Economic upgrade starts with better welfare
- Source: Global Times
- [00:35 August 24 2009]
- Comments
There has been some encouraging news lately that the government will devote more resources to improving the basic welfare of Chinese citizens.
Earlier this month, the Ministry of Human Resources and Social Security announced a trial pension plan expected to cover 80 million people in China's rural areas. Last week, a widely-anticipated plan to distribute essential medicines was unveiled as part of the 850 billion yuan reform efforts in China's healthcare system. On Friday, the State Council released a guideline on bringing occupational diseases under control.
Improving social welfare is costly, so we are delighted to see the government finally taking the long overdue step of giving people the care they deserve. Three decades of fast economic growth has brought China enormous wealth, and it is the right time for the government to spend more on better basic welfare coverage.
China's economic miracle has been built on its labor cost advantage, but it is widely agreed that this growth model, despite its past success, is not sustainable. Domestic spending, crucial to the country's long-term growth, has been difficult to boost due to a lacking social welfare system.
China is also challenged to transform its economic structure, which currently relies too heavily on labor-intensive manufacturing because of a shortage of highly-skilled workers. Many are stuck in low-level, low-wage jobs because they cannot afford further training that might lead to a higher-paying, more skilled position.
In this sense, mending the social welfare system will also be crucial to improving China's labor competitiveness. In the short term, China may suffer a loss of advantage due to its human resources cost rising, but this is a price that must be paid for moving away from low-end manufacturing to more profitable sectors.
The latest efforts also signal an important conceptual change regarding what best symbolizes a powerful country: a rich government, or a well-off public. Nothing will better show the government's determination to focus on people-oriented governance than giving citizens better care.
Expanding social welfare coverage is expensive and could be a political hot button issue. The debate could mirror the ongoing argument between the public and the corporate sector as to whether raising the minimum wage should be delayed to help keep down unemployment.
Businesses hate extra costs and naturally will resist any mandatory spending required of them to raise public welfare. The government must take more responsibility and have the courage to regulate companies with the goal of providing basic welfare benefits for the public.
