I. Expanded employment, great progress in reemployment and fundamental changes in employment structure and employment mechanism.

Employment is essential for the living of the people and has always been one of the priorities of the CPC. Since the 4th Plenary Session of the 13th CPC Conference, the Central Committee of CPC has put employment on an important position on the economic and social development agenda and taken a set of active and effective policies and measures to tackle the issue. To deal with the issue of laid-off workers from SOEs, which becomes more and more pressing in recent years, the Central Committee has made a number of decisions, making arrangements for guaranteeing basic living of the laid-off workers and their reemployment. With the proper guidance of the Central Committee, the whole Party and society work together and have achieved great progress in employment and reemployment.

1. Employment keeps expanding.

From 1990 to 2001, the total employment in China increases from 650 million to 730 million with a growth of 83 million. Of which, urban employment increases from 170.41 million to 239.4 million with a growth of 69 million while rural employment increases from 477.08 million to 490.85 million with a growth of 14 million. Despite the sharp gap between labor supply and demand as well as the downturn of the world economy, China has maintained stable in employment. The urban registered unemployment rate has been effectively kept at around 3 percent for most of the years, though it started to increase in the recent two years resulting from the mounting employment pressure. By the end of 2000, the urban registered unemployment rate was 3.1 percent while it rose to 3.6 percent by the end of 2001 and 3.9 percent by the end of Sept. 2002. At present, the localities are actively implementing the policies and measures adopted at the National Reemployment Conference and strengthening reemployment promotion. With concerted efforts, the urban registered unemployment rate is expected to keep at 4 percent by the end of this year, which is lower than the planned control rate of 4.5 percent.

2. Employment structure improves continuously.

The employment by industry shows that the tertiary industry becomes the main channel of employment expansion. The share of employment in the tertiary industry increased from 18.5 percent in 1990 to 27.7 percent in 2001 while the share of primary industry decreased from 60 percent to 50 percent. The employment by ownership indicates that the individual and private businesses are becoming the major sources for employment expansion with their rapid growth. During the period of 1990 to 2001, total employment in the urban individual and private economic entities increased by 30 million, accounting for 40 percent of the total increase in urban employment in the same period. The employment by urban and rural areas shows that urbanization is accelerating while the share of rural employment declined from 73.7 percent in 1990 to 67.2 percent in 2001, with a decrease of 6.5 percent.

3. Substantial progress has been made in reemployment.

In order to address the issue of labor redundancy resulting from the long practice of the planned economy, the Central Committee draws up the guideline of "encourage merging, regulate bankruptcy, lay off and reallocate workers, downsize and enhance efficiency and implement the Reemployment Program ". Attention has been placed on the principle of properly dealing with the relationship between deepening SOE reform and promoting reemployment, combining downsizing and enhancing efficiency with reemployment promotion, and laying off and reallocating workers in accordance with the affordability of the society. As a result of the continuous efforts of reemployment promotion, remarkable progress has been made in reemployment. During the period from 1998 to the first half of 2002, there have been 26 million workers laid off from SOEs, of which 17 million have been successfully reemployed through various channels and forms. A large number of workers transferred from the secondary industry to the tertiary industry, from SOEs to non-public economic entities. As a result of the released redundancy in the SOEs, the enterprise reform has been deepened and their competitiveness improved.

4. The market oriented employment system initially takes shape.

Responding to the need of the socialist market economy, the 3rd Plenary Session of the 14th CPC Conference put forward the initiative of "reforming the labor system and developing labor market" so as to give a full play to the fundamental role of market mechanism in allocating labor resources. The 4th Plenary Session of the 15th CPC Conference further required that the market oriented employment system should be gradually developed. With the progress of the reforms and the development of the labor market, the market oriented employment system has initially taken shape, under which the workers are enabled to seek for jobs by themselves while the market plays the role of adjusting employment and the government the role of promoting employment. At present, not only the new entrants of the labor force, but also the laid-off workers, the unemployed, the graduates of universities and secondary educational institutions and the demobilized military officers and soldiers get employed or reemployed through the market. Great change is seen in people's perception to and pattern of employment. The employment forms turn to be more flexible and diversified with the emerging of such new employment forms as part-time, casual, seasonal work and flexible arrangements in working hours. New ideas including seeking for jobs on one's own, self-employment, lifelong learning and improving employability have been widely accepted.

In the process of developing market oriented employment system, the labor market and employment service system has been strengthened. The public employment service system has been initially established. By the end of 2001, there were 26,000 job placement agencies in China, of which 18,000 were public job placement agencies providing public service including job placement, occupational guidance, vocational training, labor supply and demand information and community job vacancies development. Vocational training has been strengthened and the system of pre-employment and pre-post training has been set up. The vocational qualification system has been further improved. 35 million vocational qualification certificates have been issued to individuals passed occupational skill testing.

5. The transfer of rural surplus labor to non-agricultural sectors has been accelerated.

At present, the employees in the township enterprises amount to 130 million. In addition, 80 million rural labor have migrated to work in the cities, the remittance has become an important source of income for the farmers. The regulation and service system for the rural migrant workers has been gradually developed under the guideline of "equal treatment, proper guidance, improved regulation and better service". The regulation, supervision and inspection on the labor contract, wages and working conditions of rural migrant workers have been strengthened so as to protect their rights and interests.

China faces great employment pressure at present and will still face the pressure in a period of time. There is a sharp conflict between the demands of full employment and the large labor force and poor labor quality. The tasks of employment and re-employment remain very arduous. To improve employment and re-employment work in the new era, the CCCPC and the State Council held the National Reemployment Conference in September 2002, which further specified the guidelines, objectives, policies and measures for employment and reemployment. Focusing on the re-employment of laid-offs, an active employment policy has been formulated. We will actively carry out the tasks and requirements set by the National Re-employment Conference, pay more efforts to promote employment and reemployment, take effective measures to define responsibilities, implement policies, ensure financial input and secure supporting measures so as to open up new prospects in employment and re-employment.

II. The policies of "Two Guarantees" and "Three Security Lines" have been well implemented and the framework of a social security system with Chinese characteristics initially established.

The 13 years since the 4th Plenary Session of the 13th Conference of CPC in 1989 has witnessed the fastest and best development of social security in China. In particular, since the 15th Conference of the CPC, with a view to promoting reform and development and maintaining stability, the CCCPC made the significant decision to implement the "Two Guarantees" and "Three Security Lines" policies and speed up social security system reform focusing on pension insurance, unemployment insurance, basic medical insurance and the minimum living standard guarantee system for the urban residents, which have played a crucial role in deepening SOE reform, restructuring the economy as well as maintaining social stability.

1. The "Two Guarantees" policy has been well implemented.

The "Two Guarantees" policy (namely to guarantee the basic living of the laid-offs from the SOEs and to guarantee the timely and full payment of basic pension benefits to the retirees of enterprises) is a major decision of the CCCPC. From 1998 to the end of June 2002, the laid-offs from the SOEs accumulated to 26 million, 90 percent of whom have entered the re-employment centers in the enterprises. Nearly all the laid-offs in the centers can receive basic living allowance on time and their social security contributions are also paid by the centers. During the same period, the retirees that receive basic pension benefits increased from 27 million to 32 million, with an average annual increase of 1.5 million. Almost all retirees can receive pension benefits on time and in full amount. In addition, 21.5 billion Yuan pension benefits in arrears has been paid out. To implement the "Two Guarantees" policy, the Central Government has allocated earmarked subsidies of 130 billion Yuan RMB to the "Two Guarantees Fund" in the old industrial bases and the middle and western areas from 1998 to 2001. The implementation of "Two Guarantees" policy has rendered a powerful support to safeguard the workers' legitimate rights and interests.

2. The "Three Security Lines" have been gradually improved.

The "Three Security Lines" are important components of the social security system with Chinese characteristics. The first security line is the basic living guarantee system for the laid-offs from the SOEs, which is aimed to guarantee the basic living standard, pay social insurance contribution and promotes reemployment. The second security line refers to the unemployment insurance system targeted at the unemployed, which provides the unemployed with unemployment benefit and actively promotes their re-employment

Since the 1990s, the unemployment insurance system reform has been speeded up, with its coverage extended to employees in all types of enterprises and public institutions in urban areas. By September 2002, the participants in the unemployment insurance totaled 101 million, with an increase of 36 million over the end of 1989 and the beneficiaries totaled 4 million. Since 1998, the delivered unemployment benefit has amounted to 37 billion Yuan RMB. In addition, 16 billion has been allocated to reemployment centers in the enterprises. Therefore, the unemployment insurance system not only guarantees the basic living for the unemployed, but also greatly supports the guarantee of the basic living of the laid-offs in the SOEs and reemployment promotion. The third security line refers to the minimum living standard guarantee system of urban residents covering all urban residents whose family income per capita is lower than the prescribed level. Its main function is to guarantee the essential living of the low-income residents. At present, the minimum living standard guarantee system of urban residents has been in place in all cities and towns where the county government is located, with 19.63 million beneficiaries. The "Three Security Lines" are well integrated and have effectively guaranteed the basic living of the laid-off workers, the unemployed and the low-income residents, serving as an effective social safety net.

3. Great progress has been made in pension insurance system reform.

Since the early 1990s, the pension insurance reform for enterprises has been accelerated. The pension insurance system developed from the "enterprise insurance" to social pooling and established the cost sharing mechanism among the government, enterprises and workers. The basic pension insurance system of enterprise employees under which social pooling is combined with individual account has been initially set up. The socialized delivery of pension benefit and socialized administration of and service to the retirees have been in place. The basic pension adjustment mechanism has been established, through which the benefit level of the retirees has been raised so as to enable the retirees to benefit from social and economic development. At the end of 2001, the basic pension insurance system covered 142 million people, which was twice more than that of 1990.

4. All-round medical insurance system reform has been initiated.

In accordance with the objective of establishing a basic medical insurance system for urban employees by combining social pooling with individual accounts, set by the 3rd plenary session of the 14th CPC Congress, the State Council promulgated Decisions on the Establishment of the Basic Medical Insurance System for Urban Employees in 1998. It decides to establish a medical cost sharing mechanism, medial service competition mechanism and gradually form a multi-level medical insurance system to replace the public medical care and labor insurance medical care system. At present, participants in the basic medical insurance amount to 83 million. The quality of medical service has been improved, revenues and expenditures of the medical insurance funds maintained balance. The work injury insurance and maternity insurance reform progress steadily, covering 43 million and 35 million workers respectively at the end of 2001.

5. The pilot program of enhancing urban social insurance system reform has reaped initial fruits.

In accordance with the objective of establishing a social security system independent of the enterprise, with multiple financial resources, regulated management and socialized service set by the 5th plenary session of the 15th CPC Congress, the State Council formulated the pilot program to enhance the urban social insurance system, and designated Liaoning Province to experiment the program, focusing on making the individual accounts under the basic pension insurance a real account and merging the system of basic living standard guarantee of laid-off workers with the unemployment insurance. The pilot program began in July of 2001, and witnessed great progress so far. The pilot program has accumulated experience for nationwide social security system reform.

With the challenges of population ageing, urbanization and globalization, the improvement of social security system will remain as a tough task for China for a period of time. We will save no efforts to strengthen the policies of the "Two Guarantees" and the "Three Security Lines" so as to provide due benefits to all beneficiaries. Efforts will also be given to expand the coverage of social insurances, further improve the basic pension system, actively promote the medical insurance reform and soundly promote the merging of the system of the basic living guarantee for the laid-off workers with the unemployment insurance. Attention will be on strengthening the collection of social insurance contributions and promoting the socialized administration and service in social insurance.

III. The wages of employees has been increasing, legal construction on labor and social security enhanced and the legal rights and interests of the workers well protected.

1. Rapid wage increase and remarkable upgrade of the living standard of the working population.

In 2001, the annual wages per capita amounted to 10,870 Yuan, which was 5 times over the number of 1990. Deducted by the inflation factor, the real annual increase is 8.1 percent during this period, which ranks the top since the founding of the People's Republic of China. At the same time, the minimum wage system has been established, together with wage guideline system and labor market wage level guidance system. All of these systems have supported the establishment of a macro-regulation system on wage income distribution and facilitated the transformation of the government's function. In mid 1990s, the standard working hour was shortened twice, first from 48 hours per week to 44 hours and then from 44 to 40 hours. Meanwhile, the public holidays have been increased from 7 to 10 days each year, which forms 3 "golden weeks" respectively in May, October and Spring Festival. Therefore, the total rest time for employees has increased from 59 to 114 days per year.

2. Legal construction on labor and social security has enhanced and the legal rights and interests of the workers are well protected.

In order to realize the principle of rule by law and protect the legitimate rights of the workers, a set of laws and regulations have been promulgated during this period -- the Labor Law, the Trade Union Law, Law on the Protection of the Minors, Law on Guarantee of the Rights and Interests of Women, Law on the Protection of the Disabled, as well as Provisional Regulations on Collection of Social Insurance Contributions, Regulations on Unemployment Insurance, Regulations on Minimum Living Guarantee for Urban Residents, and Regulations on Prohibition of Child Labor. 23 ILO conventions have been ratified, by China, including 3 Core Conventions, that is, Equal Remuneration Convention, Minimum Age of Admission to Employment Convention, and Worst Forms of Child Labor Convention. Moreover, the tripartite consultation system has been initiated and the labor dispute resolution system developed, along with the establishment and development of the Labor Contract system and the Collective Contract system. The strengthened labor and social security inspection plays an active role in protecting the rights and interests of workers, punishing and rectifying illegal practices through daily inspection and supervision, targeted investigation and comprehensive regulation.

At the next stage, we will further enhance legal construction on labor and social security, administrate strictly by law and strengthen law enforcement so as to protect the legal rights and interests of the working population. At the same time, the enterprises income distribution system reform will be further deepened, while the incentive system and restrict measures that suit for modern enterprises system are going to be developed. The macro-regulation on income distribution will be strengthened and an income distribution framework composed of "a small high-income group, a small low-income group and a large middle-income group" will be formed.

(China.org.cn November 12, 2002)