Social security to enjoy larger slice in budget

Zheng Silin, Chinese Minister of Labor and Social Security released on September 17 that in China's plan on adjusting government spending structure the portion for social security would be raised to 15 to 20 percent of the total budget and local governments would be supposed to invest more on social security.

He made the commitment at the 28th Global Social Security Conference to innovation on the system which will be focused on financing the personal pension account.

The combination of the social fund-raising channel and personal accounts are the two pillars of China's social security system which was launched in 1997. However, the pension payable now is such a massive amount that there is hardly resources for personal accounts. As much as 600 billion yuan needs to make the empty personal accounts workable.

A pilot project is under way in the old industrial base in the northeast China to have capital accumulated in personal accounts. Then the social fund-raising source and the personal accounts will be subject to dedicated management system. The experience of the northeast China will be shared by other areas in the country.

In this case, the central government, local government and the newly added fund will all contribute to make up for the shortfall of pension payment. Innovative ways are expected to be explored to keep and raise the value of the personal accounts. The government will play the regulatory role to supervise market-oriented operation of the capital on personal accounts.

Gao Xiqing, Vice-chairman of China National Council for Social Security Fund stressed that as financial budget was the main source to finance the social security system, it should be made compulsory to include fund for social security in the financial budget package to guarantee a stable and generous source of social security investment.

Xiao Jie, Vice Finance Minister confirmed that his department was actually making efforts on improving the public finance system which would make more inputs into the social security year by year.

According to Mr. Zheng, 10 to 11 percent of the financial spending has gone to social security in recent years. The growth of spending on social security basically has kept the pace of the increase of financial spending.

In 2003, the government earmarked money six times as much as it did in 1998 for the subsidies to urban residents and enterprise staffs to sustain their pension payment and basic living standard. 70 billion yuan was from the central government.

China established its national social security fund in 2000. Zheng warned against the serious deficit of the fund although the social insurance kept extending to more people and the collection kept improving in recent years.

The unemployment insurance is under mounting pressure. The accelerated urbanization process, industrial restructuring and sweeping corporate reform combine to keep the excessive labor supply in urban areas last in the years to come. The number of laid-off workers and people without jobs will remain large.

The aging society is another problem. It is estimated that by 2030, China will have to face the largest aging population. This will add more burden to the pension and health case system in urban areas.

By People's Daily Online