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Reform plan in Liaoning targets problems in SOEs
( 2001-07-09 10:19 ) (1 )

The State Council has approved a pilot programme of social security reform in Northeast China's Liaoning Province, minister of labour and social security Zhang Zuoji has said.

The programme is the first step towards China building the world's largest social security system, and if successful, the new social security system will be introduced nationwide.

Zhang said the new system will cover as many people as possible but at a relatively low level.

Ten per cent of China's large and medium-sized State-owned enterprises are based in Liaoning Province, one of the oldest industrial bases in the country.

Liaoning has been selected as the city to start reforms because its problems are typical of many cities around the country.

Bo Xilai, Liaoning's provincial governor, said he saw it as both an opportunity and a challenge for Liaoning.

"A lack of funds is one of the major difficulties we will face,'' Bo said.

The general aim of the three-year programme is to set up an independent social security system which has a range of fund sources.

China's social security system mainly covers State employees who rely on the government for pensions and medical and employment insurance.

The pilot programme will focus on these three sectors.

The current pension insurance system will be re-adjusted and improved, and setting up the medical insurance system will be sped up.

The reforms also aim at turning social security funds from subsidies and allowances into insurance.

Basic living allowances for laid-off workers from State-owned enterprises will be turned into unemployment insurance, and from this year laid-off workers will be paid unemployment insurance.

Retired workers will be paid a pension and will be safe even if their work units are not financially sound.

China also plans to set up a sound regulatory framework and promote relative legislation.

The Standing Committee of the National People's Congress, the country's legislative body, is currently looking at the social security law, which is expected to set standards for the collection and management of social security funds and assign responsibility to relevant institutions.