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China's social security white paper (full text)
Updated: 2004-09-07 11:23

The first two decades of the 21st century will be a critical period in the development of China's old-age insurance. The state will further improve the basic old-age insurance system that combines social pool and personal accounts, and gradually consolidate the latter. Basic old-age insurance will extend to cover all eligible employees in urban areas, and at the provincial level the establishment and improvement of regulating funds for old-age insurance will be carried out. Social pool at the city level shall be improved and gradually raised to that at the provincial level.

II. Unemployment Insurance

While promoting the reform of the enterprise employment system and setting up a market-oriented employment mechanism, the Chinese Government is speeding up the development and improvement of an unemployment insurance system to guarantee the basic livelihood of employees after they lose their jobs, to help them find new jobs, and accelerate the combination of the basic livelihood guarantee system for people laid off from state-owned enterprises with the unemployment insurance. By the end of 2003 there were 103.73 million people who participated in the unemployment insurance scheme, which provided unemployment insurance benefits of varying time limits to 7.42 million laid-off employees throughout the year.

Standardizing and Improving the Unemployment Insurance System

In 1999, the Chinese Government issued the "Regulations on Unemployment Insurance," which effectively standardized and improved the unemployment insurance system.

-- Range of participation and premium payment. All enterprises and institutions in urban areas and their employees must participate in the unemployment insurance program, under which employers pay two percent of their total wage bill and individuals pay one percent of their personal wages as unemployment insurance premiums. When the unemployment insurance funds in areas that have participated in the social pool program are not enough, the shortfall shall be made up by unemployment insurance regulating funds or subsidized by local financial budgets.

-- Qualifying conditions for unemployment insurance. Laid-off persons must meet three requirements to qualify for unemployment insurance: having paid unemployment insurance premiums for at least one year; not having terminated their employment voluntarily; having registered as unemployed and being willing to be re-employed.

-- Rate of unemployment insurance allowance. The people's governments of provinces, autonomous regions and municipalities directly under the Central Government determine the unemployment insurance allowance in their own localities, which shall be lower than the minimum wage in their localities but higher than the minimum living allowance for urban residents. Provisions regarding the time limit during which one receives the benefits are as follows: An unemployed person whose former employer and himself or herself have continually paid unemployment insurance premiums for more than one year but less than five years is eligible for benefits for up to 12 months; if they have paid the premiums for more than five years but less than 10 years, the unemployed person is eligible for benefits for up to 18 months; if they have paid the premiums for more than 10 years, the unemployed person is eligible for benefits for up to 24 months.

-- Other unemployment insurance benefits. If an unemployed person falls ill while enjoying unemployment insurance allowance, he or she is entitled to receiving medical subsidies. If the unemployed person dies during this period, his or her family can receive funeral subsidies as well as a pension. In addition, an unemployed person may receive vocational training and subsidies for job agency services when receiving unemployment insurance allowance.

-- Unemployment insurance provisions for farmers-turned-contract- workers who are employed by enterprises and institutions in urban areas. Their employers shall pay unemployment insurance premiums as required, while the individual workers shall not. Those who have worked for one year continuously, those who do not renew their contracts upon expiration or those who terminate their contracts before they expire can apply for a living allowance, which shall come in a lump sum depending on the length of time they have been employed.

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