President Hu Jintao's call for accelerated social security reforms in both urban and rural areas demand the full attention of all departments in charge of building a better social safety net.
If the country is to create a development opportunity out of the current economic crisis, the policymakers concerned must speed up their efforts to overhaul the social security system in line with people's increasing needs.
Since the global financial and economic crisis hit the country's exports hard late last year, the Chinese authorities have recognized the necessity to move away from reliance on export and investment for growth. And, to boost domestic consumption as a key growth engine, a national consensus has been developed on a more universal, flexible and efficient social security net to cushion people against hard times.
The central government has planned to allocate 728 billion yuan ($106 billion) this year - an increase of 29.4 percent year on year - for items directly related to the people's well-being such as education, medical and health care, social security, employment, low-income housing and culture. The country has also achieved considerable progress on expanding coverage of basic social security in both urban and rural areas.
However, given the massive outlay needed, the current social security coverage remains meager. As a result, most people are keen to save money for keeping in the bank rather than spend it without worrying about old age or costly medical treatment.
President Hu also urged special attention to work relating to rural residents who represent weaker groups in the social security system.
A case in point is the difficulty for farmer-turned migrant workers to transfer and renew pension fund accounts anywhere across the country. Usually, migrant workers change jobs more frequently than urban workers.
The ongoing global downturn that hit China's export bases in coastal areas has forced a large number of migrant workers to seek jobs in other places.
But the current pension insurance scheme discourages such cross-region flow of workers. The scheme stipulates that a person's contribution to the pension fund (which increases with every working year) will be stopped and reverted to the starting level when he or she leaves a job to work in another province or region.
The Ministry of Human Resources and Social Security is acutely aware of the problem. At the beginning of the year, the ministry issued two drafts soliciting public opinion on pension insurance for migrant workers and cross-region transfer of pension fund for urban workers. But the follow-up of reform is not quick enough.
The President's call highlights the urgency for building a better social security system that is in tune with the requirements of a flexible labor market.
In view of the impact the policy would have on employment and consumption, it is time to cut the red tape and press ahead with social security reforms without the least delay.
(China Daily May 26, 2009)
