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Status Quo of and Policy Suggestions on Rural Social Security


By Xu Xiaoqing & Wang Xiaolin, Research Department of Rural Economy of DRC

Research Report No.048, 2007

Data under analysis in this report are all from the surveys conducted during 2004 and 2005 by our project team. The areas under survey include three provinces and one autonomous region: Jiangsu, Jiangxi, Inner Mongolia, and Yunnan, covering 7 counties, 11 towns, 30 villages and 638 rural households. The field survey was carried out at four layers: county, town, village, and household. Interview and questionnaire were adopted. In the questionnaire survey, the team, by means of random sampling, acquired the data on family, social and economic situations of the rural households; their demands to public services; and their appraisal to rural public service supply, etc.

I. Status Quo of Rural Social Security

After years of reform, China has made considerable achievements and great progress in developing rural social security system.

1. Rural social security network has been basically established and the security system structure has become clear

The statistical materials from the State Statistics Bureau show that from 1995 to 2004, China had basically established a social security network in the vast countryside ( Table 1). In 2004, China had 26,442 social welfare institutions for the aged in the countryside, which had accommodated 594,417 people by the end of that year. In the same year, rural social relief fund amounted to RMB 3788.03 million yuan, accounting for 6.6% of the total expenses on civil administrative affairs.

Table 1 Development Situations of Rural Social Security Network

Status Quo of and Policy Suggestions on Rural Social Security

Data source: China’s Rural Statistics Yearbook 2005

The countryside is a component part of the whole society. Its social security system should be the extension and under the coverage of that of the society as a whole, including social old-age insurance, social medical insurance, social relief and special pension, etc. Such system has basically taken shape in some developed rural areas. Among the eleven towns under survey of this report, ten have established basic social security system. 100% of the villages in Guannan and Jiangyin of Jiangsu Province with good economic conditions have participated in rural cooperative medical system; and the coverage rate of rural social old-age insurance is high as well.

2. Socialization principle gradually embodied

The capital raising socialization, management and service socialization and responsibility sharing mechanism are gradually established. The survey shows that in the pilot villages carrying out social old-age insurance, the three parties of the state, the collective and household (individual) jointly share the responsibilities according to some proportion. The capital supply and system arrangement of social relief and veteran benefit and placement are mainly handled by the government departments at all levels; at the same time, generous donation made by social organizations or individuals are not excluded. In the developed rural areas, farmers are no longer restricted by land and they have participated in current social security system.

3. Management system gradually completed

The organization reform of the governments at various levels starting from 1998 has gradually established a state management system featuring in suitable uniform management and social security system, in which labor and social security departments make uniform management on the national social security affairs; and the civil affairs departments make uniform management on social relief and social welfare affairs. The phenomenon of uncoordinated policy measures, seeking fame and profits and responsibility evasion has become rare.

Take Jiangyin County in the southern part of Jiangsu Province as an example. Currently various social security models coexist in the countryside, with its typical “Sunan Model” (i.e. southern Jiangsu model) characterized by “family security as the basis, community security as the core, and commercial insurance as the supplement”. The government has set up a Management Committee for Rural Social Old-age Insurance Fund, which functions in guiding and supervising the fund. A Management Office for Rural Social Old-age Insurance Affairs is established to deal with the concrete affairs and fund management of the old-age insurance. Social Old-age Insurance Department is set up in towns to take charge of the routine work. In 2003, 15,030 rural residents were newly covered by rural social old-age insurance system, with the participation rate surpassing 90.3%. In terms of the income and expenses, the social security departments at township level adopt a full-responsibility method of “management expenses left to the town, in which the gap will be subsidized by town finance”, and shall not take profit-making as their goal.

II. Problems and Causes Related to Rural Social Security System

Although China’s rural social security system has made remarkable progress since new China was founded, it still lags behind people’s expectation. Up to now, China has not developed a full-fledged rural social security system. At present, regional social security projects, such as rural social old-age insurance and rural social medical insurance, cover only less than 10% of rural population; and social relief, veteran benefit and placement and social welfare (rest homes and the system for providing food, clothing, medial care, housing and burial expenses for childless and infirm rural residents) are quite limited, far from enough for meeting the needs of the rural society.

1. Low-level, small-scope and narrow-coverage rural social security cannot meet the needs of rural social development

The main forms of China’s rural social security are rural social relief, social special pension, rural “five guarantees” and rural social old-age insurance and cooperative medical insurance implemented in a few places. The main objects are poor households and households enjoying the “five guarantees”, instead of most of the rural population. In many places, rural security projects mainly consists of social relief and social special pension, while medical insurance and unemployment insurance are absent. The survey shows that rural households participating in unemployment insurance, work-related injury insurance and child-bearing insurance account for less than 5% of the total sample numbers.

Rural social security work focusing on pension and medical insurances is only carried out in a few areas, conflicting with the law and regulations that all the areas and households meeting the requirements should be covered. The survey reveals that the rural households that have not participated in any insurances account for almost 50% of the total sample numbers (Table 2), while those who have participated in social old-age insurance account for only 26.74%, most of whom have done so out of the farmers’ own will.

Table 2 Social Insurance Coverage of Rural Households(%)

Status Quo of and Policy Suggestions on Rural Social Security

Source: Survey data

Those households that have not participated in social insurance occupy 38.40%, and the main reason for that is that they do not understand this policy; those households that have not participated in social insurance account for 28.95% due to economic conditions; and 14.64% of the households still have doubts about the policy, and they are afraid that it might change and cannot be put into practice (Table 3). Actually, the Chinese government has indeed changed its attitude toward rural social insurance from time to time, which makes the farmers who already have doubts become more reluctant to participate in this project.

Table 3 Reasons of Farmers without Participation in Social Insurance(%)

Status Quo of and Policy Suggestions on Rural Social Security

Source: Survey data

The survey shows that the social relief in rural areas mainly refers to natural disaster relief and five guarantees system. The pilot project of subsistence allowances has just begun in the countryside. The farmers mainly rely on themselves to solve the problems when encountering natural disasters, diseases, and accidents; those who wholly rely on the government to receive relief account for less than 5%; 32% can receive some relief fund, but that is not enough to solve their problems (Table 4). ...

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