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China’s Retiring Migrant Workers Have No Place to Call Home

Those Who Moved to the Cities for Work in the 1980s Find Pension Accounts Largely Empty

A generation of Chinese people from rural areas who moved to the big cities to find work is reaching retirement age, but many are finding they have been left outside the country's urban pension system despite extensive reforms in recent years.

Zhang Shumin and her husband, Liu Yuchen, spent over 20 years working as sanitation workers in Beijing and live in a tiny room next to a public restroom they clean. The natives of the northern province of Hebei are nearing retirement, but have learned their employer never properly paid their pensions.

The problem Zhang and her husband face is common among the county's first generation of migrant workers, the people who left their rural homes to look for jobs in big cities in the 1980s. These people mainly worked as temporary contract workers, and have been left out of the basic pension plan that started covering urban employees in the 1990s.

The country adopted its first Social Security Law in 2011, but many migrant workers have fallen between the cracks of local and national regulations and face constant discrimination.

These migrant workers often take jobs that locals will not, take less pay, and are not eligible for raises and other benefits. Due to outdated regulations differentiating between rural and urban pension schemes, they are frequently denied pension contribution reimbursements from their employers as stipulated in the 2011 law.

Courtroom Drama

Zhang and Liu run a public toilet by the capital's Temple of Heaven Park. They have worked as contract workers for East District Environment Sanitation Service Center, a service company backed by a district government.

The couple arrived in Beijing in the late 1980s with the hope they would be starting a new life. Their parents' generation tended to return to their land and homes when it was time to retire, but Zhang and Liu are part of the first generation of urbanized migrants. This group often gave up land that was contracted to them in the countryside and have nothing to go back to. They sold their parents' rural homes to pay tuition for their daughter, who attended a university in the capital.

In 2006, they signed their first labor contract, which stated that their employer would take care of all the relevant social security procedures in accordance with national and Beijing regulations. They counted themselves lucky to have a contract and proper welfare arrangement.

Then in 2011 their contract expired and their employer refused to extend it. This is also when they found out there was little money in their pension account.

"All those years my boss had encouraged us to work hard by saying that the policies would keep improving and that we might be able to become regular workers, Zhang said.

Every time Zhang asked her employer if her pension was paid and whether she would be able to retire in Beijing, the answer was yes.

When Zhang was diagnosed with cervical cancer and Liu started to have epileptic seizures in 2011 they realized they had little to fall back on. Without welfare coverage, the couple had difficulties paying for health care.

Zhang took their case to court. She said their employer violated the terms of their contracts when it fired them, and demanded their jobs back. The company sued them for appropriating property because the couple was still living in the public restroom.

After mediation, two hearings, and two lawsuits taking up a total of 19 months, a court ruled in the couple's favor. They were to be employed again and compensated for their losses.

A Common Problem

During the legal ordeal, Zhang found that the Environment Sanitation Service Center should have started contributing to her pension in 1999, when Beijing started including rural migrants in the pension system. The company only opened an account for her in 2010, a mere four years from when she would turn 50, the country's retirement age for women.

Under 2007 Beijing city laws, employers are allowed to make up for missed contributions retroactively through a simple procedure that only requires confirmation of the labor relationship. Considering that she won the court case and was employed again, Zhang thought that getting her retirement funds back would be relatively easy. However, her application for reimbursement was refused by the city's Bureau of Human Resources and Social Security.

Ye Mingxin, of the Beijing Yilian Labor Legal Aid and Research Center, said Zhang and Liu's predicament is very common. Many migrants from rural areas are reaching retirement age, but their employers have failed to contribute to their pensions.

Migrant workers are increasingly included in urban workers pension schemes, but they still face unequal treatment.

The 2011 Social Security Law does away with unequal treatment of rural migrants, stating that "rural residents entering the city to work should have social welfare according to local regulations." In the capital, this law was matched by a system that unified pension contributions for everyone, regardless of where their household was registered.

However, previous documents that do differentiate between rural and urban workers have not been annulled. A 1999 temporary law on migrant workers' participation in the Beijing social welfare system, which was revised 2001, mentions a lower-than-average payment standard and a one-time lump sum retirement payment for migrant workers.

Also, a 2007 document limits full reimbursement of missing pension contributions to "urban workers from Beijing and non-rural hukou holders from other places." (The hukou is a residence-registration permit necessary for gaining education and health care services, among many other uses.)

A Ministry of Human Resources and Social Security document discussing the implementation of the social security law says all problems related to late and missing payments from before the law came into force in 2011 should be handled according to "national and local government regulations."

In practice, this means that migrants from the countryside tend to receive a one-time lump sum compensation from their employer, rather than full reimbursement of all missing pension contribution payments.

Similar issues, in which local legislation awkwardly coexists with the 2011 national-level Social Security Law, occur in many other areas, including Shanghai and the eastern province of Jiangsu.

Root of the Paradoxes

Huang Leping, the director of the Beijing Yilian Labor Legal Aid and Research Center, said the development of local regulations can be understood in their historical context. However, he argues, against the backdrop of massive urbanization, a social welfare system that differentiates between urban and rural workers is outdated.

The pension system covering urban workers has been rapidly expanding since the 1990s and now covers 324 million employees. But as numbers from the National Bureau of Statistics show, last year only 15.7 percent of 269 million urban migrants participated in the scheme. Barriers for migrant participation include the relatively high individual and employer contributions, the often temporary nature of migrant work, and the difficulty transferring retirement funds across regions.

Wang Yanzhong, director of the Labor and Social Welfare Research Center of the Chinese Academy of Social Sciences, said the differences in local regulations for handling migrant insurance and retirement issues are rational from the perspective of a local government. In places where monthly pension payouts are relatively low, incorporating migrants into the pension system through reimbursement does not cause significant pressure to the system and is happening. But in wealthier regions, where the basic monthly pension payout is higher, including people from other regions risks disturbing the balance sheet.

In addition, Wang said, the country's retirement age is relatively low, as women can stop working at age 50, while their average life expectancy is 75. In other words, 15 years of contributions could result in 25 years of pension payout. That would be a challenge for any pension scheme, and this is especially true in regions where payouts are high and the contribution of low-income migrants is low.

The paradoxes boil down to problems within the social security system, which is in urgent need of continuous reform. "Regional differences, the urban-rural gap, and a fragmented system are making the compensation policy more complicated," Wang said.

While some argue that new laws should only apply to the future, Huang said that that doing this would diminish the significance of the reforms. "Since we now have the compensation policy, it should be applied equally, regardless of household registration."

But Huang is not optimistic about the outcome of the anti-discrimination lawsuits initiated by urban migrants.

The judicial system lacks a review mechanism to investigate violations of the constitution. Taken together with the population pressure Beijing is facing, this is bad news for the first generation of urbanized migrants like Zhang as they retire.

They have lost touch with the countryside, but the city is not ready to become a home for them either.