4 minute read
In the last thirty years, more than 172 million rural Chinese workers have relocated to metropolitan areas in search of employment.
New research from ANU College of Business and Economics’ (CBE) Professor Xin Meng suggests that, despite making an important economic contribution, most migrant workers are treated very differently from their urban counterparts.
In particular, Meng and her colleagues find that migrant workers have much lower rates of participation in social insurance schemes than their city-born peers. This low take-up rate is particularly concerning given the suite of legislative reforms that have been introduced to increase migrate workers’ coverage rates, notably the Labour Control Law in 2008 and the Social Insurance Law in 2011.
The team suggest four possible reasons for relatively low migrant worker participation rates, namely: local government reluctance to enforce regulations given the resultant increase in labour costs; decentralised administration of social insurance schemes reducing insurance account portability and, therefore, migrants’ incentive to participate; migrant workers perceiving lower cost (lower coverage) rural programs as a substitute for more expensive urban schemes; and, migrant workers’ lack of understanding (i.e. information) regarding the benefits of insurance participation.
To understand the importance of lack of information in explaining the low social insurance take up rate, the research team used the survey sample from the Rural-Urban Migration in China Project to conduct a field experiment. They randomly selected half of the sample to receive a pamphlet that detailed the costs and benefits of social insurance programs (the treatment group), with the remainder provided no such information (the control group). They then compared the social insurance take up of the two groups in the next survey year.
While whole of sample testing suggests information does little to increase overall migrant worker participation rates, subsample analysis reveals that it has a significant effect on informal–sector workers, which comprise the overwhelming majority of the migrant workers. Specifically, informal-sector workers provided with information pamphlets reported a 3.2 percentage point increase in enrolment in health insurance relative to their counterparts in the control group, a 23 per cent increase on the baseline 13.8 percent enrolment rate.
Results for pension program participation were a little more complicated. As pension insurance rule state that individuals can only receive benefits upon retirement if they have contributed to the scheme for 15 or more years, naturally, the researchers did not find any information impact on pension participation for those who were too old to be eligible to receive pension benefits. However, informal workers in the treatment group who were young enough to contribute to pension insurance schemes for the fifteen-year minimum necessary to receive retirement benefits were significantly more likely to participate in the pension program than their counterparts in the control group.
Taken together, the research highlights information provision as a relatively low-cost way of increasing social insurance coverage for this very large, vulnerable group of Chinese workers.
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