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Social Security Needs Reform
Misunderstandings about social security programs in China should be corrected, urged Jing Tiankui, director of the Institute of Sociology under the Chinese Academy of Social Sciences, in an article in the Beijing-based Outlook magazine.

Social security reform should aim at easing burdens on government, national finance and enterprises. The government should take the leading role in this reform. Operation of social security programs can not be totally market-oriented.

The social security system should function as a relatively independent system, said Jing.

With different channels of fund collection and subjects of protection, the country's social security system can be divided into three parts.

One part includes programs supported by national finance, such as social relief, social welfare, mutual aid and special care for disabled ex-servicemen and family members of "revolutionary martyrs."

Another part refers to the country's mandatory social security programs, such as insurance for retirees' pensions, unemployment, medicare, work injuries, childbirth and housing.

And the third part is commercial insurance on the principle of voluntary participation and aiming at making profit, covering insurance of individuals or enterprises, and mutual insurance.

The operation of China's social security programs should give priority to fairness, stressed Jing.

Respective responsibility of the government, enterprises, and individuals should be clearly defined. Coverage of social security programs should be expanded on the basis of ensuring people's basic livelihoods. And all kinds of resources should be used fully to maintain the sustainable development of social security programs.

China's social security programs currently face many difficulties, Jing pointed out.

First, there is a lack of sufficient funds. Unemployment insurance and urban retirees' pensions cannot play an effective role due to a lack of money.

Statistics from the State Council show that China's funds for social security programs reached 124.2 billion yuan (US$15 billion) last year, of which funds for unemployment insurance totaled 21 billion yuan (US$2.53 billion). But in the same year, people participating in the program of unemployment insurance surpassed 100 million. Although governments at all levels have appropriated more funds for social security, the input remains insufficient.

In addition, the program of medicare insurance takes only a small part of social security funds. The gap between the public's medicare needs and limited and expensive medical resources is becoming a sizeable problem.

Second, coverage of social security programs is too limited.

In 1998, 27 million workers were laid off from State-owned enterprises, among whom more than 90 per cent received help from the re-employment centers and about 18 million people were re-employed. By the end of last year, people taking part in retirees' pension, unemployment and medical insurance schemes reached 140 million, 100 million and 94 million respectively. Yet, the country's social security programs still cover only 10 per cent of China's population.

Finally, management of social security programs has not worked effectively. Responsibility of different departments is not clearly defined.

China's social security system should thus be reformed so that these difficulties are addressed, urged Jing.

The system of retirees' pension insurance and minimum living standards security should be unified. This integration would better define responsibilities of the government, enterprises and individuals.

It is difficult to push medicare insurance reform forward because many urban residents do not want to lose their vested interests and this reform puts too much stress on medical treatment.

Studies show medical treatment costs more but is less effective than sanitation and health services. Medical treatment is not the main contributor to a decreasing death rate. Public health services can effectively prevent diseases and have significant effects using little money.

The medicare insurance reform should stress public health services. As for medical treatment, enterprises and individuals can choose different insurance methods according to their financial power, said Jing.

With regards to unemployment insurance, it should be transformed into re-employment incentives. Once a person loses their job, they should be encouraged to receive training to aid re-employment. If that person does not attend training sessions, he can only draw the minimum living standards insurance. Replacing the practice of issuing relief to the unemployed with issuing funds for training sessions, might prevent people from drawing unemployment relief when they have already been re-employed.

All social security programs should be based on the community. And every family should benefit from them.

(China Daily May 22, 2003)

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