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Migrants to get parity on welfare
07.19.2011

Starting July, more than 4.5 million migrant workers who have full-time jobs in the city will be able to enjoy the same social welfare benefits as local employees, authorities announced yesterday.

The move will require both migrant workers and their employers to pay for social insurance, including pension, medical insurance and work-injury insurance.

"Migrant workers will benefit from the move and they will have their basic needs guaranteed as they grow old," said Bao Danru, vice director of the Shanghai Human Resources and Social Security Bureau.

At present welfare benefits differ for local workers and migrants. When a local goes to hospital, he or she need pay a lesser percentage of the cost, with the remaining coming from the insurance pool.

Migrants, on the other hand, pay more for their hospital bills with the insurance pool percentage much lesser compared to local employees.

Bao explained that when migrant workers quit the city, their social insurance accounts will be transferred to their next destination. And they can also claim pension after reaching the retirement age - 60 years for men and 50 or 55 for women depending on their jobs.

However, the new policy will largely increase companies' labor costs, especially for labor-intensive firms.

Zhao Jiande, an official in charge of the city's migrant worker affairs, said an employer at the moment only needs to pay less than 300 yuan (US$46.36) in social insurance a month for one migrant worker - the present regulation exempts the worker from paying anything.

From July, the company will have to hand in nearly 600 yuan a month for one migrant worker while the migrant worker pays one-third of that amount.

"It will no doubt bring more pressure on local businesses, and the 600 yuan figure would only be an average sum over the next five years, a transitional period," Zhao said.

He explained the five-year transitional period is mainly aimed at allowing employers to get used to the change, and the payment will eventually reach the same level as for local employees at 800 yuan a month in 2016.

Local authorities said it is hard to predict how the policy will affect the local job market for migrant workers.

According to Zhao, they believe some companies would likely hire fewer employees in order to control their budget while others may opt to restructure their businesses to ensure more profits.