Many legal experts believe that China currently desperately
needs a regulated social security fund system, especially now as
citizens cope with a domestic economy that is experiencing dramatic
transformation. The consecutively rising Consumer Price Index (CPI)
along with huge costs for housing and healthcare has generated
great anxiety over welfare benefits.
Currently, the nation's top legislature is pondering a draft law
that would legalize people's rights to enjoy a regulated social
security fund system. "The fiscal revenue garnered in 2007,
estimated at 5 trillion yuan (US$689 billion), is capable of
expanding the social pension fund nationwide," said Zheng
Gongcheng, a member of the Standing Committee of the National
People's Congress and also a member of Committee for Internal and
Judicial Affairs. "Yet vast income gaps in different parts of the
country and the incomplete social security fund system hinders the
country from providing welfare to everybody overnight."
The domestic social security system has experienced many changes
since China began initial stages of opening-up and reform in the
1980s. At that time, hordes of employees from state-owned companies
raced to private business sectors hoping to seek personal gold
mines. Bankruptcies and business failures often occurred in both
private and non-private sectors during the nascent economic
restructuring and the previous pension system that functioned in
the non-market economy was no longer able to guarantee pension
security for everyone. In early 1990s, hundreds of social pension
programs cropped up in different parts of the country. According to
Zheng, some local governments considered these programs as a way to
generate a competitive edge to attract overseas investors at the
cost of citizens' welfare benefits. In 2000, social security
premiums and taxes co-existed in the country, which, according to
Zheng, pose grave threats to the accountability of the system.
"The conflicting duties among the various administrations harm
the integration and reasonable development of the social security
fund system," Zheng stated in a recent interview with Nanfeng
Chuang Magazine last month. "Chaotic management inside
different governmental departments has caused social pension
scandals in Shanghai and Shenzhen in recent years." In June,
Shanghai courts started hearing cases against officials involved in
the social security fund scandal that involved 3.7 billion yuan,
Xinhua reported.
To avoid further embezzlement, the country is planning to draft
a law to enhance the supervision of the fund, composed of pension
insurance, medical insurance, work injury insurance, unemployment
insurance and maternity insurance. In line with the draft law
submitted to the 31st session of the Standing Committee of the 10th
National People's Congress, institutions in charge of social
security issues should report their revenue, expenditures, balances
and earnings on regular basis. According to a Xinhua report last
month, the draft law encourages companies to organize supervisory
committees composed of company representatives, trade unions and
legal advisers.
According to the proposed law, employers who do not pay enough
of the required social security premiums for their employees should
return equal amounts of money from commercial bank accounts. If
companies pay insufficient social security funds to employees, and
provide no guarantees for these funds, then institutions in charge
of the funds can file legal suits to seize the defaulting company's
assets and auction them off for restitution purposes. The draft law
would also define punishments for embezzlement and fraudulent
practices.
The draft law would set up a legal framework to safeguard the
country's social security fund, including system principles,
insurance services and management supervisions, said Tian
Chengping, minister of the Labor and Social Security Ministry. The
fledgling legal framework still needs time to prove its
effectiveness and experts are still spilt on issues concerning fund
collection and management. Zhu Qing, director from the department
of Public Finance inside Renmin University, said that the social
security fund should be levied as a tax and the departments of
finance, tax and audit, in addition to social security
institutions, should be involved with management. "In my opinion,
economic activity of any kind should be conducted by several
government departments in order to control corruption," Zhu said in
an interview with China Tax News last September. Zhu is
also a standing director of the National Institute of International
Tax Studies.
But Zheng, who is also the director of the China Social Security
Studies Center inside Renmin University, opposes levying taxes for
social security fund. "Public taxes contradict the privacy of
personal accounts. Moreover, the balanced budget by way of taxation
conflicts with the function of fund accumulation," Zheng said in
his interview with Nanfeng Chuang magazine. "Taxation will
also weaken the rights and duties people require to enjoy the
system."
According to Zheng, as a measure to create a secure working
environment, to solve the contradictions in the labor market and to
uphold social equality, the central government should integrate a
social security system. "Trade unions and employers can supervise
their own social security departments, as long as the system
remains transparent," said Zheng.
(China.org.cn by Wu Jin January 14, 2008)