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Narrowing the Gap

To better protect the welfare of the rural workforce, a new social insurance system targeting workers in small towns comes into operation on October 20.

Passed by the Municipal People's Congress, the insurance system is seen as a milestone in the city's campaign to reduce the income gap between urban and rural areas.

Known as 24+X, the new system, designed to replace the old farm insurance scheme and become the basic social insurance system in non-suburban areas, has two distinctive characteristics -- low entrance cost and high flexibility.

It has lowered the compulsory contribution rate for work units to 24 per cent compared with the 45.7 per cent demanded by the urban insurance system.

That is to say, for work units joining the new insurance system, the compulsory amount they need to pay is 24 per cent multiplied by 60 per cent of the previous years' average income of local employees. While for those under the urban insurance system, the multiplier is 45.7 per cent.

But that doesn't mean non-urban insurance is second-class, as there is a supplementary item, the "X" factor.

The amount of "X" is flexible for work units and individuals. They may, according to their own situation, decide on the amount of the supplementary portion so it is possible that the new scheme will match or surpass the urban insurance system.

The small town insurance scheme now includes endowment, health, unemployment, and maternity insurance policies.

"The low entrance and high flexibility makes possible a wide insurance coverage in the suburbs," said Zhu Junyi, director of the Shanghai Labour and Social Security Bureau, in an explanatory speech to Congress.

"It can best meet the different demands of different districts, enterprises and individuals."

More than an important step in improving the social security system, the new insurance scheme is also a positive way to increase employment of the surplus rural labour force.

Shanghai's employment situation remains serious with the relocation of redundant farmers, who lost their land to the urbanization campaign, at the top of the list of problems.

According to the latest data, the city has about 1 million redundant farmers, one third of the total number of farmers in Shanghai Municipality.

According to the implementation timetable of the new scheme, the financial subsidies for farmers reclaiming their land should first be used to pay for their small-town insurance.

(Shanghai Star October 16, 2003)

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