China has determined to discard its enterprise-sponsored welfare system established in the planned economy era, which have become heavy burdens of state-owned enterprises.
At a work conference Tuesday on state-owned assets supervision, Li Rongrong, director of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), said this year's work will focus on enterprises in the northeast industrial base and on state-owned national enterprises.
During the past decades, the Chinese state-owned enterprises (SOEs) functioned like all-inclusive tiny societies and many of them ran a large number of facilities including cafeterias, libraries, nurseries and kindergartens, schools, barbershops and even hospitals and hotels, bringing some kind of comprehensive, cradle-to-tomb welfare benefits to the employees.
The discarding of these welfare functions by enterprises is an important task for the deepening of SOE reforms, said Li, who called on eastern areas to speed up reforms in this field and central and western areas as well as northeast to actively create the conditions for it.
Governmental departments should help SOEs to solve problems and difficulties when separating affiliated welfare organizations, he said, emphasizing asset allocation and re-employment of staff previously working in those welfare firms.
So far, reform plans concerning 17 enterprises, including China National Petroleum Corporation, China Petro-Chemical Corporation and Dongfeng Automotive Company, all state-owned national enterprises, have been approved by the government, involving assets of 8.49 billion yuan (102 million US dollars) and re-employment of 74,000 people, according to SASAC.
From 1997 to June 2003, the number of SOE workers decreased from 69.7 million to 41.9 million, but SOEs were still spending 45.6 billion yuan every year on such welfare, running 11,000 primary and middle schools as well as 6,100 hospitals, SASAC figures showed.
The old welfare system seriously affected SOEs' operation and development especially in northeast China, which was a leading industrial center around China in the 1950s and 1960s, and became sluggish in marching toward the market economy in the mid-1990s.
By the end of 2002, SOEs in the northeast still had 7,183 social welfare organizations including schools, nurseries and hospitals.
The enterprises had too many distractions in the old system, said Zhang Xiaopei, general manager of the state-owned Jilin Chemical Industrial Group Company, adding that it was high time to withdraw from all the unnecessary fields and focus on their major businesses.
In an effort to find a way out, large-sized enterprises started to discard unessential welfare burdens. In Jilin Province, an independent logistics company was established a year ago to deal with the living arrangements of SOE employees.
The central government kicked off a welfare reform in northeastern Liaoning Province in 2001 and so far a total of 6.547million people participated in the social welfare system, accounting for 76.1 percent of all the employed.
SOE's operation of social welfare organizations is a big obstacle for further reforms, and the government should pay for the welfare cost instead of enterprises, which can use the funds to expand their businesses, said Xu Chuanzhan, an expert with Jilin University.