The document discusses the new Social Security Law implemented in China, with a focus on its impact on both Chinese and foreign workers. Here's a summary:
Key Points of the New Social Security Law:
Impact on Foreign Workers: The law, enacted in October 2010, initially indicated the possibility that foreign employees working in China might be subject to various social security funds. It was confirmed in September 2011 that foreign workers would be included in China's social security system.
Changes to the System: The main objectives include greater control over social security fund contributions, streamlining administration so that employers must fully pay contributions, and improving the overall social security system for residents. The third objective is seen as the ultimate goal, with the first two serving as instrumental steps towards achieving it.
Social Insurance "Five Insurances": The five main types of social insurance are covered by this law - pensions, medical insurance, work-related injury insurance, unemployment insurance, and maternity insurance. The law specifies that employers contribute based on the total salary paid to their employees, while employees contribute based on their actual received salary.
Transfer of Social Security Benefits: The law allows employees to transfer their social security benefits when changing jobs between different regions, enabling them to receive their pension based on accumulated contributions from their entire working career. However, the method of calculating unified benefits has not been detailed yet.
Addressing Challenges: The law tackles issues like the lack of a transparent treatment of Chinese pension systems, which discouraged job mobility among individuals, limiting labor mobility and affecting access to qualified workers across the country. The challenge lies in the implementation, especially with the transition of pension fund management from central to local governments, which will require time.
Improvements in Medical Insurance: The government aims to improve the medical insurance system, making it more efficient. A key point is that the medical insurance fund directly covers hospital treatment costs without the need for the patient to pay upfront and later receive reimbursement, thus addressing a common issue.
Integration of Rural Workers: The law also includes provisions for a pension system for rural workers, aiming to eventually integrate them into the urban system. This is intended to reduce the effect of the "hukou" (Chinese ID card) system, which limits job mobility options for rural populations. However, creating an integrated system is still a distant goal, with the law only indicating the direction without specifying concrete methods for achieving it.
Future Implications: The document suggests that the full impact and implications of these changes will unfold over time, particularly as they relate to the gradual shift in managing pension funds from central to local governments, which is expected to take many years.