A 1980 law says one-child parents should be compensated after retirement. Many of those parents are now retired or approaching retirement age, which means that cities across the country are seeing one-child compensation payments rise.

Some officials in Guangzhou believe a fund is the only way for the city to uphold its obligations under the one-child policy.

Such funds have been proposed in other cities that are facing similar cash crunches. In Guangzhou, the problem is larger, however, and the culprit is the city's own economic success.

One-child compensation payments are based on average per capita incomes, which are generally higher in the south China business hub  than in other places around the country.

Municipal officials, however, say a proposal to change the formula to calculate the compensation may help solve the city's problems.

The current formula, revised in September 2002, allots 30 percent of the average yearly salary of workers in the city, or 8,471 yuan (US$1,025).

That is about four times the national average.

During a conference last week, the Guangzhou Municipal Family Planning Committee and the Guangzhou Municipal Labor and Social Security Bureau called for the creation of the new fund.

Due to the lack of an effective mechanism to pool funds quickly, a great number of parents have not been paid, officials said.

In addition, some employers who have gone bankrupt are not paying into reserve funds that would ensure the compensation for their employees, said Zhang Jieming, director of the Labor and Social Security Bureau.

In 1980, the municipal family planning authorities ordered that a sum of 5 percent of their retirement funds should be given to one-child parents after retirement. The money was to be set aside by the employers of these one-child parents.

A number of companies have complained that the compensation standard is too high at a time when many of them are losing money.

The city's Family Planning Committee and Labor and Social Security Bureau say the government should step in and set up the special fund.

(China Daily June 14, 2004)