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Crucial Institutional and Mechanism Issues Hold the Key to Social Policy Improvement


By Ge Yanfeng, Yu Dong and Zhang Bingzi, Research Department of Social Development of DRC

Research Report No 87, 2012

Development of social policies and related institutional improvements not only make it important to clarify the trend of reform and development in various fields and specific policies, but also require advancement of institutional reform in related fields and improvement of the operational mechanism, especially in terms of technology selection and management in key fields, so as to enhance service and management quality and efficiency across-the-board. Based on an overall consideration of the international experience and the challenges experienced in making and implementing social policies in China, we would like to draw attention to the following aspects:

I. Adjust and Improve Relationships among Governments at Different Levels in Terms of Responsibility for Social Security and Public Service

Social security and public service fall into the governments' responsibility. The key issue is that China has five levels of governments. Over the years, the non-smooth responsibility relationships among governments at different levels have severely hindered social development, so it is high time to speed up reform in this regard. The key solution lies in improving the responsibility system among governments at different levels concerning decision-making related to social security and public service, as well as follow-up investment, decision implementation and supervision of related work.

1. We need to strengthen the central government's responsibility for decision-making and overall planning

In the field of social security and public service, we must adhere to equality and policy consistency, thus it is essential to further strengthen the central government's responsibility for overall planning. Considering the large development gaps between different regions, the local governments could be given relevant right in making specific policies to some extent, but the general direction and guidelines provided by the central government must be complied with.

2. We need to further clarify the responsibility for implementation

In light of the characteristics of different types of social security and public service, it must be made clear what is the responsibility of the governments at a higher level, what responsibility rests with the local governments, especially at the grass-roots level, and what needs to be delivered jointly by governments at different levels. The fact is that in most cases the local governments, especially those at the level of counties and the county-level cities, are responsible for implementing policies on social security and public service.

3. We need to ensure responsibility for investment corresponds with that for implementation

In view of the imbalance in economic development from region to region and the fact that local governments are counted on in the delivery of service and administration, it is imperative to further reform and improve the cost-sharing mechanism, strengthen the central and provincial governments' general transfer payment to local governments, so as to equalize the governments' finance. In the field of compulsory education, the expenditure-sharing mode can be explored on the basis of reform over recent years.

4. We need to reinforce the high-level governments' responsibility for supervising local social development

The objectives and evaluation standards in this regard should be stipulated by the central government while the concrete supervision and evaluation should fall into the responsibility of the provincial governments. Meanwhile, it is essential to bring into play the supervisory role of service recipients and the public.

II. Improve Public Investment and Management Mode, Identify Product Attributes and Cost-sharing Mechanism, and Ensure Benefit of the Public, Especially Low and Medium-income Social Groups

1. We should make clear the scope and standard of public service and see to it that a reasonable level of service is provided, in a bid to promote standardization of basic public service

The level and standard of social security and public service must be in accordance with development requirement, the national conditions and strength. We should prioritize our work and define the focus by referring to international practice. Still we should improve the mechanism so as to ensure sustainability of relevant policies. While it is important to keep the service at a reasonable level that is neither too high nor too low, it is the priority for the next phase to push ahead with standardization in related fields. The standardization process involves the formulation of both minimum and maximum standards that are fundamental to service equalization. Considering the realistic differences between regions, a reasonable level of flexibility which can never be too great is allowed in this regard; within the same region, the same standards should be adopted for various services whenever possible.

2. We need to reform the investment mode and improve management, so as to enhance performance of public investment

We should not only steadily increase investment, but more importantly we need to enhance the performance of the public investment through institutionalization efforts and ensure the public investment is translated into public welfare in the true sense. We must reverse the tendency of stressing capital construction but neglecting investment for routine operation, and establish a mechanism linking public investment and related service pricing. Still, we need to reinforce supervision upon use of public funds, standardize capital flow, promote open and transparent operation of public funds and strengthen performance evaluation. As for management of specific affairs, we need to fully leverage modern information technology to make improvement in this regard. At present we need to make substantial endeavor to redress compartmentalized IT development and application in various fields and between different regions, so as to realize information sharing. Moreover, we need to promote application and development of IT technology, to better manage social security, public service and social administration.

3. We need to further identify product attributes and cost-sharing mechanism

We should fully draw on international experience in this respect, offer service for free, with below-cost pricing or according to cost depending on the financial resources available and service characteristics. With regard to the basic service for a majority of people, it is appropriate to provide it for free, or for a small fee (for the purpose of avoiding waste). Regarding the service and the cost of which needs to be shared by individuals and families, the individual's ability to pay must be taken into full consideration, and corresponding reduction, exemption or subsidy policies should be developed, to avoid reverse transfer payment and ensure the benefit of the middle and low-income social groups.

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