Under the rule of the Chinese Communist Party (CCP), the social security system has long been criticized for neglecting the lower-income population. As the economy continues to decline, unemployment rates rise, and the deficit in social security funds widens, an official document suddenly emerged claiming to “improve social security for flexible employees and migrant workers,” sparking skepticism.
On June 9, the CCP Central Office and the State Council issued a document emphasizing the inclusion of groups with unstable employment and prone to discontinuing social security payments in the social security coverage. These groups mainly include self-employed individuals, part-time employees, migrant workers, online delivery drivers, and online car drivers.
The document also mentioned implementing policies such as “canceling the household registration restriction for flexible employees to participate in social security at their employment location” and adopting more flexible methods for social security contributions. In cases where individuals face sudden difficulties leading to payment interruptions, measures will be taken promptly to include them in social assistance and ensure continuous social security coverage.
However, the document drew criticism online: “The deficit is too large, they urgently need cannon fodder.” “Short of funds, they are already eyeing on anyone and everyone.” “Squeezing out the last drop of blood.” “Without human blood buns, they are going straight for the meat bun.” “It’s not that migrant workers and online drivers need social security, it’s the social security that needs them.”
China has three types of pension systems: the civil servant system, the enterprise employee system, and the urban and rural residents system (including farmers). Among them, civil servants receive the highest, followed by enterprise employees, and urban and rural residents the lowest.
For decades, migrant workers have left their rural homes to seek work in cities, toiling in sweatshop factories, building apartments they can never afford. With age, the first generation of migrant workers find it challenging to secure employment in the slowing economy. Many of them are financially strained, with meager or almost non-existent pensions, forcing them to continue working.
For self-employed individuals, according to CCP regulations, they have no unit, so they must handle social security themselves, requiring them to submit a business license and an organizational code certificate. The coverage is limited, providing only basic old-age and medical insurance, with no options for unemployment, work injury, or maternity insurance. Migrants are basically unable to participate in social security.
Economic analyst David Huang from the United States told the Epoch Times that the official move appears to be aimed at improving universal coverage, but the underlying reason could be due to the insufficient social security funds and considerations for maintaining stability.
He said, “The urgency to integrate flexible employees into the system is to expand the contribution base, fill the gap, and also stabilize this group. They are numerous, with unstable jobs, and are prone to expressing discontent through collective actions.”
Tian Xie, a professor at the University of South Carolina’s Moore School of Business, told the Epoch Times that the CCP’s proposal seems to expand social welfare, but its intentions are not genuine. He pointed out that excluding these individuals from the original social security coverage was unreasonable. Social security should protect all taxpayers in society. In a normal country, all workers should be treated equally.
Xie believes that China’s current economic downturn, increasing unemployment, and the growing deficit in social security funds are the main reasons for the significant social security gap. In times when there are not enough people paying social security contributions, the CCP aims to include these individuals by essentially forcing them to contribute. However, it appears that the people have seen through this scheme, with a very negative response.
In April 2019, the Chinese Academy of Social Sciences released the “Chinese Pension Actuarial Report 2019-2050.” The report predicted that by 2028, the current pension balance could first turn negative, with a deficit of 118.13 billion yuan. By 2035, the pension fund might be depleted. Then, by the time the post-80s generation reaches retirement age, this group will have no money to receive.
According to Caixin Net, in 2021, the CCP’s budget report submitted at the 2021 Two Sessions revealed that in 2020, the national social insurance fund budget income was 7.21 trillion yuan, down by 13.3%. With an additional 50 billion yuan from the national social security fund, the total income was 7.26 trillion yuan. The budget expenditure of the national social insurance fund was 7.88 trillion yuan, resulting in a deficit exceeding 600 billion yuan.
Official budget data from the CCP shows that in 2024, social security fund income increased by 5.2%, but expenditure surged by 7%, leading to the first cash flow deficit in six years.
David Huang stated that the massive social security deficit is primarily due to the habitual misuse of funds, with local governments diverting social security subsidies to infrastructure or financial projects over the years, leaving a financial black hole. In addition, excessive subsidies within the system for various strata add to the deficit, along with accelerated population aging and the low contribution rates from small and medium-sized enterprises.
To alleviate financial pressure, Beijing has started a delayed retirement policy. Starting from January this year, the statutory retirement age is gradually being extended, with plans to extend male retirement to 63 years by 2040, along with synchronization for females.
However, due to the unfair CCP system, more and more young people, especially gig workers such as food delivery drivers, choose to refuse social security payments. Many young people are voluntarily exiting the social security system.
The Wall Street Journal reported in April that the Chinese pension system is facing a crisis of trust, with an increasing number of young people, especially gig workers like food delivery drivers and online hosts, choosing not to pay into the pension system. For example, 29-year-old delivery driver Liu Xin from Chengdu stated that he has to pay 1,400 yuan per month, equivalent to two weeks’ worth of meals. He frankly admitted that he doesn’t believe he will receive any money after forty years.
In February of this year, several delivery platforms in mainland China announced plans to pay social security contributions for eligible delivery drivers. However, due to the high mobility of delivery riders and other characteristics, industry insiders believe that this move does not completely safeguard the rights of delivery workers. Many delivery drivers are concerned that personal contributions may reduce their income, and the transient nature of their work could lead to insufficient payment years for social security, among other issues. Consumers, on the other hand, worry that the costs will be passed on to them.