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Migrant workers protest against poorly managed social security reforms in Guangdong

Click here to download this introduction in PDF format
CLNT_tuibao_2010_INTRO.pdf

In July 2008, CLNT provided extensive analysis of how China’s social security system was failing migrant workers – especially when it comes to old-age pensions. Even though Chinese law requires old-age insurance for all migrant workers, until recently, the funds in workers’ insurance account could not be transferred between different cities and provinces. Hence when migrant workers returned home, or moved to a new place of work, most chose to exercise the option of “cashing-in” their pension (tuibao) (see http://www.clntranslations.org/article/31/systematic-government-theft-of-migrant-workers-retirement-pensions).

But this is about to change. On 1 January 2010, new provisional regulations were enacted permitting the inter-regional transfer of social security accounts. In Guangdong, the new regulations were accompanied by a last minute announcement that, from 31 December 2009, workers would no longer be allowed to cash-in their pensions. Many workers did not hear the news and missed the deadline. Some turned to protest in an attempt to get their money. For this issue of CLNT, we have translated an article from the Southern Metropolitan Weekly about workers at the Meitai toy factory in Foshan, who went on strike and blocked a highway after they missed out on cashing-in their pensions.

Before every Chinese New Year social security service centres in industrial areas like the Pearl River Delta are flooded with migrant workers, retrieving the money deducted from their wages into their pension account. Workers have to queue up for hours – often overnight. Some even quit their jobs days before they are due to leave the city just to guarantee an appointment with the social security service centre. And after all that effort, migrant workers can only cash-in their own pension contributions. Money contributed by their employer must be left behind. This has to do with the fact that China, as yet, has no national pension system, and different localities have not been willing to honour pensions transferred from elsewhere. CLNT’s July 2008 edition analysed in detail how migrant workers’ access to a fair pension was thwarted by bureaucratic barriers, competing regional government interests, and resistance from employers who understandably resent paying for a pension they know migrant workers would never get and would be just swallowed up by local government.

Workers do not welcome hasty new regulations

In late December 2009 came the last-minute announcement that the Provision for the Transfer and Continuation of Old-Age Pension for City and Township Enterprise Employees 城镇企业职工基本养老保险关系转移接续暂行办法 would be implemented as of 1 January 2010. But the news was not welcomed by most migrant workers. Following the announcement, Social Security Service Centres in the Pearl River Delta were instructed not to cash-in any more pensions after 9.00pm on 31 December 2009, and upon hearing the news workers rushed to get their money. Many did not receive the news before it was too late. Some who missed the deadline resorted to protest in an attempt to get their money. One such case was the Meitai toy factory in Foshan – a large industrial city in the Pearl River Delta – where workers went on strike and blockaded the highway outside their factory. They accused their employer of intentionally withholding the news for fear that workers would resign en masse in order to get to the social security service centre before the deadline passed. The police responded by forcibly dispersing the crowd and arresting 22 workers, who have since been released. As far as we know, the Meitai workers were unsuccessful in their attempt to get their pension money.

Several things are clear from this case, and from the widespread anger amongst workers following the announcement of new legislation. Firstly, most migrant workers view their pension contributions of 9 percent of their wages as an excessive deduction from their meagre incomes. They would rather have the money in their hand to meet their immediate costs of living – and are likely to continue feeling this way as long as China’s minimum wage remains so low.

Furthermore, many migrants are rightfully sceptical about the proposed changes to social security legislation. Even though the cities where they work in Guangdong are willing to transfer their pension accounts, many workers are not confident that their home towns will accept it, or process it transparently – especially if they are from small towns or villages.

And lastly, the implementation of these provision regulations was hasty, and workers were not provided with adequate information. Workers had already budgeted on having their pension money to fund their return home at Chinese New Year. Many missed out because of short notice. For such low-wage workers, more notice is required before enacting legislation preventing them from accessing a sum equivalent to 9 percent of their annual income.

Follow the link below to read the translated article about Meitai workers’ protest

A fierce “wave of cashing-in pensions” swells on the eve of new social security legislation
http://www.clntranslations.org/file_download/105

Follow the link below to read the original article in Chinese

社保新政前夕,“退保潮”汹涌
http://www.nbweekly.com/Print/Article/9596_0.shtml

This new regulation should be understood in the context of the broader reform of China’s social security legislation. Drafting of China’s first National Social Insurance Law is currently underway. Judging from the Draft Law, and statements made by senior officials to the National People’s Congress in March, the national government is aiming to centralise and standardise the collection and distribution of pension funds across the country. Such reform is long overdue, in light of the high labor mobility in China. A centralised pension system also represents an important step away from the restrictive household registration system (hukou).

For more detailed analysis of the Draft Law, see the following legal brief from Mallesons Stephan Jacques, “China’s social justice revolution continues”
http://www.mallesons.com/publications/2009/Jan/9770887w.htm.

To view to full Chinese text of the Provision for the Transfer and Continuation of Old-Age Pension for City and Township Enterprise Employees (城镇企业职工基本养老保险关系转移接续暂行办法) see http://www.gov.cn/zwgk/2009-12/29/content_1499072.htm

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