Making an effort to overhaul the social security system

Editor’s note: As the five-year China-EU Social Security Reform Cooperation Project (EUCSS) plays an active role in advancing the country’s reforms in social security system, Matthias Reusing, second secretary, Co-operation Section of the EU Delegation to China and Mongolia, and Lu Jianshe, acting project director of EUCSS, share their insights into the project with China Daily.

The project has been piloted in both developed parts of eastern China and in less developed areas. In view of the immense economic differences in the two areas, how can the social security system be evenly applied nationwide?

Lu: To promote a nationwide balance, social insurance systems should aim at raising the levels of pooling. In a nationwide pool it would be much easier to balance strengths and weaknesses. In provincial level pools you can balance differences between richer and poorer municipalities. Raised pooling levels would also facilitate the treatment of migrant workers’ entitlements.

How can the social security system reach more rural people, and what are the major reasons for its failing to do so? How will you encourage expansion of the system?

Lu: A previous pension system introduced for rural residents had limited coverage because only the farmers themselves paid contributions and with a very low accumulation.

Yet it has been replaced by a new scheme under which, though voluntary, contributions paid by rural residents are matched by equal contributions paid by the collective and, if contributions continue to be paid for 15 years, additional contributions are made by the municipal or provincial government.

Many rural residents spend part of their working life as migrant workers in cities, but previously on returning home, on request they could receive a refund of their contributions. Now their rural and urban contribution records instead are aggregated to ensure that they can build up entitlement to a pension throughout their working life.

As the new rural scheme develops and becomes attractive to farmers, the government may consider making participation compulsory.

How many training programs has the EUCSS project held so far and how much has the Chinese government contributed to them? Do you think the project did what it was supposed to do?

Reusing: The EUCSS project is a cooperation project between the EU and China and the costs 40 milllion ($57.96 million), over a project lifetime of more than five years, have been equally shared.

Over 20,000 people at central and provincial levels have attended specific trainings, workshops and seminars. The project organized conferences, study tours, and internships across a wide range of topics in the field of social security, including medical and old age insurance, work injury and unemployment insurance as well as social care (e.g. for elderly people) and fund management.

The project has used a wealth of EU Member States’ experience to provide inspiration to Chinese officials responsible for the reform of social insurance in China. The main lesson learned is that a national social security system shall be open forrevision and reform, in light of economic, political and demographic considerations and circumstances that can change over time.

The overall objective of the EUCSS project is to support the transition to a sustainable social security system in China which guarantees accessible, adequate and affordable social security benefits to all Chinese citizens. As such, the EUCSS project has contributedto both policy development – particularly the new Social Insurance Law – and social insurance administration reform in sixChinese provinces. However,only the future will show, if the European experience has had a significant impact on China’s social security sector reform.

The closure of the EUCSS project is not the end of the cooperation between the EU and China in the field of social protection reform, but rather marks a milestone towards a more mutual cooperation in this field, in order to address joint challenges, such as dealing with an ageing society, both China and most EU member states are confronted with.

Source: China Daily

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