Three Worlds of Welfare Capitalism

Author: [Danish] Andersen
Publisher:
Publish Date: 2003-11-01
Features: Starting from the poor relief laws of early industrialized countries, after hundreds of years of development, the social security system has now formed a relatively complete framework and become an important component of a country's socio-economic system. As a socialist country, China has attached great importance to social security work since the early days of its founding. In 1951, the "Labor Insurance Regulations" were promulgated, and in the 1950s, a social security system was established to meet the requirements of the planned economy, characterized by state funding and unit management. This system played a positive role in ensuring the livelihood of workers and maintaining social stability. With China's transition to a socialist market economy, the traditional social security system formed under the planned economy increasingly exposed its flaws: First, the implementation scope was narrow, primarily limited to state-owned units, and was not adaptable to the development of multiple economic sectors. It hindered labor mobility between different ownership units and disadvantaged the fair competition of state-owned enterprises with other types of enterprises. Second, the level of security was uniform, with all costs borne by the state and units, and workers were not insured, lacking a sense of self-security, leading to a serious waste of social security resources. Third, the management and service of security were handled by enterprises, creating a scenario where enterprises "ran society," affecting their ability to focus on production and operation. When enterprises shifted from being appendages of government agencies to self-funded, autonomous market entities, losses could no longer guarantee basic security benefits for workers. Fourth, the security programs were incomplete, such as the non-recognition of unemployment under the planned economy, the absence of unemployment insurance, and the difficulty of hiring and laying off workers in state-owned enterprises, leading to a large surplus workforce and an inability of the labor structure to adapt to adjustments in industrial, technological, and ownership structures. In recent years, with the deepening of reforms, the long-accumulated surplus workforce in enterprises has become visible, resulting in a large number of laid-off workers and a rising unemployment rate. Issues related to old-age insurance, medical insurance, and social relief have also become increasingly prominent. The reform of the social security system, which affects the lives of hundreds of millions of people and involves the adjustment of interests among the state, enterprises, and workers, has now become a focal point of attention across all sectors. Its complexity and importance have gained social consensus. Establishing a social security system compatible with the socialist market economy system has become an extremely important and urgent task related to reform, development, and stability. The Party Central Committee and the State Council have always attached great importance to the reform of the social security system. Since the Third Plenary Session of the 11th Party Congress in 1978, reforms have been explored in some social security programs. After the Third Plenary Session of the 12th Party Congress in 1984, reforms were carried out around the central task of revitalizing state-owned enterprises. The "Decision on Several Issues Concerning the Establishment of a Socialist Market Economy System" adopted at the Third Plenary Session of the 14th Party Congress in 1993 listed the social security system alongside the modern enterprise system, a unified market system, a macro-control system, and an income distribution system as an important component in building the framework of China's socialist market economy. This marked the transition of China's social security system reform from being a supporting measure for state-owned enterprise reforms to a new stage of system construction.