Who stole Shenzhen workers’ pension?

Who stole Shenzhen workers’ pension?    

A pension insurance system riddled with problems.


In April 2014, 48,000 workers launched a strike at Yue Yuen Shoe Factory, located in Dongguan City, over underpayment of the social security premium. It was the largest strike in China in recent years. Migrant workers were first entitled to participate in Shenzhen City’s pension insurance (one component of social security) 27 years ago (in 1987) and the Social Insurance Law requires enterprises to pay premiums according to workers’ actual wages. Yet, recent research on pension insurance shows that nearly 80% of the enterprises in Shenzhen are violating the law, by underpaying the premium and, instead of paying the premium for all workers, more than half of the factories only pay for some of the workers.


“Underpaying” as common practice, as found in nearly 80% of enterprises.

Between 22 December 2013 and 5 March 2014, Shenzhen Firefly Workers' Services Centre and Huang Qiaoyan, lecturer at School of Law of Sun Yat-Sen University, jointly interviewed over 600 migrant workers, who were working in large-scale long-established factories (with averagely over 1000 workers in each factory and the average factory being more than 20 years old), to understand the status of their pension insurance and premium payments. It was found that nearly 80% of the factories were paying the premium based on the legal minimum wages, while less than 5% of the factories paid premiums according to their actual income (including bonus, allowance, subsidy, overtime wages and etc). For details please refer to Table One.


Table One: Status of Premium Payment of Pension Insurance

Table Two: Other criteria enterprises adopted in paying social security premiums



Enterprises’ “homemade rules”, a variety of calculation methods.

Social Insurance Law and related regulations in Shenzhen require an enterprise to register a worker under the social security scheme within the first month (30 days) of her/his employment. An enterprise should then contribute

13% of the actual total wages as pension insurance premium and the individual worker should pay in 8%, However, more than half (50.4%) of interviewees reported that their employers selectively pay social security premiums for certain workers, instead of for all. In terms of payment and calculation methods, the enterprises make up their own rules. Over 35% (35.79%) of the factories would only pay the premium after a worker has completed her/his probation, which leaves the temporary workers unprotected. Nearly 15% of enterprises divide workers by their ranks and underpay the grassroots workers’ premium, a de facto workplace discrimination. Nearly 40% (38.95%) of enterprises pay the premium according to “other criteria”, some of them let workers “choose” if they want to participate in the social security scheme and some ask workers to apply by themselves. Please refer to Table Two for the other criteria.


Contribution on the basis of legal minimum wages ends up not being much better than the government’s subsidy

Based on this research, a migrant worker can only receive some 700 Yuan of pension per month in Shenzhen, if her/his pension premium has been paid on the basis of legal minimum wages. Compared with the basic living allowance of 620 Yuan, which one can apply for without any prepaid contribution when reaching the city’s poverty line, it is indeed a very bad deal for the paying workers. Furthermore, with 700 Yuan is not only impossible to live in an expensive city like Shenzhen, it is also barely enough to live in a rural area, let alone cover the extra medical expenses needed when one ages. Migrant workers contribute most of their life to factories and the economic development of Shenzhen, yet, in return they are abandoned by the enterprises and society and struggle, or often fail, to make ends meet.


Confiscation by Social Security Bureau leaves retired workers penniless

Li Xiulian (a pseudonym) is 50 years old. She is originally from Hunan Province and has worked in Shenzhen for almost 20 years. She started working in a Hong Kong-owned garment factory in December 2002 in Shiyan District of Shenzhen City. The factory only started to pay for her social security premium in late 2006. When she retired in April 2014, she found she was not entitled to any pension, as the Social Insurance Law requires one to pay premiums accumulated in an individual account for at least 15 years, before s/he can receive any pension. Ms Li recalled that she had requested the employer pay for her premium in 2004 but was told that she had to work for five years before she could join the social security scheme. In 2006, she finally managed to convince her employer to pay the premium. However, eight years of payments does not make her eligible for a pension and she could only get back the 8,000 Yuan,  contributions she had made over the years, while the part contributed by her employer was kept by the Social Security Bureau. Enraged, she said, “my employer’s payment is meant for me, not for the Social Security Bureau, even if it doesn’t give me (a pension), the Bureau should pay me back.” She repeatedly demanded her former employer pay in the missing years but they declined. The former employer only suggested that she contribute the premium in her hometown as a replacement, or withdraw the total amount from her individual pension insurance account. Without a pension, Ms Li has no choice but to return to the labour market and continues to make a living in a factory. Her case is rather common. In recent months, labour organizations in the Pearl River Delta have received many similar complaints.


A potential collective movement to claim social security triggered by enterprises’ neglect.

Nearly 30% of workers have taken actions to make enterprises pay for their pension insurance. The most common strategy is that workers start a negotiation with their employer. However, the research shows that workers are often ignored if they talk to the boss about this. Currently, most workers have not sought strikes, stoppages and other “pricey” actions to fight for their rights to a pension, but a growing trend of collective action to fight for their rights is observed.


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