Confusing rules turn expats off nation’s social insurance program
Lack of efficiency and clarity deter participation, report in Chongqing and
Elsa Jacquin has a social insurance card issued by the Chinese government, but the French expatriate is not sure if she is covered by the country’s social security network, and doesn’t know where to seek an answer to this and many other questions.
“How should I draw my pension? Where should I go when I relocate to other cities in China? How can I access unemployment or maternity benefits?” she asked, adding that many of her friends are just as confused.
Jacquin paid social insurance contributions via her former employer when she lived in Beijing, but canceled the payments when she moved to Chong-qing in 2012.
She now runs a consultancy and is hoping to enroll her foreign employees in the program, but doesn’t know where to seek help.
In 2011, the Ministry of Human Resources and Social Security issued a regulation stipulating that all foreigners working in China should be included in the social security system from October that year.
However, a lack of efficiency and clarity in implementation means many foreign workers are hesitant about joining the program.
According to the ministry, just 33 percent of the 600,000 foreigners working in China last year had joined the program by 2013. “The participation rate of those from overseas is small compared with the number of expats in China,” Hu Xiaoyi, vice-minister of human resources and social security, told a news conference in December.
Lu Quan, an associate professor at Renmin University of China who specializes in social insurance, said inefficiency and the opaque nature of regulatory details are deterring greater participation by foreigners.
“Although China’s economy has developed aggressively, services such as pensions still lag behind. Many expats return to their home countries when they retire and then find it extremely difficult to collect their pensions,” he said.
In addition, he pointed out that medical bills incurred outside China are not covered by the insurance system, reducing its appeal to those who travel frequently.
Expats with valid work permits
Francesca Roberts, a 23-yearold English teacher in Chongqing, described her visit to a public hospital as “an experience I never want to go through again”.
Because Roberts speaks little Chinese, a colleague accompanied her to the hospital. “I told my colleague how I felt, and my colleague translated to the doctors. After an examination, the doctor explained everything to my colleague and finally my colleague told me. My colleague knew more about my health problem than I did. I felt there was no privacy at all,” she said.
However, when she attended the examination room on her own, Roberts was unable to understand the doctors and nurses, who all spoke in Chinese. “For quite a long time I didn’t know what was going on,” she said. Extra payments
To better benefit employees and abide by the law, many employers supplement the State system by buying additional medical insurance that covers international and private hospitals.
“The medical insurance in the program doesn’t cover the international departments of public hospitals or private clinics, where most English-speaking doctors work,” said Zhang Fulan, deputy general manager of China Services International, which provides a range of services for expats, including enrolment in the social insurance program.
Zhang said most large companies, such as State-owned and international enterprises, enrol in the program to abide to the law, but private companies, especially small and medium-sized businesses, are reluctant to do so.
“Employers have to pay nearly 40 percent of an employee’s monthly contribution, which is a huge drain on small businesses,” she said.
As general manager of a small business with four employees, Jacquin said small and medium-sized companies feel the pinch more than larger businesses. “The cost is enormous,” she said.
Lei Ting, a human resources expert at Microsoft, said the company provided training for HR staff when the policy was introduced in 2011 to ensure they fully understood the program.
“We explain to prospective expat employees that the insurance is mandatory and that they have to sign up if they want to work here. Our company is in China and we are obliged to abide by the country’s laws and regulations,” she said.
Lei declined to provide details of any other cover the company provides for foreign employees.
Both employers and employees are concerned about the lack of information about the program.
Zeng Yu, an HR specialist for Brose, a German autoparts company, in Chongqing, said she knew very little about the policy until she attended seminars and discussion groups to learn more.
“German workers don’t need to pay the pension, but they are still required to pay for other insurance policies, including maternity and work injuries,” she said. Improving the system
To improve the program for expats, the Chinese government will negotiate bilateral social insurance agreements with other countries.
The agreement with Denmark was signed in December, said Hu Xiaoyi, vice-minister of human resources and social security, at a news conference that month. He said China has negotiated agreements with 12 countries during the past three years.
Xi, from Northwest University, said two features of the social insurance system are widely accepted in the international labor market. The first concerns bilateral agreements, such as those with Denmark, South Korea and Germany. The second relates to a system used in the European Union where expats are exempted from paying two premiums; their pensions are distributed by different EU countries, depending on how long they worked in a particular country.
“We can utilize the EU’s experience in the East Asia region to recognize social insurance in countries and regions in East Asia,” Xi said.
Lu from Renmin University of China suggested that information about the policy and its implementation should be provided to foreigners when they enter the country to ensure they are fully briefed before they start work.
“The information should be displayed at airports and included in service brochures for foreigners. As things stand now, the policy lacks transparency,” he said. Contact the writers at luowangshu@ chinadaily.com.cn and caoyin@ chinadaily.com.cn
Tan Yingzi contributed to this story.