Searching for a Better Sense of Security

飞雪寒冰

Stretching China’s social safety net to reach more people with more support has been cited often by government leaders as a key priority for 2009.



“Upgrading the level of social security by a wide margin” was a goal underscored at a February 23 meeting of the Politburo, and Premier Wen Jiabao on March 5 mentioned the social security system – including pensions for retirees and basic living subsidies for the poor – in the context of the government’s economic stimulus project.



In a central government work report, the central government promised a 17.6 percent increase in Beijing’s portion of social security funding to 293 billion yuan, up 43.9 billion year-on-year. Altogether, the government’s nationwide spending plan for 2009 called for local governments to boost contributions 26.6 percent from the previous year, to 489.7 billion yuan, bringing combined central and local government spending to nearly 782.8 billion yuan, up 23 percent.



That said, a closer look at the calculations shows this much-anticipated financial backing may not stretch as far as many hoped – at least for now. Meanwhile, calls for more comprehensive social support and bigger government outlays have been growing louder.

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Small Steps



Indeed, the latest nationwide spending plan calls for only a slight increase in the budget portion dedicated to social security.



The central government, for example, has earmarked 6.68 percent of its 2009 expenditures for social security programs, down from 7.04 percent in 2008. And although local governments plan to spend more this year, expenditures across the country will rise a mere 0.11 percentage points to represent 10.27 percent of all government outlays.



The impact on the general public will be limited. Allocations will focus on improving the social security for poor people by increasing the subsistence guarantees, and raising pension levels in some areas, said Chu Fuling, director at the Social Security Department of the Central University of Finance and Economics.



Receiving the biggest increases will be programs subsidizing social insurance, supporting workers affected by enterprise closures and bankruptcies, and providing basic living subsidies to urban poor.



Subsistence guarantees for the urban and rural poor, disaster relief, support for disabled military personnel, and payments to families of martyrs will receive more than 127.8 billion yuan combined.



Spending for subsidizing social insurance funds this year will increase 24.2 percent to more than 202.4 billion yuan, with more than 139.2 billion yuan from the central government set aside for basic pension funds for enterprise retirees.



The central government will continue to bolster the pension levels an if necessary, help to close gaps in personal pension accounts for local government authorities, said Yin Zhiyuan, deputy director-general of pension insurance at the Ministry of Social Security’s Department of Human Resources.



The central government will help local governments unable to fully fund their pension insurance funds. Wen’s work report also said premium levels for unemployment, work accident and childbirth insurance would be enhanced as well.

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The medical insurance system, which is not included in the social security program, will get a boost through a 30.4 billion yuan central government injection for a new Rural Cooperative Medical Care System and a Medical Insurance System for Urban Dwellers. The goal is to ensure an 80 yuan per capita subsidy from the central and local budgets.



The central government also set aside only 5 billion yuan to supplement the social security fund, down 54.9 percent from last year.



Pensions for retirees of government institutions will get a boost from the national budget with an injection of more than 214.1 billion yuan, up by 19.9 percent from 2008. Subsidies for workers following enterprise bankruptcies and shutdowns will amount to 40.6 billion yuan, up 24.5 percent.  　



Monthly per capita subsistence allowances for the rural and urban poor will increase by 10 yuan and 15 yuan, respectively, costing the central government an additional 17.7 billion yuan this year. Moreover, the government plans to boost pension subsidies by 26.5 billion yuan.

   

Chu Fuling called the additional investments useful overall, although he said the general impact would be limited.



“A 10 to 15 yuan hike for the poor is not much,” he said. “Meanwhile, despite constant growth, monthly pensions for enterprise retirees are still far less than those offered by government institutions.” These pension payments are to reach only 1,200 yuan a month by 2010, Chu said.

飞雪寒冰

Wide Margins



Larger benefits are not the only indicators of success for a social security system. Improved services and wider coverage are also valuable. But cash benefits are what count for most people.



Yet the government’s modest success in building a social security system have been tempered by warnings against high expectations for social benefits from officials such as Tang Min, deputy secretary-general of the China Development Research Foundation (CDRF).



“Existing national coffers can afford no more than a basic and low-level social security system,” said Tang. “At the moment, various payment-based arrangements should remain at the center of the whole system.”



The investment scale needed for building a social security system in China and the government’s ability to finance are spelled out in CDRF’s recently released China Development Report 2008-’09: Building a Development-oriented Universal Social Welfare System.



“Social welfare” as described in the report includes more than “social security” as defined in the national government budget, encompassing education, public health care, employment, pensions, housing, subsistence for the poor and special benefits for specific groups.



It lays out a package of goals, from offering fair benefits to all citizens, to providing adequate public services and giving equal access to services to people in rural and urban areas.



The report also calls for improving the basic system of “elderly care” and allowing the entire working population to participate in social insurance schemes through a system of affordable installments and proper benefits for retirees, the sick, those injured on the job, and the unemployed. Subsidies also would be offered to the elderly not covered by social security.



The report also outlines a plan for medical coverage and steady improvements in medical care benefits, as well as implementation of basic medical insurance for urban workers new rural cooperative system.   



At the same time, the report says, the government should provide basic living support and medical benefits for the unemployed and others with little or no income.

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At this point, government social security spending is expected to reach 1.24 trillion yuan by 2010. This will provide monthly subsidies for each of 80 million elderly people of 100 yuan in rural areas and 300 yuan in urban areas as well as 2,341 yuan a month in pensions for 12.6 million government retirees; pension insurance coverage for 250 million rural dwellers; and special care for 6.5 million military veterans or relatives of revolutionary martyrs, providing per capita allocations of 417 yuan.



Investments also would raise monthly subsistence allowances for the country’s 62.7 million rural and urban poor to 100 yuan and 200 yuan, respectively, and provide a monthly subsidy of 200 yuan for the 5.3 million households with childless or infirm elderly people eligible for food, clothing, medical care, housing and burial expense guarantees. The government’s spending is expected to hit 2.39 trillion yuan by 2020.



CDRF Secretary-General Lu Mai said the ambitious spending plan underscores the importance of reaching the government’s goal of maintaining annual GDP growth rate of 8 percent. He also stressed the importance of enhancing the ability of fiscal and tax regimes to provide financing, as well as the government’s ability to administer allocations.



“A country’s social security level should keep pace with its economic development, so that each stimulates the other,” said Wang Yanzhong, a social security specialist at the Chinese Academy of Social Sciences.

TiffanyLin