The purpose of this paper is to investigate China's employment stabilization policies in response to the coronavirus disease 2019 (COVID-19) pandemic and to discuss the accessibility of these policies in practice. In addition, by focussing on the problems and dilemmas encountered during the implementation of these policies, this paper proposes some future directions for reforming employment protection and social insurance to adapt to the changing employment structure and mode in China.
The design and methodology of this paper utilises open sources and documentary materials on China's employment stabilization policies, employment protection and social insurance measures.
The employment stabilization policies/measures launched during the COVID-19 pandemic were formulated under an initial policy framework designed only for employees in a definite employment relationship and do not match the current employment structure and model. As a result, the accessibility of employment stabilization policies/measures is limited because some worker groups that are the most affected are not covered by the policies.
This paper provides timely analysis on the China's employment stabilization policies and evaluates the accessibility of these policies.
Zhang, H. (2020), "China's employment stabilization policies in response to the impact of the COVID-19 pandemic", International Journal of Sociology and Social Policy, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJSSP-05-2020-0167Download as .RIS
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Copyright © 2020, Emerald Publishing Limited
Since the coronavirus disease 2019 (COVID-19) outbreak, numerous enterprises in China have been unable to resume normal operation and production. The surveyed unemployment rate nationwide reached a peak of 6.2% in cities and towns in February 2020, an increase of 0.9% compared to the same period in 2019. This number did not include migrant workers, who account for an exceptionally large number of workers. In addition, the number of new college graduates is expected to hit a historic high of 8.74m in 2020 (National Bureau of Statistics of China, 2020). China is facing an extremely serious employment challenge. The central government and different levels of local governments are deeply concerned about this challenge. To address the situation, they have issued various policies and measures to stabilize employment, which focus mainly on employment protection and social insurance.
This paper aims to investigate China's employment stabilization policies in response to the COVID-19 pandemic and to discuss the accessibility of these policies in practice. In addition, by focussing on the problems and dilemmas encountered during the implementation of these policies, this paper proposes some future directions for reforming employment protection and social insurance to adapt to the changing employment structure and mode in China.
1. Employment stabilization policies and measures in response to the impact of the COVID-19 pandemic
Since the beginning of the COVID-19 pandemic, the central government has paid significant attention to the impact of the outbreak on employment. President Xi Jinping gave a series of important instructions and emphasized that “Especially during a pandemic, more attention should be paid to ensuring and improving people's livelihood. We must pay particular attention to employment and prevent large-scale layoffs”. By stabilizing employment, the government can keep the economy and expectations stable and can stabilize people's livelihood and faith.
In March 2020, the General Office of the State Council of the People's Republic of China issued the “Implementation Opinion about Addressing the Impact of the COVID-19 and Strengthening Employment Stabilization Measures” (abbreviated hereafter as the Implementation Opinion). The Implementation Opinion includes various policies and measures related to employment protection and social insurance. The measures for employment protection mainly involve further reducing corporate burdens and stabilizing the job positions of businesses, improving vocational training and employment services, and enhancing employment support and protection forkey groups. The measures related to social insurance mainly include reducing or exempting employer contributions to social insurance, returning unemployment insurance contributions paid by enterprises, and providing social insurance subsidies, unemployment insurance benefits and financial aid.
The employment protection measures taken to further reduce corporate burdens and keep job positions stable include granting construction enterprises a deferral of migrant worker wage payment deposits until the end of June 2020; furthermore, the deposit requirement may be exempted for construction enterprises with a good payment history. The policies are implemented to ensure a lump-sum tax reduction and exemption, secured lending and interest subsidies, and employment subsidies for enterprises that have hired workers from key groups. The measures related to vocational training and employment services include the following: (1) Vocational training programmes will be expanded, and the training period can be prolonged for unemployed workers and migrant workers; (2) Online hiring services will be continuously promoted, and public employment service sectors, employment consultation organizations for college graduates and commercial human resource service businesses will play a more import role than they previously have. Services related to open-position information, employment consulting and online job interviews will be expanded. For older workers and workers with low skills, hiring information will be delivered through phone calls and text messages to provide specific job-seeking/application services; (3) Temporary public welfare jobs, such as disinfection and epidemic prevention and sanitation jobs, will be expanded for people who cannot find jobs through normal market channels. Measures supporting and protecting employment forkey groups focus on ensuring the orderly transfer and employment of migrant workers, expanding employment channels for college graduates and strengthening support for poor and vulnerable people.
Regarding social insurance, policies related to the phased reduction and exemption of employer contributions to social insurance and the deferral of payments shall be implemented as soon as possible. The return of unemployment insurance payments entails to reducing or exempting the unemployment insurance contributions of enterprises that do not lay off workers or that cut a small number of jobs. The rate of refund starts at 50% and can be as high as 100% of the total paid unemployment insurance contributions of employers and employees in the previous year. Hubei Province may exempt all entities participating in insurance from the employer's contribution to unemployment insurance. The standards for qualifying for the refund according to the employment stabilization policies can be loosened for insurance-participating enterprises that are facing temporary difficulties but have a chance of recovering and that continue to not lay off workers or lay off only a few workers. The refund policy prioritizes enterprises impacted by the COVID-19 pandemic. The amount of the refund shall not exceed six months of average unemployment insurance benefits, and the rate shall be based on the number of insured employees. Alternatively, the rate can be determined based on the standard that the total amount should not exceed three months of social insurance contributions by both the employer and employees.
Social insurance subsidies shall be provided to newly-added public welfare jobs at a rate based on job responsibilities and work hours. The subsidies shall not be paid for more than six months and are funded by employment subsidy funds. The measures supporting unemployment insurance and unemployment financial aid aim mainly to ease the application process and prolong the unemployment insurance period. Online applications for unemployment insurance benefits have been available since the end of April of 2020. Unemployed individuals who have not been employed by the expiration of their unemployment insurance period and those who do not meet the conditions for receiving unemployment insurance benefits will receive a six-months unemployment financial aid package that does not exceed 80% of the local unemployment insurance benefits (see Table 1).
Under the close attention of the central government and according to the policy guidance it has provided, local governments have also launched their own employment stabilization policies based on the Implementation Opinion in response to COVID-19's impact on employment. According to official reports, governments reduced or exempted 123.9bn yuan in employer contributions to three kinds of social insurance (pensions, unemployment and work-related injury insurance) in February 2020, and they are expected to reduce or exempt more than 500bn yuan between February and June. As of 24 March 2020, the governments have returned 22.2bn yuan in employer contributions to unemployment insurance to 1.46m enterprises and have provided benefits to 49.15m workers (China’s Ministry of Human Resources and Social Security, 2020).
2. Accessibility analysis of employment stabilization policies in response to the impact of the COVID-19 pandemic
Accessibility is an important concept that was originally used to assess the fairness, efficiency and quality of healthcare service systems (Salkever, 1975; Campbell et al., 2000). As the concept of accessibility has developed, it has gradually been introduced into welfare service assessment and refers to whether individuals are able to receive a service they need or whether a service satisfies demands in terms of its characteristics and level (Hong, 2006; Wang, 2009; Hurley et al., 2013). In this paper, accessibility refers to whether employment stabilization policies and measures launched during the COVID-19 pandemic meet the needs of people who require them and thus meet their goals.
In assessing the accessibility of employment stabilization policies, the first step was to investigate the current employment structure and mode in China. Two decades ago, China's employment structure was dominated by primary industry, as evidenced by data indicating that agriculture and tertiary industry accounted for 50% and less than 30%, respectively, in 2000. Since then, the proportion of employment accounted for by primary industry continued to decline, while the proportion related to tertiary industry gradually increased. By 2011, the proportion of tertiary industry (35.7%) surpassed that of primary industry (34.8%), making tertiary industry the most prominent source of employment. By the end of 2018, the tertiary industry segment accounted for 46.3%, while primary industry accounted for only 26.1%. Within tertiary industry, five sectors (transport/warehousing and postal service, wholesale and retail, hospitality business and restaurant, rental and business services, residential services/repair and other services) are the main contributors to employment. In particular, the total workforce in these five sectors accounted for 67.31% of total employment in urban private businesses and individual economies; of these, 40.33% were in wholesale and retailing business (Wang, 2020). The COVID-19 outbreak has directly hit the service sectors the hardest. Aspects of the service sector that heavily rely on population density and mobility and provide the most jobs, such as tourism, restaurants and sports/recreation/entertainment, almost completely stopped as a result of the outbreak, creating a tremendous employment challenge.
Regarding the change in the employment model, new types of jobs in the platform economy and digital economy, including package delivery, takeout delivery and ride-hailing drivers, have emerged with the development of information and mobile technologies. Fundamentally different from the traditional employment model, this new employment model presents a “non-organizational” form in which the relationship between worker and enterprise is more like a partnership than a traditional “employer-employee” relationship. In China, the exact number of workers in the new employment model is unclear. A report regarding electronic commerce logistics in 2016 stated that there were 2.033m workers in this field, most of whom were males within the age range of 20–30 years. Nearly 80% of the workers in electronic commerce logistics came from the countryside; they worked for 9–10 h daily on average and most had been employed for less than one year (Beijing Jiaotong University et al., 2016). According to ILO, self-employment is widespread in traditional sectors as construction and transport as well as in the growing service sectors and in new business models as a substitute for salaried employment (International Labour Organization (ILO), 2016). China is no exception. According to the urban individual employment (self-employment) data from the National Bureau of Statistics of China, it can be estimated that the proportion of urban workers employed by organizations has been continuously decreasing, while the proportion of self-employed workers has been increasing. At the end of 2018, urban workers employed by organizations and self-employed individuals accounted for approximately 40% and nearly 25% of total employment, respectively.
In recent years, with the rapid development of urbanization, the proportion of permanent urban residents has exceeded 60% and the proportion of urban employment out of total employment Roseto 57.11% (Wang, 2020). The urban employment of a massive number of migrant workers from the countryside has led to an urbanization process in which the majority of the nation's population lives and works in cities and towns. As of the end of 2019, the number of rural migrant workers was close to 0.3bn, and the number of migrant workers who flow outside districts and counties was 0.174bn (National Bureau of Statistics of China, 2019). When migrant workers from rural areas are considered urban workers, they account for approximately 40% of all urban workers (see Table 2). In other words, the floating population dominated by migrant workers has become the main component of urban employment in China.
During the COVID-19 outbreak, the route of transmission was more difficult to cut off in cities and towns, where life activities and employment aggregate more. As a result, the measures to control the spread of the disease and cut off its transmission route have had a greater impact on urban employment than on rural employment. Thus, under the current employment structure and model, workers in the service industry, workers in the new employment model and migrant workers are the groups most strongly affected by the COVID-19 outbreak. In reality, these three groups of workers intersect and overlap to represent the majority of the urban employment in China.
The employment stabilization policies/measures launched during the COVID-19 outbreak primarily apply to employees in a definite employment relationship because China's Labour Contract Law provides employment protection and social insurance only to those employees. According to the Labour Contract Law, employment protection is meant to protect employees by coordinating the capital–labour relationship; social insurance, which is funded by both the employer and employee contributions, acts as a type of mutual aid. As the employment structure and model change, employment without a clear relationship or self-employment has become a new trending form. In many cases, the eligibility criteria for social protection are tailored to salaried employment or are tighter for the self-employed, which may hinder their access to social insurance schemes (Spasova and Wilkens, 2018). According to China's Social Insurance Law, all urban workers must participate in social insurance plans, but the actual rate of insured workers has never reached 80%. As of the end of 2018, only 45.24% of workers were covered by unemployment insurance plans designed directly to mitigate the risk of unemployment; in other words, more than a half of workers were not covered by unemployment insurance (see Table 3). In addition, the rate of workers with social insurance remains low amongst the floating population represented by migrant workers. A large number of urban workers are not covered by standard social insurance. According to Social Insurance Law, migrant workers should participate in social insurance plans for urban employees. However, in 2017, the percentages of migrant workers covered by pension, healthcare, unemployment and work-related injury insurance plans were only 36.09, 45.43, 36.22 and 28.50%, respectively (Wang, 2020); in particular, only approximately one-third of workers had unemployment insurance.
The employment stabilization policies/measures launched during the COVID-19 pandemic were formulated under an initial policy framework designed only for employees in a definite employment relationship and do not match the current employment structure and model. As a result, some worker groups are neglected by these policies/measures. The first such group is individual workers (self-employed workers), a low percentage of whom is covered by urban employee social insurance and protected by the Labour Contract Law. It is difficult for these workers to participate in the insurance plans that require employer contributions, such as work-related injury and unemployment insurance. The second group is workers in the new employment model who are employed in the platform economy and the digital economy. These workers are most likely not registered or counted by the government system; as a result, it is difficult for the government to accurately determine the employment status of this worker group. Therefore, some of these workers are not covered by employment protection and social insurance policies. Similar to self-employed individuals, workers in the new employment model can participate in social insurance plans as flexibly employed personnel, but most only have pension and healthcare insurance because it is difficult for them to participate in unemployment and work-related injury insurance plans that require employer contributions. The third group comprises a portion of migrant workers. Although migrant workers can participate in local social insurance plans, the actual insured rate does not exceed 50%; in particular, only approximately one-third of this group has unemployment insurance.
Although there are no official statistical data indicating the scale of the three affected worker groups, an estimation can be made based on the percentage of urban workers covered by employee social insurance. Similar to some European countries, China's social insurance system is a patchwork of “optional access” and “partially exclusive”, which means self-employed or flexibly employed workers can opt into some social insurance schemes but are excluded from others (Spasova and Wilkens, 2018). In China, individual workers and workers in the new employment model are excluded from participating in unemployment and work-related injury insurance plans but are able to have pension and healthcare insurance as flexibly employed personnel, the number of urban employees without work-related injury insurance coverage can be used to roughly estimate the percentage of urban employees excluded from standard employment protection and social insurance. In 2018, this percentage was approximately 45% (Wang, 2020), meaning that nearly half of urban workers were excluded from the standard employment protection and social insurance system.
Under this circumstance, the accessibility of employment stabilization policies/measures launched during the COVID-19 outbreak is limited because the worker groups that are the most affected are not covered by the polices. For example, unemployment insurance refunds are not applicable to nearly half of urban workers; unemployment insurance benefits are provided to only workers who are unemployed during the outbreak and have unemployment insurance and will not be available to those who do not have unemployment insurance, a group that comprises approximately half of urban workers. Just as Governor of Gansu Province Tang Renjian stated in his speech before May Day: “There is a big gap between the expectation of the policy effect and the actual feeling of enterprises. Policies are visible but not accessible. Some of the employment stabilization policies are running on empty.” (Sina Net Finance, 2020). His statement indicates the issue of policy accessibility.
3. Suggestions for improving the accessibility of employment stabilization polices launched in the context of the COVID-19 outbreak
Employment is the foundation of people's livelihood. Stabilizing employment enables the stabilization of work resumption, reassures people and stabilizes the society. Around the world, the response of many governments has been to offer temporary financial support to the business and workers affected in order to stabilize employment and maintain people's livelihood. However, some scholars find that in Europe, a significant proportion of workers and enterprises are unable to access the temporary financial support being provided by the governments because they engaged in undeclared work (Williams and Kayaoglu, 2020a). Undeclared work is concentrated in the service industries, many of which witnessed closure during the “lockdown” and many undeclared workers lost their jobs (Williams and Kayaoglu, 2020a). Similar to the situations in European countries, the current employment protection and social insurance policies in China do not include all of the workers who are affected the most by the COVID-19 pandemic. This exclusion should be corrected by improving the accessibility of the policies; in other words, the policies should be improved to match the changed employment structure and model and should have high flexibility and resilience.
On the one hand, the employment stabilization policies launched during the COVID-19 pandemic should expand to focus on worker groups that have been excluded. Individual workers (self-employed workers), workers in the new employment model and migrant workers are excluded from the standard employment protection and social insurance policy system. These groups are highly vulnerable to the impact of COVID-19 and thus need special attention. To support them, the government should increase the scale, expand the scope and improve the strength of employment protection to ensure that these workers can be covered by employment protection and social insurance plans. Workers in new employment model or in informal sectors should also be included in the social protection system, based on a fair sharing of the cost between employers, workers and governments (International Labour Organization (ILO), 2020). In addition, migrant workers should be treated equally under employment protection and social insurance policies and should be covered by the local employment protection system. It is necessary to ensure adequate social protection coverage for workers in all forms of employment (International Labour Organization (ILO), 2016). From a long-term view, the focus of employment protection and social insurance policies should be shifted from workers with a clear employment relationship to all citizens.
Additionally, the government should encourage, guide and motivate social organizations to improve the accessibility and focus of policies. Targeting the current “non-organizational” employment model, the government should establish a “government-social organization-individual” management chain through which social organizations, including social communities and charity organizations, can compensate for the link weakened by the absence of “organizations” (Wang, 2020). These organizations should be encouraged to take a proactive role in employment protection and social insurance police/measures so that these policies can benefit everyone in need and provide an employment-stabilizing effect.
Last but not least, during the governments' efforts regarding work resumption, increased attention should be paid to the service industry in addition to large enterprises. The service industry is closely associated with people's daily life because it employs a large number of workers. Measures to mitigate the contraction of the formal economy in service industry, especially micro and small enterprises, are critical to prevent informal employment (Williams and Kayaoglu, 2020b; International Labour Organization (ILO), 2016).
Employment stabilization policies in response to the impact of the COVID-19 pandemic in China
|Employment stabilization policies||Definite measures|
Source(s): Implementation Opinion, March 2020, the General Office of the State Council of China
China's urban employment situation (2008–2019)
|Year||Proportion of permanent urban residents(%)||Urban employed persons (million)||Proportion of urban employment out of total employment (%)||Rural migrant workers (million)||Migrant workers who flow outside districts and counties (million)||Proportion of migrant workers who flow outside districts and counties out of urban employment (%)|
Source(s): China statistical yearbook, various years
The number and coverage of urban workers participating in basic social insurance 2018
|Social insurance type||Number of participants (million)||Coverage (%)|
|Employee's pension insurance||301.040||69.33|
|Employee's medical insurance||233.075||53.68|
|Employment injury insurance||238.744||54.99|
Note(s): Number of participants means active employees and retired employees are excluded. Coverage = number of participants/total number of employees
Source(s): Wang (2020)
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The research is supported by project of Sichuan University, China (SKSYL201808).