and that provides standardized safeguards and society-wide services. In addition, we need to conduct meticulous pilot projects aimed at improving the social security system in urban areas. We need to improve the basic old-age insurance system for workers in urban areas, combining contributions from enterprises and institutions with personal accounts. We also need to improve the unemployment insurance system and gradually incorporate the basic cost-of-living allowances for workers laid off by state-owned enterprises into unemployment insurance. We need to strengthen the system of subsistence allowances for urban residents and take good care of those in dire need. We need to improve the basic medical insurance system for workers in urban areas and carry forward the reform of medical institution and the system for distributing medicines. Institutional employers with available resources are encouraged to set up supplementary old-age and medical insurance programs for their employees and more fully utilize commercial insurance. We must see to it that there are reliable sources and a stable flow of funds for social security, and that these funds are efficiently operated under a strict management mechanism. We need to develop other social security programs, such as social welfare, charities, job placement for demobilized servicemen and social mutual aid. We must safeguard the legitimate rights and interests of women, juveniles, senior citizens and the handicapped; and we need to support the various programs to help the handicapped.

Expanding employment by all possible means. During the Tenth Five-Year Plan period, we face the demanding task of expanding employment. While maintaining a fairly high growth rate for the economy, we must develop labor-intensive industries that have comparative advantages, especially service businesses that can provide large numbers of jobs. We also need to encourage the development of collective, private and individual businesses to create more jobs. We need to set up a flexible employment system to provide more forms of employment. We need to help people change their ideas about employment and encourage them to start their own businesses or find jobs for themselves. We need to make greater efforts to develop the labor market, improve employment services, expand vocational training, and form market-oriented employment mechanisms.

Increasing income of urban dwellers, especially those with low incomes. We need to establish a wage payment system, a minimum wage system, and a mechanism for adjusting the minimum wage as the economy grows. Government financial departments at all levels need to ensure that the salaries of government employees and pensions for retirees are paid in full and on time, and gradually increase salaries in accordance with the principle of feeding the people first, then building the country. We need to deepen the reform of the system of income distribution. We should adhere to the principle of giving priority to efficiency with due consideration to fairness. We need to implement an income distribution system in which distribution according to work is the leading principle and other factors are taken into consideration, and we need to include capital, technology and other economic factors in the distribution of economic rewards. We must raise salaries of senior managers and senior technical professionals in state-owned enterprises to fully reflect their contributions. At the same time we must enforce strict restraint and supervision to prevent those who do poor work from getting high salaries even if the performance of their enterprises is dissatisfactory. There must be penalties for those who are not qualified or even guilty of malfeasance. Annual salaries and stock options may be initiated on a trial basis for leading executives and key technical professionals in state-controlled companies listed on the stock market, but state assets must not be transferred to individuals. We need to tighten the control and supervision over income distribution in monopoly industries, standardize the distribution of social wealth, and strengthen the regulatory function of tax collection over income distribution to prevent the gap in income distribution from becoming too wide.

Adjusting the consumption pattern and improving the environment for consumption. Efforts should be made to improve housing and transportation conditions for both urban and rural residents. We need to build more affordable and functional housing and establish a system to ensure an adequate supply of low rent housing. We need to energetically develop public transportation. We need to improve urban landscaping and develop infrastructures in urban and rural areas. More efforts should be made to improve the living environment of urban and rural residents. We need to develop preventive medical care for communities, improve public health services in rural areas, and expand public-oriented sports facilities.