John GilesDewen Wang

Social Insurance Coverage in Urban China

Overview Social insurance schemes in Urban ChinaTrends in social insurance coverageRegional variationMicro evidence of social insurance coverageUnderstanding patterns from different data sourcesIssues involved in expanding coverageConclusion

Motivation

Policy goals Extending social insurance coverage is an important current policy priority of the Chinese governmentA full coverage goal is set to provide basic social security to cover all people by 2020

But, challenges remain when extending social insurance schemes to informal sectors and informal employees….Document patterns in social insurance coverage, and as the work progresses, and aim to explain both provision and take up of insurance

Social Insurance Schemes in Urban ChinaSchemes Employer Contribution Employee Contribution

Pension insurance <= 20 percent of payroll <=8 percent of monthly wage

Unemployment insurance 2 percent of payroll 1 percent of monthly wage

Medical insurance 6 percent of payroll 2 percent of monthly wage

Work injury insurance Average about 1 percent of payroll No employee contribution

Maternity insurance Not more than 1 percent of payroll No employee contribution

Total 30 percent of payroll 13 percent of monthly wage

 

Recipients of Social Insurance Schemes Registration/Workers  Pension  Unemployment  insurance  Medical Insurance

Urban enterprises   SOEs  M  M  M   Collective  M  M  M   Foreign and SAR funded  enterprises  M  M  M   Private enterprises   M  M  M   Other enterprises  M  M  M 

Public institutions  M/PAGO  M  M 

Government agencies  PAGO  M 

Social organizations  PAGO  M 

Private non‐enterprise units  V  V 

Self‐employed  V  V 

Flexible urban employment workers  V    V 

Rural migrant workers  V  O  V  

Pension Insurance Coverage

20

30

40

50

60

70

8019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Coverage

 Rate of Pen

sion Insurance (%

)

Definition One Definition Two

Medical Insurance Coverage

0

10

20

30

40

50

6019

93

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Coverage

 rates of m

edical in

surance (%

)

Definition one Definition two

Urban Resident Basic Medical Insurance Scheme

10

20

30

40

50

60

70

40

60

80

100

120

140

160

180

200

2007 2008 2009

Num

ber of urban

 residen

ts participated

 in basic med

ical in

surance (m

illion)

Number (million) Coverage rate (%)

Coverage

 rate(%

)

Rural Migrant Workers in Urban Social Insurance Schemes (%)

Year Pension Insurance Medical insurance Unemployment Insurance

2006 15.0 25.0

2007 17.6 29.8 11.0

2008 18.0 31.8 11.6

2009 18.7 30.6 11.6  

Regional Coverage Variation-by Scheme40

6080

100

120

2000 2002 2004 2006 2008

P I (%)

4060

8010

0

2000 2002 2004 2006 2008

U I (% )

2040

6080

100

120

2000 2002 2004 2006 2008

M I (% )

Regional Coverage Variation-by Per Capita GDP in Logarithm Form

4060

8010

012

0

8 9 10 11log (Per Capita GDP)

PI (%)

4060

8010

0

8 9 10 11log (Per Capita GDP)

UI (%)

2040

6080

100

120

8 9 10 11log (Per Capita GDP)

MI (%)

Micro EvidenceWho is currently excluded?

How does participation vary by age, gender, educational attainment and migrant status?

Gender differences are not obvious among those employed in firms.As one might expect, there is less gap between migrants and urban residents at higher levels of educational attainment.Not surprisingly follows patterns of informal employment.

In 2005 Low Participation in Pension Programs by Migrants Populations and Gender Differences

CULS 2005

Expanded Participation by Migrants as of 2010, but Gap is Still Significant

CULS 2010

What Actual Support is Received by Those who are Out of Work?

We do not separate those who are unemployed from out of the labor force.

Working age population, age 16-60, includes many women who have retired as early as 50 and are collecting pensions.

UI receipt is more important for men, as women tend to exit from the labor force at a younger age.

Social Insurance Support Received Among Locals Out of Work

Social Insurance Received by Out of Work Migrants

Early Retirement of Urban Women Allows for Much More Pension Support of Women Out of Work

0.2

.4.6

.8S

hare

2006 2007 2008 2009 2010Year

Pension UI

Local MenShare of Non-Working with Support

Declining Replacement Rates of Pension Benefits in Urban China

40

50

60

70

80

90

100

11019

90

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

Replacem

ent rates (%

)

Enterprise Employees PSU+GOV

Over the Crisis Period, Some Decline in Share of Urban Residents Registered as Unemployed Who Receive Benefits

UI Benefits Have Kept Rising, But the Replacement of Average Wage Has Declined

0

5

10

15

20

25

30

0

1000

2000

3000

4000

5000

600019

94

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

UI ben

efit level

UI benefit level (Yuan/Year)

Proportion of average wage (%)

Prop

ortio

n of av

aragewage

Roadmap toward A Full CoverageInstitutional reform

Scaling-up urban resident medical insurance scheme to cover all urban residentsPiloting and rolling out urban resident pension scheme to cover all urban residentsReforming urban employee pension scheme and encouraging rural migrants 'participationExtending UI to rural migrant workers

Pooling and integration of MIS and service deliveryImplementation and enforcement of labor contract law and labor promotion lawSupporting reform measures

Hukou reform, fiscal system reform and statistical reform

ConclusionsConsiderable Progress in Raising Coverage Rates for Pensions and Health Insurance for the Urban Population

Support Actually Received by Migrants Out of Work is Still Quite Low.

To Expand further Social Insurance Coverage in Urban Areas: We need to understand voluntary take-up decision of self-employed and those in small scale enterprisesUnderstand compliance among employers and employees alike

Approach to China-India ComparisonStart with mapping out the similarities and differences in

arrangements for social protection programs for public

and formal sector employees in China and India

Highlight differences and similarities in approaches to

covering “informal sector” and “informal workers”

Describe and compare patterns of patterns of

participations by different groups of workers, and

patterns of benefit receipt.