Social Insurance Coverage in Urban China John Giles Dewen Wang
Overview Social insurance schemes in Urban China Trends in social insurance coverage Regional variation Micro evidence of social insurance coverage Understanding patterns from different data sources Issues involved in expanding coverage Conclusion
Motivation Policy goals Extending social insurance coverage is an important current policy priority of the Chinese government A 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 China Schemes 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 80 70 60 50 40 30 20 Coverage Rate of Pension Insurance (%) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Definition One Definition Two
Medical Insurance Coverage 60 50 40 30 20 10 0 Coverage rates of medical insurance (%) 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Definition one Definition two
Urban Resident Basic Medical Insurance Scheme 200 180 160 140 120 100 80 60 40 Number (million) Coverage rate (%) 2007 2008 2009 70 60 50 40 30 20 Number of urban residents participated in basic medical insurance (million) Coverage rate (%) 10
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 Scheme 40 60 80 100 120 PI (%) 40 60 80 100 UI (%) 20 40 60 80 100 120 MI (%) 2000 2002 2004 2006 2008 2000 2002 2004 2006 2008 2000 2002 2004 2006 2008
Regional Coverage Variation-by Per Capita GDP in Logarithm Form 40 60 80 100 120 PI (%) 40 60 80 100 UI (%) 20 40 60 80 100 120 MI (%) 8 9 10 11 log (Per Capita GDP) 8 9 10 11 log (Per Capita GDP) 8 9 10 11 log (Per Capita GDP)
Micro Evidence Who 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 Share of Non-Working with Support Local Men Share 0.2.4.6.8 2006 2007 2008 2009 2010 Year Pension UI
Declining Replacement Rates of Pension Benefits in Urban China 110 100 90 80 70 60 50 40 Replacement rates (%) 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 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 6000 5000 UI benefit level (Yuan/Year) Proportion of average wage (%) 30 25 4000 3000 2000 1000 5 20 15 10 0 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 UI benefit level Proportion of avarage wage
Roadmap toward A Full Coverage Institutional reform Scaling-up urban resident medical insurance scheme to cover all urban residents Piloting and rolling out urban resident pension scheme to cover all urban residents Reforming urban employee pension scheme and encouraging rural migrants 'participation Extending UI to rural migrant workers Pooling and integration of MIS and service delivery Implementation and enforcement of labor contract law and labor promotion law Supporting reform measures Hukou reform, fiscal system reform and statistical reform
Conclusions Considerable 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 selfemployed and those in small scale enterprises Understand compliance among employers and employees alike
Approach to China-India Comparison Start 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.