Chapter 721 – Social Security
When Secretary Xu was about to ask Feng Yu to leave, Feng Yu asked suddenly: “What are your views on Social Security Insurance?”
Secretary Xu was puzzled. Why did Feng Yu bring up this subject so suddenly? Zhang Ruiqiang looked at Feng Yu. Was Feng Yu trying to change the subject to stop the awkwardness?
Zhang Ruqiang cannot let Secretary Xu answer this question, and he replied: “Social Security insurance is just a form of retirement fund. In the past, it is the companies that take care of the retired staffs and their pensions. That means 20 to 30 workers had to support a retired staff, and this number is increasing as more people retires. Also, many people could not retire because they are not working for any companies. They had to work even at old age. We learned this social security insurance from developed countries.”
Secretary Xu looked at Feng Yu. Zhang Ruiqiang had given a good reply, and he wanted to hear what Feng Yu have to say about this Social Security Insurance.
“Mayor Zhang’s reply is very simple. But have you all ever thought how long it will take to implement this policy? Now, our government is forcing the companies in China to pay the social security insurance for their staffs. But you all should know how effective this policy is.”
“What are you trying to say? Stop beating around the bush!” Zhang Ruiqiang was pissed. This Feng Yu always like to flaunt his knowledge. Zhang Ruiqiang did not really research into this policy, and even the people at the Central Government were not very sure about social security insurance. They only treat this as an experiment.
“I dare to say that this policy will not succeed even after you all have retired!”
“What did you say? Are you joking with us?! This is a national policy, and how can it take such a long time to succeed?” Zhang Ruiqiang was furious, especially Feng Yu brought up the subject of retirement. He was afraid that Secretary Xu would be affected. Furthermore, Zhang Ruiqiang has at least more than 10 years before his retirement. Why Feng Yu dare to claim that this policy will not succeed?
Feng Yu laughed: “Did our Family Planning Policy succeed? How many people really followed this policy?”
Secretary Xu had wanted to retort Feng Yu. You are not a civil servant, and how dare you criticize the government’s policy?
But when Feng Yu used the Family Planning Policy as an example, Secretary Xu kept quiet.
This policy was suggested in 1971 and started promoting this idea in 1980. They started with the CPC members and their youth members. This was enforced on their CPC members. In 1982, this policy became official and was set as a law. To date, this policy had been in force for more than a decade. But the population was still increasing every year. The government had their hands tied. They can’t be strangling all those babies once they are born.
In the villages, the population is very important to the farmers. This policy might be fine in the cities, but in the farmlands and villages, people ignored this policy. Even when the government increases its efforts in enforcing this policy in 1991, it was still not successful.
A basic government’s policy and law were still not successful after more than a decade. The government had wasted lots of resources and manpower on this implementation. Moreover, this Social Security insurance policy was still not set up as China’s basic law, and how could it succeed?
Most importantly, social security insurance needs both the company and employees to pay. Firstly, many employees will oppose to this. Why should their salary be deducted? All those people who retired in the past also did not pay a single cent for their pension. Why can’t the companies or factories take care of them after they retire? They had contributed almost all their life for the company!
The workers will want the companies to pay for all the premiums of Social Security Insurance. But no companies can afford to do this. This would not be a small amount if they were to consider those workers who were about to retire. Some companies that were not doing very well went straight to the local government. We cannot afford to pay for this social security insurance. If you force us to pay, then the company will be bankrupt, and all the workers will be out of jobs!
“To make this policy success, it is important to implement both the company’s insurance and social security insurance together. But how to get the right balance? If they're too many people are accepted into the social security insurance, the premiums collected by the government will not be enough to take care of the people. If the premiums are too high, the companies will not be willing to accept this policy.”
In other countries, there are many ways those governments collect premiums for their social security insurance. It was more common for them to implement proportional contributions from both the companies and the individuals, or equal contributions from both the companies and individuals.
These two methods were more common in other countries. But both have its pros and cons. What China was trying to implement was contributions from both the companies and employees based on a fixed proportion. This policy was still in force even before Feng Yu returned back to his current life.
Implement both company and social security insurances together? Zhang Ruiqiang and Secretary Xu looked at each other. It would be hard to implement both together. But the reality was like what Feng Yu had said. If both types of insurances were not implemented together, this policy would not succeed. The companies will have to take care of their retired staffs and pay social security insurance. It will be hard on the company’s finances.
Secretary Xu looked at Feng Yu: “How does Bing City Machinery Company pay the social security insurance for the workers?”
“Our company and employees are paying the premiums together. Isn’t this want the government wanted?” This was only suggested by the Central Government and was not compulsory for the companies to follow. This was because the government was not sure how the workers would react.
“All your workers agreed to this arrangement?” Secretary Xu asked curiously. He had heard from his men that many workers were creating trouble for their companies because of this social security insurance. Some of them went on strike, and some went to the higher-ups. All of them do not want this policy.
“It is very simple. Just raise those workers’ salaries. If they have to pay 40 RMB a month for social security insurance, then I will raise their salaries by 100 RMB a month. Why would they object? The company will still be paying for most of the premiums. If we make things clear with the workers, they will understand.” Feng Yu had a “why are you asking such a stupid question?” expression on his face.
Secretary Xu was at a loss of words. You think all companies in China are like your Bing City Machinery Company? How can they afford to increase their workers’ salaries? What do you mean by making things clear with the workers and they will understand? A pay raise is the main reason they accepted this social security insurance.
What matters the most to employees? It’s their salaries!
Secretary Xu sighed in his heart. This Bing City Machinery Company was really rich. They were already paying their workers' high salaries and were still willing to increase their salaries by 100 RMB? This means their grade 8 workers will get more than 1,000 RMB a month? The average annual salary for Bing City was only slightly more than 5,000 RMB last year. Will this average salary increase to over 6,000 RMB this year because of Feng Yu?
“Feng Yu, your method will not work for other companies. How can other companies increase their worker’s salary by so much?” Zhang Ruiqiang frowned.
“They still must increase their workers’ salaries. Didn’t all the workers have their salaries increased because of inflation last year? The economy this year is much better than last year. Why can’t the companies increase their salaries? Are you expecting those companies to pay the government more taxes and let the government pay for the workers’ social security insurances?” Feng Yu asked.
Increasing the workers’ salaries was equivalent to increase the cost of the companies and lowering their profits. As such, the taxes paid by the companies will also be lowered, resulting in the local governments getting lesser tax incomes.
But if the companies do not increase the workers’ salaries, this social security insurance policy could not be implemented successfully. Feng Yu suspects the separation of the national tax and land usage tax last year had something to do with this social security insurance. On the surface, the local government will be receiving more tax income, but in reality, their responsibility had increased.
Secretary Xu and Zhang Ruiqiang were deep in thoughts. Feng Yu was right, but should they go ahead with what Feng Yu had said?