More Laid-offs Benefit From China's Social Security Reform

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Last updated at: (Beijing Time) Monday, June 03, 2002

More Laid-offs Benefit From China's Social Security Reform

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"I would rather leave my former work unit if it's in financial difficulties and take the benefit and preferential reemployment conditions the government gives the unemployed," said a laid-off worker who used to work for a bankrupt state-owned enterprise in Shenyang, capital of northeast China's Liaoning Province.

Sources say that 515,000 workers in Liaoning Province, home to the largest number of state-owned enterprises among China's provinces, have left struggling businesses in 2001 and another 500,000 will make the same choice this year.

The moves are part of a government plan to reform China's fledgling social security system after the industrial province waschosen for a reform pilot scheme on July 8, 2001.

Chinese workers used to be reluctant or even afraid to leave their state-owned employers, long considered a stable source of work and income.

Even when many state-owned firms failed to make a profit and started cutting payrolls or even sacking workers, laid-off staff still preferred to hang on to their job contracts that existed in name only for their sense of security.

However, Liaoning's on-going reforms focus on establishing a comprehensive social security system that guarantees basic living for the unemployed and retired workers and largely ease the laid-offs' worries about the future.

"Building a social security system and sustainable economic development are critical for laid-off workers to make a basic living and seek reemployment chances," said Liu Kegu, deputy governor of Liaoning Province.

Statistics show that compensation paid to Liaoning's unemployedworkers and social security investment in the province totaled 3.23 billion yuan (390 million U.S. dollars) and 21.47 billion yuan (2.59 billion U.S. dollars) respectively in 2001.

By the end of last year, some 6.57 million workers in Liaoning had been insured against unemployment and 203,000 people were receiving relevant insurance payments. Both figures topped those for the rest of China at that time.

Local government not only strives to help the unemployed maintain basic living standards but also helps them find new job opportunities.

Over one million unemployed workers in Liaoning will enter the job market in 2002. Those who have no job contract with their former employers are now undergoing unemployment registration withlocal government departments for such assistance as free professional training and re-employment tax breaks.

According to provincial social security official Xu Xiaoqing, the local government will buy certain job vacancies for older unemployed workers who find reemployment extremely difficult as well as seeing that businesses pay social insurance due for the laid-off workers.

Liaoning's provincial government plans to help 700,000 unemployed workers find new jobs in 2002, after a similar drive led to the reemployment of 828,000 people last year.

More than 70 percent of those reemployed in 2001 chose service industries and the trend is expected to continue.

According to observers, the fact that Liaoning's industrial growth rate lags behind that of the service industry is largely because of the unsatisfactory performance by state-owned enterprises and a reemployment surge in the service industry.

Liaoning provincial governor Bo Xilai says that completely severing unemployed workers from inefficient businesses will help reduce their operational costs and sharpen their corporate competitive edge.

Statistics show that Liaoning Province's Gross Domestic Productincreased to 9 percent last year, higher than the national averageand thanks largely to the social security reforms.

The province's unemployment rate reached 4.9 percent last year,1.3 percent higher than the national figure, and is expected to rise more in 2002. However, social stability will not be affected due to successful government efforts in helping reemployment, according to a local official, who cites a 6 percent unemployment rate as acceptable during a period of social security reform.

Local sources say that transferring all unemployed workers to community administration and giving them appropriate assistance will be completed this year.

"To help one million laid-off workers find new jobs is not a mission impossible," says Liu Kegu.

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