Education for migrant family in China



Migrant Labor and Social Welfare Policy

Submitted April 24th, 2006

by

Ruifeng Fang

Erica Miller

Huong Trieu

Xiaoying Yang

Prepared for the International Economic Development Program, Ford School of Public Policy, University of Michigan

Table of Contents

EXECUTIVE SUMMARY 3

INTRODUCTION 3

HUKOU SYSTEM REFORMS 7

Small Cities 7

Medium-Sized Cities 8

Large Cities 8

EDUCATION 9

Current Policy and Analysis 9

Policy Recommendations 11

Promote central government’s budget allocation 11

Permit migrant children to take CEE in cities 11

Create a supervision system 12

HEALTH CARE 12

Current Policy and Analysis 13

Policy Recommendations 15

Permission to Enroll in Urban Health Care 15

Centrally Funded Medicare Program with Local Support 16

LABOR PROTECTION 16

Current Policy and Analysis 17

Policy Recommendations 18

Abolition of Discriminatory Practices and Arbitrary Fees 18

International COLA Wage Determination and Workplace Standards 19

Use United Nations Resources 19

CONCLUSION 20

BIBLIOGRAPHY 23

EXECUTIVE SUMMARY

The hukou system has created a divide between the rural and urban populations. With the relaxation of the hukou system, large migrant communities are residing in urban areas. While the hukou system is no longer capable of preventing migration, it still plays an important role in determining claims to public resources. As a result, migrants are turned away from social services such as education, health care and the labor protection in the cities. While recent reforms to the hukou system will resolve the issue with providing social welfare to permanent migrants, temporary migrant laborers, which accounts for the majority of the migrant population, will continue to suffer the same deficiency in the system. As a result, for education, we recommend that a central budget allocation for education, relaxation in the location of College Entrance Examinations, and the creation of a supervision system. For healthcare, we recommend conditional migrants’ enrollment into the urban health care system and a centrally funded Medicare Program with local support. For labor protection, we recommend the abolition of discriminatory practices and arbitrary fees, institution of the COLA wage determination and workplace standards, and further research with UN resources on the trade offs between economic development and the treatment of workers.

INTRODUCTION

In the 1950s, China witnessed rapid urban growth as a result of high levels of migration from the countryside. Confronted with economic crisis and famine in the 1960s as a result of the Great Leap Forward, the Chinese government implemented the hukou system to restrict migration into the cities. The hukou system divided citizens into several groups: agricultural residents, non-agricultural residents, permanent residents and temporary residents. As an outcome of the planned economy, the system restricted farmers from entering cities, which guaranteed a labor force in rural areas but also deprived them of many rights that their urban counterparts enjoyed (CEIS, 2004). Under the hukou system, every citizen was required to register at his place of permanent residence. Transfer of registration required official approval and was rarely made.

The relaxation of the hukou system was initiated by the returned youth of the Cultural Revolution (Mallee, 2003). The combination of agricultural decollectivization and market reforms further facilitated the rapid rise of rural-urban migration. Decollectivization created massive underemployment in the countryside, and many rural laborers migrated into big cities for better job opportunities because they can at least double their income by moving (Wang, 2004). This migration pattern contributed to China’s phenomenal economic growth through the supply of cheap labor. One research claims that migrant labors contributed to 16% of total GDP growth in the past two decades (Ping and Pieke, 2003).

Currently China has more than 140 million migrant workers, along with about 20 million children flowing into cities with their parents each year (BBC, 2004). The rural-urban labor migration remains largely seasonal or temporary. Moreover, the majority of the 160 million rural-urban migrants do not migrate to large cities, but instead, they move within their township to work for local industries. A 1999 study finds that of the 67 million rural-migrants, only 28 percent left their province. Although the current migration pattern remains largely temporary, the experiences in the United States and other developed countries have indicated that modernization relies on urbanization and industrialization. Now, China’s urban population only accounts for less than 50% of the total population. Therefore, China should take measures to convert farmers into workers and help them take roots in cities.

While the hukou system is no longer capable of preventing migration, it still plays an important role in determining claims to public resources. It ties an individual’s entitlements and rights to his/her residence status. Since the hukou system makes it difficult for migrants to gain permanent residents elsewhere, it excludes migrants from most state provisions, thereby raising migrant’s cost of living, which can effectively create a permanent underclass in the cities. The inflexible registration system restricts migrant children’s educational opportunities to their hometowns, limits access to health care coverage, and engenders labor exploitation.

In the cities, migrant children cannot enjoy the same rights as their urban counterparts due to their non-residence status. Their educational opportunities are restricted to their hometowns. In the meantime, even if they are allowed to go to public schools in the city as the policy supports, public schools cannot ensure adequate educational facilities because their budget mainly comes from local governments which allocate the education budget strictly according to the number of local registered permanent resident students (Jin, 2004).

The hukou system is also a key barrier in enlarging health insurance coverage. Even though migrant laborers contribute to economic development and pay consumption taxes equal to that of the local work force, health care is not extended to migrants. While cities are in better financial situation to provide health care to migrants, they choose not to do so. Instead, cities with large migration want only to enjoy the benefits of cheap labor without taking the responsibility in providing health service to them. Since the deterioration of the rural health care system, migrants’ origin governments also lack the financial resources to provide adequate health care to migrants.

Besides being closed from state provisions, migrant laborers are subjected to intense discrimination and labor rights violation at the workplace. Since rural migrants can at least double their income when they move, the opportunity is difficult to resist (Wang, 2004). Still, because of the large pool of labor, companies are able to hire more selectively, driving wages down from where they might be if workers had a wider pool of opportunities. Monthly minimum wages are set locally and have steadily fallen below the national government’s guidelines, and neither the minimum wage nor limits on working hours are being enforced. Migrants also experience frequent delay in wage payments and are subjected to illegal arbitrary fees. Pressed by poverty and lack of protection by the destination governments, migrants suffer grim working conditions.

Neither rural nor urban areas seem to wish to deal with the problems generated by migration. Both rural and urban areas are outsourcing their social welfare problems by exporting laborers in rural areas and restricting services in urban areas. Many land-locked rural counties and provinces in central and western China declare "labor export" as a key development strategy for their areas (Hare and Zhao, 1996). However, migrants are not considered the responsibilities of their destinations. Furthermore, the rural and urban poor are dealt with in separate departments. Rural poor fall under the State Poverty Alleviation Office and the urban poor are the responsibilities of the Ministry of Labor and Social Security.

HUKOU SYSTEM REFORMS

Until recently, the top leadership has failed to recognize the contribution that migrants have made to China’s economic development through their low-wage labor. Moreover, during the 1990s, the leadership refused to grant migrants the rights and access to urban benefits. As a result, migrants have enormous grievances that need to be addressed. The migrants’ immense bitterness towards the unfair system has translated into confrontations between state authorities and migrant communities. To maintain stability, the central government has implemented various policies to provide social welfare to migrants. Since March 2001, the central and local governments have taken steps to reform the hukou system to legitimize migrants’ residency in urban areas. Depending on city size, local governments have set up different residency requirements (Ping and Pieke, 2003).

Small Cities

The central government abolishes the decade-old rural-to-urban migration quota system in all small cities and towns (defined as county-level cities, county seats and established towns). Anyone who has a stable non-agricultural income and a permanent residence in a small city or town for at least two years will automatically qualify for an urban hukou and become a permanent local resident.

Medium-Sized Cities

Medium-sized cities and some provincial capitals have abolished the cap on the number of rural laborers who can apply for permanent residence status. Some medium and even large cities are also authorized to do the same, with a higher and more specific income, employment and residence requirement

Large cities

Metropolitan cities such as Beijing and Shanghai have adopted a policy of widening their gates. Under new regulations, major urban centers openly set prices for their much sought-after hukou. Highly educated workers with at least a college degree hired by local employers can now easily get local hukou in most Chinese cities. The going rate for a set of three Beijing urban hukou (self, spouse and one child) involves no less than being a multi-millionaire investor or a foreign-educated talent. Alternatively, one can purchase a high-end “commercial” unit or apartment to qualify as a local hukou applicant – a one-off spending of at least 500 thousand RMB cash, 30 times the average annual wage in Beijing. Since only local hukou holders can apply for mortgage loans and borrow from their pension plans to make the down-payment, “outsiders” must purchase those hukou-qualifying apartments with one-off cash payments.

The current policy helps to address problems associated with permanent migrants. It will also transform a portion of the temporary migrants into permanent migrants by granting them urban citizenship. However, a significant percentage of the migrants are still temporary movers. Despite current reformations to the hukou system, more specific policy changes are needed to address the problems in the transient population. In each of the following sections, education, health care, labor, we will evaluate the effectiveness of the reformed hukou system in addressing the problems and delineate any additional policy changes needed in each issue area.

EDUCATION

When rural families migrate into cities, without permanent residency status, they have many difficulties, in particular, obtaining education for their children. Nowadays, more than 80 percent of migrant children are unable to attend middle schools in China.

Current Policy and Analysis

China has ratified the Convention on the Rights of the Child (CRC), which includes children’s education rights. Chinese legislation affirms children’s “right to receive an education” and requires that children must receive nine years of compulsory education from age six. Since 2003, the central government has launched a new regulation on migrant children’s education, which included:

1. Migrant children should first consider enrollment in public school.

2. Migrant children’s school enrollment rate should be equivalent to city resident children’s school enrollment rate.

3. Migrant children’s education should be enrolled into urban development plan.

4. Migrant children’s tuition fee should be the same as local residents’.

5. There should not be any kind of transaction fee when migrant children transfer from one school to another.

6. Lower the enrollment threshold for unofficial schools ()

However, the policy could not ensure migrant children’s equal rights as a result of insufficient governmental budget allocations, and the faulty hukou system and the inherent deficiency in the education system.

In general, budget allocation is the fundamental cause which perpetrates migrant children’s unequal educational opportunities in urban areas. Public schools in China are funded by either central government or local governments, or both. Overall, local governments, which contribute 85 percent school funding to local schools, are the major education investors (China Education and Research Network). Local governments usually allocate their education budget according to the number of local registered permanent resident students (Jin, 2004).

According to the regulation, “Promoting the Reform of Domicile System in Small Cities and Towns”, there is no quota control over the registration of permanent residence in small cities and towns since March 2001 (). However, in big cities, migrant children still cannot enjoy the same rights as their urban counterparts because of their non-residence status. Public schools cannot ensure enough educational facilities for non-permanent residents because their budget mainly comes from the local government.

Additionally, the current hukou reform only addresses education issue stemming from permanent migrants. Temporary migrant children will continue have a difficult time being accepted in schools because they are not permanent residence. Moreover, China does not have a uniformed education system. Different localities have different textbooks, and students are required to take their College Entrance Exam at their registered hukou。 So, even if temporary migrant children can and do attend schools in their host residencies, the quality and substance of their education will vary. As a result, they will have difficulties in passing the exam.

Policy Recommendations

Promote central government’s budget allocation

China only spends about 2 percent of its GDP on education, which is far less than the internationally recommended 6 percent (Human Rights Features). In addition, schools, relying heavily on local budget, cannot avoid gaps in education equality and inequalities in educational opportunities. The combination of an absolute increase and ratio increase in central government budget for education will help raise the average education standards for public schools regardless of their geography. Having the central government provide the majority of the funding will reduce the necessity of the residency requirement for school enrollment. Hence, both temporary and permanent migrant children will have less difficulty entering schools in big cities as well.

Permit migrant children to take CEE in cities

As mentioned above, the hukou system requires migrant children to take their college entrance exam in their hometown. They will have more difficulties in the examination since the text books used in big cities such as Beijing and Shanghai, are different from books used in their hometowns. Thus, we recommend the central government relax this requirement and allow migrant children to take their examination where they attend school.

Create a supervision system

Although the central government has launched the new regulation to improve education opportunities for migrant children, there is a lack of supervision and implementation support. The execution of the policy varies from area to area. Whether migrant children can attend schools depends on availability of local government resources. Lack of funding is the major cause of a low school enrollment rate among migrant children in cities. Thus, we recommend the local governments to create a supervision system for migrant children in big cities. Local governments are to be responsible for ensuring migrant children’s school enrollment rate are on par with city resident children’s school enrollment rate. They would also need to submit an annual report to the central government regarding the number of migrant children in schools.

Meanwhile, a complaint office should be set up at the local levels. Migrant children confronted with unfair experiences at schools should have an avenue to file complaints with the local government.

HEALTH CARE

Migrant workers are more vulnerable to illness and diseases than other low income groups for the following reasons: first, their jobs are highly intensive and they usually work overtime. Second, they usually live in shabby, crowded and dirty dormitories without basic facilities. Third, many of them do not have a balanced diet on a daily basis.

Since their wages barely support them, they have no ability to pay expensive medical bills. Suffering from illness, many of them choose not to seek medical treatment. Consequently, their situation worsens and results in further health degradation. Keeping migrant labor away from health care coverage not only hurts China’s public health but also its human capital. In the long run, China’s competitiveness could be undermined by a large, unhealthy population.

Current Policy and Analysis

Recently, China’s health care system has changed dramatically. Free health care is no longer available to urban workers. Instead, individuals are either covered by a work-related health insurance system, Government Employee Health Insurance or Labor Health Insurance, or they are self-paying individuals. Because the current hospital system operates on a “pay-for-service” principle, health care costs have become a heavy burden for all Chinese citizens. The Chinese government plans to establish a unified health insurance system in the urban areas. The new model establishes a personal account for every urban worker as well as a collective fund (Ministry of Labor and Social Security). A worker should first pay medical expenses from his own personal account. The collective fund will pay the worker for his expenses as his costs exceed a baseline. All money in personal accounts and collective funds will come from the contributions of individuals and enterprises. Since 2005, the central government has asked local governments to establish medical assistance programs for low income groups in urban areas.

In rural areas, the grassroots medical care system which served rural population in Mao’s era simply disappeared. Now the governments are endeavoring to establish a rural cooperative medical system (RCMS) (Wong and Satyanarda).

Unfortunately, migrant workers are among the most disadvantaged groups in terms of health insurance coverage. All the aforementioned models have not taken migrant workers into account. The current Chinese health insurance system is managed at the local level. Local governments are responsible for collecting fees and disbursing medical care expenses. Except for the requirement of employment contracts, residence permission is necessary. In general, only workers with city hukou are eligible to participate in the health insurance system. Migrant workers are only permitted to join rural health insurance plans in their hometowns. In most cases, rural health insurance plans do not exist. Even when there is a plan available in rural areas, it is impossible for migrant workers to fulfill the requirements for this plan, since they work and live in cities, away from their hometowns.

While hukou system reforms have been implemented in many cities, the criteria are too high for most low skilled migrant labor to get an urban hukou, thereby reducing their chances to gain access to health insurance. In large cities and Pearl Delta areas, most migrant laborers are still excluded from getting either a local hukou or health insurance coverage. Moreover, while the current reforms can provide health care to permanent migrants who can afford the hukou purchase, temporary migrants still present a huge health care problem. Currently, all health care reforms have overlooked this problem.

In order to overcome the dysfunctions of the health insurance system for migrant labor, it is important to remove the barrier between the rural and urban areas in terms of health insurance management. While the Ministry of Labor and Social Security oversees health insurance in cities, the Ministry of Health is responsible for national health care system and health insurance reforms in the countryside. This separation has led to the failure of the system to address migrant laborers’ emergent need for medical insurance and contribute to inability of the system to work out feasible policies for a population that fits neither the urban nor the rural hukou.

Policy Recommendations

Permission to Enroll in Urban Health Care

Migrant labor should be permitted to enroll in urban health insurance programs rather than rural health insurance programs, as long as they live and work in a city. The criteria shall include working length and local residence. While the minimum period requirement is subjected to the discretion of local governments, the central government should establish a baseline for the whole country. The residence standard should only require a housing contract as a proof, rather than a hukou. Under this circumstance, migrants will be able to fulfill equal obligations and enjoy equal benefits.

Centrally Funded Medicare Program with Local Support

It is very important that migrant laborers have access to basic medical care facilities and are treated in equally in cities, regardless of their residence status. Basic Medicare initiatives should be developed to mimic Medicaid programs for low income people in the United States. Through this program, migrant laborers would have health care coverage when their income falls below the prescribed level. The central government should use its huge budget surplus fund these programs to maintain a basic medical standards for low income people, in order to ease disputes between migrant communities and local governments. The central government would share costs with local governments based on health services rendered. Local government would manage these programs and ensure the quality of the health services. As a result of such programs, migrants would be guaranteed a minimum level of medical services.

LABOR PROTECTION

In looking at health insurance and education issues, we have already touched upon opportunities to exploit those workers who attempt to become mobile “under the table” and outside of the hukou system. The high competition for jobs has resulted in a “race to the bottom” in which Chinese workers, both migrant and non-migrant, have had to endure working conditions that are not up to par with international standards. However, migrant workers have additional problems in the workplace such as discrimination, unfair treatment, and arbitrary fees.

Current Policy and Analysis

Chapter 6, Article 56 of the Chinese Labor Law Code states that “Laborers shall have the right to refuse to follow orders if the management personnel of the employer direct or force them to work in violation of regulations, and to criticize, expose and accuse any acts endangering the safety of their life and physical health.” Migrant workers have little incentive to report bad workplace conditions when there is low job security, few alternatives to one’s current job, and the alternative to keeping quiet about conditions is losing one’s job. As a result, workplace rights for rural migrants are not only spare, they are also, in some cases, what we might call negative (Williams, 2003). Because migrant workers lack legal residency protection at their destination, they are also less likely report unfair and mistreatment.

Because virtually every area in China faces a higher supply of migrant worker than demand, the quality of workplace conditions for migrant workers varies more by the size of the factory than by the city or rural area in which the factory operates. There is also an influential element of political closeness between the governmental authority in power and the plant managers. In the case of the very large Baoshan Steel plant, for example, workers are divided by skill (O’Leary, 1997). This division, known as danwei, sharply divides workers into different classes of wage and benefits. Being outsiders in the cities, migrants face intense discrimination in the workplace. As contract laborers, migrants are likely to be subjected to delays in wage payment. Many times, migrants need to pay a fee to apply for certain jobs. Many urban job opportunities are closed to migrants because they require urban hukou. From time to time, migrant workers are sent home due to administrative means such as lacking the right residency paperwork.

With the current hukou reforms, permanent migrants will have more job opportunities after achieving permanent residency. However, the majority of migrants remain temporary or seasonal workers who work on contracts. As a result, the benefits of the hukou reforms would have little impact on the majority of population who will still face the same labor conditions because they are migrants with little resources.

As a major contributor to China’s economic growth, legal enforcement of labor rights for migrant workers is critical to China’s continual development. Moreover, because of its emergence as a top-scale producer, when a worker in China does not benefit from workplace safety, workers all over the world will feel the same pressures from their competitors, and workplace safety will erode.

Recognizing that a) rights of migrant laborers to a safe workplace and b) equal job opportunity for migrant laborers, below are several recommendations to ameliorate these problems.

Policy Recommendations

Abolition of Discriminatory Practices and Arbitrary Fees

All rural migrants should be treated equally when they apply for jobs. No arbitrary fees should be assessed because they lack urban hukou. There should not be unreasonable limitations on the types of the employment migrants are allowed to seek. Moreover, they should have assurance of the proper legal procedures for contracts and on-time payment of wages, which would prevent them from being unfairly treated.

International COLA Wage Determination and Workplace Standards

It has been said that Chinese managers would like to raise wages, but low-price retailers in the United States and Europe have threatened to pull production out of China (Dong Keyong, 2005).

If a multilateral treaty could be put in place that married a set of factory conditions protocol and an international factory wage standard that matched the cost of living adjustments from a base-year, such as 2004, the only loser would be retailers—they would be forced to take higher prices because capital and labor would be equally immobile, and goods in these Western companies would only be marginally more expensive. Because of China’s heavy dependence on foreign capital for manufacturing, this would be a potentially successful, if blunt, effort to establish fair workplace conditions.

Use United Nations Resources

As a member of the International Labour Organization (ILO), China can take advantage of international resources that could enable it to improve workers’ rights without threatening economic growth, especially for the Millennium Development Goals such as ending poverty. The subject of ILO research might be to determine quantitatively the health and quality of life factors incurred by the current labor standards, and compare it with profits. Since it would be difficult for the ILO to identify migrant workers, the scope could be to determine the loss in quality of life for all workers. China would benefit from enlisting the ILO to conduct field research, perhaps jointly with a university, to determine cost-effective ways to allow migrant workers to enjoy a safe workplace.

CONCLUSION

Migrant population accounts for nearly 11% of China’s population, and the majority are temporary or seasonal migrants. As a result of the hukou system, migrant laborers have little access to the public resources such as education, health care, and labor protection at their destinations. The recent hukou reforms will address social welfare issues resulting from permanent migrants, but overlook providing social welfare benefits to temporary migrants.

Despite the reforms, migrant children in big cities are still having trouble in being enrolled in public schools because: 1）local schools are funded by local governments, which allocate their resources based on the number of local residents. 2）migrant children need to take the College Entrance Exam at their hometown, which has a different curriculum. Thus, we recommend the government to: 1) Promote general budget allocation for education to meet international standard. 2) Increase the ratio of central government’s investment in school funding. 3) Permit migrant children to take the exam where they received their education.

While the reform of hukou system has been implemented in many cities, the criteria are too high for most low skilled migrant labor to get an urban hukou to gain the access to health insurance. Moreover, while the current reforms can provide health care to permanent migrants who can afford the hukou purchase, temporary migrants still present a huge health care problem. Thus, we recommend that migrant labor should be permitted to enroll in urban health insurance programs rather than rural health insurance programs, as long as they live and work in a city. Moreover, we recommend that central government fund a program similar to US’s Medicare program which provides access to basic medical care facilities to low-income groups in cities, regardless of their residence status.

Similarly, the recent hukou reforms will not eliminate the problems associated with contract workers, which accounts for the majority of migrant labor facing employment discrimination and grim working conditions. In addition to our recommendations to abolish discriminatory practices towards migrants and institute International COLA wage determination and workplace standards, we recommend a multilateral approach that uses resources from the UN initiate research how much the quality of life offsets China’s economic growth, and thereby establishing international standards for how workers should be treated.

In summary, the recent hukou reforms will have little effect on the majority of the migrant population because they are temporary workers. This paper has proposed a set of recommendations that not only addresses social welfare for the migrant communities as whole but also seek to address the problems stemming from temporary migration. In all cases, we recommend that the government pay close attention to this transient population who is economically and politically disadvantaged as a result of their residency.

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