Embarking on a New Journey Toward High-Quality Social Security
In his speech to the 28th group study session of the Communist Party of China (CPC) Central Committee Political Bureau, General Secretary Xi Jinping emphasized that social security is a fundamental institutional guarantee for ensuring and improving people's lives, maintaining social fairness, and increasing popular wellbeing, as well as an important institutional arrangement for promoting economic and social development and ensuring that people share in the fruits of reform and development—all of which makes social security a major issue of state governance. In his speech, General Secretary Xi systematically answered major questions that concern the development orientation, foundation, and strategy for China's social security program, shed light on the profound implications, methods, thinking, and tasks involved in social security work, and set out a series of new ideas, conclusions, and requirements for work related to the development of social security.
I. By building the largest social security system in the world, China created favorable conditions for finishing building a moderately prosperous society in all respects on schedule.
As General Secretary Xi has pointed, China has built the largest social security system in the world, a system with a full set of functions centered on social insurance, which includes social assistance, social welfare, and living allowances for entitled groups. This achievement laid down a solid foundation for improving the lives of our people and favorable conditions for finishing building a moderately prosperous society in all respects on schedule.
The CPC has always regarded the task of improving the people's wellbeing and the issue of social security with high importance. Since the introduction of the reform and opening up policy, to adapt to the needs of the social market economy, China has continued institutional reforms, in a bid to put in place the fundamental architecture of the social security system. These efforts initially produced isolated breakthroughs before leading to all-encompassing progress. After the 18th CPC National Congress in 2012, the Central Committee with Xi Jinping at the core made achieving full social security coverage a goal of building a moderately prosperous society in all respects. This move put the task of developing a social security system in a position of greater importance and set its development on a fast track toward the goal of a sustainable multi-tiered system that covers the entire population and ensures people's basic needs. Thanks to the tireless efforts of all, China has established a uniquely Chinese social security system, completing in less than 20 years a course that many Western countries spent over a century navigating. China has received high praise from the international community for its achievements, becoming a recipient of the Award for Outstanding Achievements in Social Security from the International Social Security Association.
Institutional reforms have produced major breakthroughs.
With a focus on promoting fairness, mobility, and sustainability, we have strengthened the top-level design of social security reforms to make them more systematic, comprehensive, and coordinated. We have brought the urban and rural resident old-age insurance systems under unified management and merged the old-age insurance systems for employees in public institutions and enterprises, thus creating two major old-age insurance platforms, one for residents and one for employees. This has helped bring previously uncovered groups into the social security system. We have also enhanced the system for centrally regulating enterprise employees' basic old-age insurance funds, which has helped address structural problems at the provincial level and eased funding shortages in the central and western regions and old industrial base areas. We have adopted unified pension contributions for employers and realized unified management of old-age insurance funds at the provincial level. These steps have laid a foundation for providing even broader mutual assistance and for realizing unified national management of old-age insurance funds. We have also developed a three-pronged injury insurance scheme that covers prevention, compensation, and convalescence, and enhanced the functions of unemployment insurance so that it can be used to cover living expenses, prevent unemployment, and promote job creation.
A staff member helps a resident activate his electronic social security card at a government services center in Beijing's Xicheng District, December 17, 2020. E-social security cards are equivalent to physical cards as a valid certification for online applications. They can be used across the country, and support functions including identity verification, record keeping, self-service inquiries, medical insurance billing, payment of fees, and collection of benefits. PHOTO BY CNS REPORTER NIU YUNGANG
Social security coverage has been expanded.
Working toward the goal of coverage for the entire population, we have implemented a plan to ensure everyone has access to social security and taken targeted actions to cover key groups. As a result, we have created the largest social security system in the world in terms of the number of participants. Since 2012, the number of people participating in China's basic old-age insurance scheme has risen from 788 million to about 1 billion, that in the unemployment insurance scheme from 152 million to 218 million, and that in the work-injury insurance scheme from 190 million to 267 million. The number of registered poor people with old-age insurance stands at 60.98 million, with a coverage rate of 99.99 percent.
Social security benefits have steadily increased. Following the principle that adjustments to social security should remain in step with economic development, we have effectively improved the lives of people in the low-income group thanks to steady increases in social security benefits. We have improved the mechanism for setting and adjusting pension benefits. The benefits of enterprise and public institution retirees have seen continuing increases, with monthly payments for enterprise employees rising from RMB1,686 yuan in 2012 to 2,900 yuan in 2020. Unemployment insurance and work-injury insurance benefits have also risen steadily, with monthly unemployment insurance payments increasing from 686 yuan to 1,506 yuan in 2020.
Our capacity for ensuring basic needs has continually improved.
The basic old-age, unemployment, and work-injury insurance funds have enjoyed general stability, with the cumulative balance of these funds standing at 6.4 trillion yuan. The investment of old-age insurance funds has proceeded at a steady pace, with the value of investment contracts reaching 1.24 trillion yuan. The average annual return of these investments is 6.8 percent, generating an investment income of nearly 200 billion yuan. We have thus been able to grow the value of our pension funds while also ensuring the security of our investments. In response to population aging, we have boosted the strategic reserves of the national pension fund, bringing fund equity to about 2.4 trillion yuan at present. The task of appropriating a portion of state capital to replenish social security funds has proceeded in a systematic way, with a total of 1.68 trillion yuan in state capital transferred from central government enterprises and financial institutions. We have also bolstered our management, oversight, and risk-control and risk-mitigation systems and enhanced the four-pronged operating mechanism consisting of policy, processing, information, and oversight. These actions have enabled administrative oversight and criminal justice work to work together to ensure the safety of social security funds.
Services have been enhanced.
In an effort to create consistent records and ensure guarantees and services for people throughout their lives, we have put in place a basic service administration network at the central, provincial, city, county, and village and neighborhood levels. We have strengthened regulations, standards, and the use of digital technologies in service management and increased the convenience and efficiency of services by making it possible for people to handle social security matters in the locality where they reside, online, or through fast-track options. The number of people with social security cards has reached 1.34 billion. In addition, over 520 million social security e-cards have been officially issued. With just one card, people can now access over 100 different services, including employment assistance, pension collection, and medical expenses reimbursement. Our services are also being extended to cover financial services and the transport, cultural, and tourist sectors. On the national social security public service platform, people can access 28 different services across 9 categories from different provinces around the country, including checking their social security status, applying for unemployment benefits, calculating pension payments, and having their qualifications certified. With over two billion visits to date, this platform has become a one-stop shop providing a range of trans-regional services for people across the country.
Greater prominence has been given to creating buffers in the economy.
In response to downward pressure on the economy, and especially the severe impact of the Covid-19 pandemic, we have taken steps to coordinate and link social security policies with policies in other spheres, giving a particular focus on protecting market entities, easing the difficulties of small and medium-sized enterprises, and stabilizing and expanding employment. We reduced social security contribution rates for enterprises on six occasions, cutting the overall rate for the five social security programs from 41% to 33.95%. This has given the real economy and private enterprises a strong boost. In 2020, we introduced a package of unprecedented exemptions, reductions, and refunds. This package included measures to cut enterprise contributions to the old-age, unemployment, and work-related injury insurance schemes by 1.54 trillion yuan—accounting for two-thirds of the total tax and fee reduction for the year, and returned 104.2 billion yuan in insurance contributions to enterprises to help them maintain stable employment. These valuable policies, which have created broad-based benefits, have won the approval of the business community.
II. Promoting high-quality and sustainable development of social security programs in line with people's expectations for a high standard of living
The Fifth Plenary Session of the 19th CPC Central Committee defined the task of improving the tiered social security system. General Secretary Xi has proposed to build a sustainable, tiered, fair, and unified social security system that covers the entire population in urban and rural areas in order to strengthen the social safety net further and provide people with more reliable and more comprehensive safeguards, in line with our general goal of continuing to meet people's diverse needs on multiple levels. Under the theme of promoting high-quality, sustainable development of social security, General Secretary has stressed the need for a systematic approach, a strategic outlook, and a stronger awareness of risks. As we are entering a new development stage, it is important to analyze the new circumstances and tasks in our work so that we may fully grasp our mission in this era and scientifically plan and promote the development of social security both now and into the future.
Promoting high-quality development of social security to achieve shared development and common prosperity
Common prosperity is an essential requirement of socialism and a common expectation of the people. As the problem of unbalanced and inadequate development is still pronounced in China, and the gaps in development and income distribution between urban and rural areas and between regions remain large, promoting common prosperity will constitute a long-term task. Social security not only guarantees people's basic right to subsistence, but also has the function of providing mutual assistance and aid. It can help to share out risks among members of society and balance income distribution relationships between different interest groups. It is also an important way of gradually ensuring all our people share fully in and contribute toward the fruits of development. Upholding a people-centered development philosophy, we should adapt to the change in the principal challenge in Chinese society by giving full play to the redistributive function of social security and encouraging the participation of all sectors of society to continue ensuring and improving the people's wellbeing in the course of development. As we transition from the task of ensuring access to social security for the entire population to providing good-quality coverage for all, we must better adapt our work to the processes of promoting well-rounded development and common prosperity for all.
A social security worker from the city of Shannan in Xizang Autonomous Region collects additional information for insurance registration in a local home in Yume Village, May 24, 2018. Since the 18th National Congress of the CPC in 2012, with a focus on the goal of ensuring that social security covers and benefits all its citizens, China has built a social security system that covers the largest number of people in the world by launching a campaign to extend access to everyone and by taking targeted steps to expand coverage among key groups. PHOTO BY XINHUA REPORTER JIGME DORJE
Improving the universal social security system to help foster a new development dynamic
The central task in fostering a new development dynamic is to ensure that the national economy flows unimpeded, so that the processes of production, allocation, distribution, and consumption rely more on the domestic market. Social security can help stimulate effective demand by boosting residents' consumption desires. It, therefore, serves as an important foundation for expanding domestic demand. Social security also has a definite role to play in counter-cyclical adjustments in the economy, as it can create conditions for smooth and orderly flows of labor. With a focus on the strategic task of expanding domestic demand, we should make ensuring public wellbeing the overriding goal of promoting unimpeded domestic circulation. We should improve the tiered social security system to alleviate people's concerns, boost residents' ability and willingness to spend, and promote consumption toward improving public wellbeing.
A Party member volunteer from Chongqing Human Resources and Social Security Bureau visits the Xiantao residential community in Yubei District to provide information on relevant policies to members of the public, March 5, 2021. PHOTO PROVIDED BY THE MINISTRY OF HUMAN RESOURCES AND SOCIAL SECURITY
Promoting the sustainability of social security programs in response to population aging
China has entered the stage of population aging as a result of its economic and social development as well as the improvements in the health standards of its people. First, life expectancy has increased. Average life expectancy among the urban population has increased from about 40 years at the founding of the PRC in 1949 to 77.3 years in 2019, and it is expected to reach 79 years by 2030. Second, the rate of population aging is accelerating. It is estimated that by 2022 and 2035, the total number of elderly people in the country will reach 260 million and 420 million, respectively, accounting for 20% and 30% of the total population. This will see China gradually progressing from the middle to the advanced stage of population aging. Third, China's labor resource endowment has changed significantly. The working-age population has been declining since 2012, with an average annual decrease of more than 3 million. And the size of this decline is increasing. It is expected that the working-age population will fall by 35 million during the 14th Five-Year Plan period (2021-2025). Fourth, the average duration of working life has shortened. The average years of schooling completed by the working population have continued to increase. Whereas this figure was just over 8 years in 1982, it now stands at 10.8 years, while the average figure for new labor-force entrants has reached 13.8 years. This means the age at which working life begins is being continuously pushed back. In conclusion, the process of population aging in China is marked by certain characteristics—the country is growing old before it becomes rich, the aging process is accelerating, its scale is immense, and the rural elderly population is particularly large. These factors will exert a major and far-reaching influence on our economic and social development. Population aging has already caused a decline in the dependency ratio of the old-age insurance system, which has given rise to new circumstances and challenges in ensuring its sustainable development. With the implementation of the national strategy to actively respond to population aging, however, we will take proactive steps to coordinate social security with the development of human resources and explore effective approaches and measures to improve the foresight and initiative of our work.
Enhancing the efficiency of social security by adapting to the trends of digital transformation
Digital development has fundamentally transformed traditional modes of production, commercial models, and ways of life, and given rise to a continuous stream of new and flexible forms of employment. These new employment forms, especially those that are arranged through online platforms, are exhibiting many new characteristics in terms of labor relations, job positions, working hours, wages, and so on. As the existing social security system has yet to adapt to these characteristics, some groups do not yet have access to social security or are insufficiently covered. Adapting to the trends of digital development, we will carry out active explorations to enhance the flexibility, inclusiveness, and adaptability of the social security system, develop new service methods, and continuously improve management and service levels.
Promoting reform of the social security system to achieve greater systems integration, coordination, and efficiency
Developing a social security system is a complex, systematic project that has strong policy implications and correlative effects, involving, as it does, the thorough adjustment of interest relationships. After many years of reform, the main framework and key pillars of China's social security system have been basically established, but deficiencies remain. Some people do not yet have access to social security, overall planning needs to be improved, and regional imbalances are prominent. The transfer points between different systems are not yet operating smoothly, the tiered old-age insurance scheme needs to be further developed, and management and service capabilities await improvement. Social security reform has now reached the stage of achieving systems integration, coordination, and efficiency. Maintaining overall institutional integrity and standards, we should adhere to a problem-oriented approach and accurately grasp the links between various social security reforms and between these reforms and other reforms in related areas. We should improve our capacity for overall planning and coordination, put social security on a stronger legal footing, and ensure synergy between all reform tasks.
Doing everything possible within our capacity to ensure social security develops in step with economic and social development
This is a key principle of social security work. The idea of "doing everything possible" stresses the responsibility and initiative that the Party and government need to shoulder in the endeavor to protect and improve the public wellbeing. "Working within our capacity," meanwhile, highlights the need to take a fact-based approach and proceed from reality in everything we do. The most basic element of China's national context—that it remains in the primary stage of socialism and will remain so for a long period to come—has not changed, and neither has China's status as the world's largest developing country. Social security in China cannot be separated from these two most crucial realities. We must ground our work in these basic national conditions in order to avoid doing things that are beyond our current development stage and fiscal capacity. We should draw lessons from countries that have blindly played "welfare catch-up" and instituted excessive welfare programs to make sure we build things out gradually, always proceeding from the fundamental principles of meeting basic needs and ensuring basic rights. As we work to make the "cake" bigger, we should also strive to ensure it is properly shared among the people.
III. Making solid progress in advancing the key tasks of developing the social security system and continuously enhancing people's sense of happiness and security
General Secretary Xi has emphasized that Party committees and governments at all levels must acquire a deeper understanding of the importance of social security, grasp the laws underlying this work, and carry out coordinated planning to advance the implementation of the Central Committee's decisions and arrangements and various reform plans, so as to continuously improve the universal social security system. During the 14th Five-Year Plan period, in accordance with the requirements of meeting basic needs, creating dense networks, and developing mechanisms, we must ensure solid implementation in all key tasks and work with a more proactive, enterprising, and reform-minded spirit to develop a sustainable, tiered, fair, and unified social security system that covers the entire population in urban and rural areas.
Furthering reform to build a more complete social security system
Reform and innovation are essential for creating a more mature and well-defined social security system. We will advance the reforms gradually, launching each item as conditions mature, with our focus on the general reform plan for the old-age pension system. Social security follows the law of large numbers, so the higher the level of overall planning, the safer and more reliable the system will be. Therefore, on the basis of improving the system for centrally regulating old-age insurance funds and realizing unified planning at the provincial level, we will take faster steps toward unified planning for insurance funds at the national level, scientifically adjust and determine the respective powers of central and local authorities with regard to old-age insurance funds, and carry out all related tasks concerning policy, processing, supervision, and information systems. We will take active and steady steps to gradually increase the legal retirement age in accordance with the principles of small adjustments, flexible implementation, and moving forward on the basis of categories and overall plans. To accelerate the development of an old-age insurance system with multiple tiers and pillars, we will, while adhering to the orientation of meeting basic needs through the basic system, increase the participation rate of enterprise annuities, promote market-based investment and operation of occupational annuities in a steady and standardized fashion, and develop a personal pension system that is compatible with China's national conditions, enjoys policy support, and is voluntary, market-oriented, and an effective complement to basic old-age insurance. We will also move more quickly toward the provincial-level coordination of unemployment insurance and work-related injury insurance, and improve the mutual support capacities of social security funds.
Adhering to the minimum baseline that benefits must be paid on time and in full
Pensions are a basic means of support for retirees; ensuring the payment of benefits is thus a non-negotiable baseline. We will enforce responsibilities at all levels and strengthen central regulation of old-age insurance funds to ensure that transfer payments are made on time, and the transferred funds are used with greater efficiency, and deploy multiple measures to see that benefits are paid on schedule. We will improve the mechanism for adjusting basic old-age insurance benefits to promote gradual increases in step with economic growth. We will continue to expand the scale of entrusted investments for basic old-age insurance funds to enhance the fund's ability to generate capital. We will also adjust and improve our policies on expanding unemployment insurance and stabilizing employment, and implement the mechanism for adjusting and guaranteeing work-related injury insurance benefits.
Focusing on the priority of achieving full social security coverage for the entire population
We will implement the plan to ensure everyone has access to social security in a targeted way, achieving more extensive coverage by improving the social insurance systems for migrant workers and people in flexible and new forms of employment. By making innovations in our work, we will formulate new measures for ensuring people in new employment forms also have work-injury insurance, and move as quickly as possible to address institutional weaknesses in this area. We will put in place improved policies on old-age insurance for urban and rural residents and for farmers whose land is requisitioned. We will encourage small and medium-sized enterprises and key groups to join social security schemes and to keep up their contribution payments, and encourage more people to participate in social security on a long-term basis.
Improving services by enhancing management systems and service networks
We will increase the functions of the national social security public service platform and ensure a full range of services is made available through the corresponding local platforms. We will continue to integrate resources for social security services below the provincial level and develop a comprehensive range of counter services. We will move faster to see that everyone has an all-purpose card and promote coordinated management of the cards used for collecting benefits and accessing services. We will promote the distribution of third-generation social security cards and cellphone applications for issuing social security e-cards, and gradually work toward making all resident services accessible through the all-purpose social security card system. We will promote the use of digital technologies in handling social security matters and innovate our service models, so that data does more of the legwork for people. We will continue to improve the style of work in public-facing social security service units and enhance traditional service measures for the elderly, people with disabilities, and other groups to ensure they receive more comprehensive services in a more caring and considerate way.
Improving relevant legislation to promote the steady and sustainable development of social security
We will strengthen legislative work in the sphere of social security to make sure that there are laws to guide the advancement of this endeavor and the furthering of related reforms. We will strictly apply relevant laws, bolster the enforcement of all laws and regulations on social insurance, and improve the efficacy and authority of law enforcement in this area. We will refine the oversight systems for social insurance funds in accordance with the law, study the issue of developing related regulations, examine and revise administrative supervision methods for social insurance funds, and bolster revenue and expenditure management and operational monitoring. We will take a zero-tolerance attitude to all types of social insurance fraud, and ensure that every cent of our people's retirement money and lifeline fund is well-protected.
Zhang Jinan is Minister and Secretary of CPC Leadership Group of Ministry of Human Resources and Social Security.
(Originally appeared in Qiushi Journal, Chinese edition, No. 12, 2021)