Social insurance a heavy burden for Chinese

16:25, March 11, 2010      

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Chinese people have to pay 40 percent or in some areas even 50 percent of their salary to buy social insurance by law, much higher than the level of most countries in the world, Bai Chongen, an economist from Tsinghua University found in his latest research, the Xinmin Evening News reported.

In the Chinese mainland, the proportion paid for social insurance to the total salary is twice the average level of the other three BRIC countries, namely Brazil, Russia and India; three times the average of five Nordic countries - Denmark, Finland, Iceland, Norway and Sweden; 2.8 times the average of G7 countries, and 4.6 times as much as Hong Kong, Taiwan and neighboring countries in East Asia, according to the research.

Bai said the high proportion of salary paid for social insurance has levied a heavy burden on enterprises and employees involved in the social insurance system, which has limited the companies in increasing employment, squeezed the disposable income of families, and restricted the growth of other supplementary and commercial insurances.

Wei Jie, a professor with the National Center for Economics Research at Tsinghua University, suggested that government increase the spending of dividends of the State-owned enterprises (SOEs) on social insurance during the 12th Five Year Plan (2011-15) period, to ease the burden of enterprises and employees.

Wei said because almost none of the SOEs' dividends were spent in enriching the social security fund, social security had to rely on the payments from employees and enterprises, which may reduce the consumer spending and have a negative impact on economic development.

SOEs' dividends should be allocated to the social security fund to keep it in accordance with its original function to improve people's livelihood, Wei said.

According to reports from the State-owned Assets Supervision and Administration Commission, the dividends the SOEs paid to the central government totaled 58.4 billion yuan ($8.56 billion) in 2007 and 2008, and most of that was spent in helping SOEs with difficulties in liquidity or hit by natural disasters and as the capital for newly established SOEs. There were 1.2 billion yuan left and it was not known by the public how much had been injected into the social security fund.

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