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Social Security Benefits Becoming the Worst Gap between Urban and Rural

People’s Daily published an article on the gap between the urban and rural areas in China. The article said that the gap in income has always been considered the major gap between the urban and rural areas. In 2012, however, that gap was reduced to 3.10:1, the lowest in ten years. This was mainly due to the central administration having a policy that supported agriculture and to the urbanization that has brought surplus labor from rural to urban areas.

However, the article predicted that the gap in social security benefits will become the worst hidden gap. Taking pension funds as an example, according to the 2014 Blue Book of China’s Society, on that issue, the difference was as large as 24 times. For farmers, the social security benefits issue was never as sensitive as the income disparity issue because they used to own their land. According to the article, as urbanization has continued, farmers have been losing their land and have been moving to urban areas where the fair share of social benefits they have been able to gain has not matched that of the urban residents. The statistics from the Ministry of Statistics suggest that, in 2012, the urbanization rate was 52.57 percent while only 35 percent of the migrant workers have gained urban residential status or Hukou which would enable them to sign up for the same residential welfare benefits that urban residents are entitled to receive.

The article explained that, if 250 million farmers were to be included in the social security system, there would be a shortfall of 30.69 trillion yuan (US$5.07 trillion) in pension funds alone which neither the business enterprises nor the local government bodies would be able to cover. It concluded that, in order to close the social security gap, it will require the attention, active intervention, and responsive measures from the government.

Source: People’s Daily, January 26, 2014