Posted on Feb 22, 2012 by Sergio Ulloa
China's two-decade long rapid economic ascent has lifted over a hundred million people out of poverty and has now placed considerable pressure on the state to update it's infrastructure and social care network in order to keep pace with the population's remarkable growth in prosperity. The Chinese government has taken some notable steps on this front, introducing a far-reaching social insurance law last year
, and now news has emerged that several of the country's most populous cities have begun to update their own municipal maternity insurance programs, requiring local firms to take greater care of their female employees.
The need to upgrade, expand capacity and streamline Mainland China's social safety net is a pressing economic and political issue for the national government. China's enormous population is aging and growing increasingly anxious about future access to quality health care, maternity services and adequate pensions. Alleviating these concerns should also work to encourage Chinese consumers to spend more of their considerable savings, rather than holding on to it for emergencies, and drive the world's second largest economy further forward. One of the issues China's government looked to address in their broad social security reforms
last July was the costs of maternity care in the country. The government wants domestic employers to take greater responsibility and contribute more towards their female employee's maternity leave and childbirth expenses. While new guidelines were indeed set, implementation has been delayed, with many cities still needing time to revise regulations and work out details for the new maternity insurance plan.
Beijing has been one of the first cities in China to respond to the central government's updated social insurance laws. According to a recent article in China Briefing
, an Asian business magazine and daily news service, the capital city has expanded their maternity insurance cover network and revised their maternity allowance calculation method in the past month to comply with the new regulations and fill in certain coverage gaps. The Beijing Human Resources and Social Security Bureau (BHRSSB) outlined these plans in circular number 334 "On Adjusting the Municipal Maternity Insurance Policy for Employees," which was released in December last year.
The most notable change in Beijing's maternity insurance scheme is the improvement to maternity allowance, which is the amount of salary contribution given to a female employee for her maternity leave. Under the new insurance system, starting January 1 2012, maternity allowance for female employees in Beijing will be calculated according to the combined average monthly salary of all employees in a given company reported during the previous calendar year. This allowance will then be multiplied by the duration of maternity leave taken by said female employee.
The government circular further clarified that Beijing-based female employees will receive the same amount of maternity allowance from the new calculation method even if their actual monthly salary level is considerably lower than that the average company wage. Meanwhile, if a female employee's monthly salary level is higher than the company standard, the employer will be required to make up the difference in the two amounts. According to the BHRSSB, this was done to alleviate concerns that senior-level employees could have ended up receiving fewer benefits for their maternity leave. In addition, if a female employee gives birth nine months after the new insurance law comes into effect, but has not made any maternity premium payments for at least nine months, the maternity compensation will be paid by her employer.
The city of Beijing's maternity insurance system was in need of an overhaul. Prior to this updated ruling, maternity allowance was tied solely to the female employee's individual average monthly salary and could only be applied within a one-month period surrounding the child birth in Beijing. This previous system simply could not guarantee enough resources for expecting Chinese mothers and often allowed employers to provide miserly allotments which could not keep up with the rising costs of maternity care. From January 2012 onwards, all Beijing-based employees tied to a local enterprise, government agency, institution, community group, foundation, firm or individual business will be required to participate in the city's new maternity insurance scheme. Any employer that fails to register their staff and contribute to the social insurance fund accordingly will be subject to fines and further regulatory oversight.
Beijing is not the only city interested in revising its social care network. Hangzhou, the capital city of Zhejian Province, has also decided to raise the maternity insurance contribution rates to assist female employees within its borders. The Hangzhou local government has introduced new measures which will lift the employer contribution rate for maternity insurance within Hangzhou City to 1.2 percent of a company's total wage bill, a 30 percent rise on the 0.8 percent required previously. Meanwhile, companies based outside the city limits, in rural and suburban areas, will have their maternity allowance contribution limits set either by local district government or county-level municipalities. While the wage base for the maternity insurance scheme across Zhejian Province will remain unchanged, local Hangzhou companies will be required to tabulate the monthly salary of all of its employees and use that as the base for future maternity insurance payments. The Hangzhou government authorities further stipulated that if the monthly wage of a female employee is below 60 percent or above 300 percent of a company's average monthly salary structure, her wage base for maternity insurance shall be capped at either 60 percent (for low salary staff) or 300 percent (for the high salary staff) of Zhejiang province's average monthly wage for the previous calendar year. Additional contributions involving specific childbirth outcomes has also being discussed, and will likely vary depending on the pregnancy term, surgeries required (such as a caesarean section), as well as whether multiple births are involved. While these measures officially took effect last year, local Hangzhou authorities are still waiting for details on how to implement the new allowance contribution system.
Revising China's maternity insurance system certainly is timely. According to the Chinese zodiac, 2012 is a year of the dragon and is widely expected to lead to a baby boom on the Mainland due to the belief that children born now will be endowed with good luck and have a prosperous life. Failure to adequately address the country's maternity care system will not only impact the lives and outcomes for Mainland mothers, but likely those in neighboring Hong Kong as well. Hong Kong has proven to be a popular destination for expecting Mainland mothers as the city is exempt from China's one-child population control rule, and Chinese children born within their borders are entitled to local residency and access to superior social services. According to the Hong Kong government, the city-state's maternity facilities were put under serious pressure last year
after 40,648 Mainland mothers gave birth in local hospitals, which was equal to roughly 45 percent of the city-state's 88,000 total births in 2010. With no end to Mainland China's population controls expected, this surge in cross-border maternity tourism activity
will continue to be a hot button issue going forward. Addressing the gaps in Mainland China's maternal safety net will likely prove to be one of the most effective measures in persuading Mainland moms to have their baby on the Mainland.