V Narrowing the relative income gaps, and improving the life standard for the poor population
Poverty is a relative concept. Residents who lived in narrow and primitive bachelor’s buildings or lived in single-storey houses in early days after liberation were not the poor population; and they did not feel hard if they could not afford to buy color TV, refrigerator or washing machine. However, the construction of socialism has been done for almost 60 years, and great achievement has been made in construction of material civilization; so the lack of some conditions at present turns into the other saying of poverty. Poverty is one of the important factors that would influence the social harmony. Many crimes, mass accidents are closely related to poverty. It’s the obligatory responsibility of the government to concern with and help the poor population. So the Party and government of Panzhihua City should take the following measures to help the poor population improve their life standard and share the fruit of economic development:
i setting up development zone for substitute industries and increasing job opportunities
It’s a strategic task to strengthen adjustment in economic structures and to promote the economic transformation of resource based cities. It’s also the urgent task for Panzhihua City. The difficulty in economic transformation is to absorb and transfer employment. It’s not practical to transfer workers in resource based cities to other cities in special period of industrial structure adjustment in large proportion. According to particular conditions in China, labor transfer between cities is more difficult than capital transfer; so it’s a wise option to transfer modern industrial activities from outside to the resource based cities gradually and selectively to promote labor employment and upgrade industrial structure. There are successful experiences in Japan and France. A good many of modern commercial development zones have been set up in Kyushu (Japan) that once suffered economic depression due to coal exhaustion, so as to attract capital from enterprises out of Kyushu. The government formulated policies in finance, taxes, use of land etc to invite businessmen to open companies and to attract capital. The policies include making an allowance to enterprises in development zone for arranging employment of coal workers and their family members; and preferential policies in different degree are given to enterprises with different proportion of job opportunities. Enterprise “garden” has been set up in Lorraine (France) to develop small and medium-sized enterprises. The main task for enterprises “garden” is to help enterprise to compile starting plan, to facilitate incorporation of new enterprises, and to supply all kinds of services at the beginning of business operation. Two years of trial operation the “garden” is available for new enterprises. There are readymade workshops, machines, offices etc in the garden, and all the service facilities are for common use; so the cost for incorporation of enterprise is very low. Expert team has been set up in the garden; and expert consultants are available for enterprises, they can help to solve the problems during business operation at any moment. Those enterprises can move out for development after certain experience of production operations has been accumulated. “Development zones for substitute industries” is expected to be set up in Panzhihua. The government shall help these development zones to gain profits with all preferential policies for “national development zones for industries using high and new technology” and “national economic and technological development zone”. Besides, enterprises in “development zones for substitute industries or replacing industries” can gain profit in national investment allowance if they receive or employ workers from resource based industries according to the number of workers received or employed.
ii Actively bringing into play the dominant role of government and principal role of enterprises, extending industry chain, and increasing employment
The development of resource based cities mainly relies on the development of resource based industries, so the latter plays an important role in the former. Therefore the economic transformation of resource based cities is the economic transformation of resource based industries to some extent. Two things shall be thought of in development of resource based industries. One is to continue improving the competitiveness of resource based products and strengthening resource based industries. The other is to speed up development of deep-processing industries, thus to restructure the single industry into diversified industries . The transformation can not only improve the competitiveness of enterprises but also promote the local economic development and make contribution to employment. At the same time, the old idea that enterprises were regarded as government institutions in the planned economy should fade out during economic transformation. The enterprises shall be united with the local community. The old concept of developing economic entities under municipal government should be abandoned, and new concept of developing regional economy shall be adopted. In the new concept, resource based enterprises in large scale, such as Panzhihua Iron and Steel Group Corporation and Panzhihua Coal Group Corporation, should be preferentially invested. Panzhihua Government should create good investment environment for them, supply all kinds of services, help to solve some actual difficulties, thus to put into full play the important role of the two key enterprises in economic transformation.
To establish modern systems in resource based enterprises, supply of utilities, education and medical care separately by the municipal government and enterprises should be abandoned, and common share of public resources should be promoted.
iii Reinforcing the development of private business, especially reinforcing the development of the tertiary industry
It’s an important method for resource based cities to introduce private business in development of substitute industries. Resource based cities need private business not only in construction of system environment, but also in increasing employment and in optimizing industrial structure. It’s one of the most effective methods for realizing the economic transformation in resource based cities to reinforce the development of private business.
The large enterprises in Panzhihua are basically state owned enterprises, but the development of private small and medium sized enterprises lags behind. The influence of planned economy system and problems appeared in transformation of state owned enterprises are quite evident in resource based cities. Since 1990s, the number of employees in state owned enterprises of Panzhihua has continued to descend, and the increased employment has come mostly from private enterprises, three types of foreign-funded enterprises etc. With single ownership structure of enterprises in Panzhihua, the development of small and medium sized enterprises lags behind; so it’s difficult for them to take over a great number of employees from resource based enterprises. Many unemployed persons from state owned enterprises turn into the poor population, which adds to the unstabilizing factors in the society and increases the difficulty in transformation. Generally speaking, the process of privatization was experienced in economic transformation of resource based cities in developed countries. During the process, the government would adopt preferential policies and measures to help in the development of private enterprises, such as setting up garden for enterprise establishment, helping unemployed persons to establish a business, making initialization plan for new small enterprises free of cost, supplying all kinds of services at the beginning and growth stage of enterprises. Therefore, the development of private enterprises would play an important role in economic transformation of Panzhihua. The government should learn successful experiences in development of private enterprises for economic transformation in developed provinces such as Guangdong, Zhejiang and Jiangsu, and introduce private capital into resource based enterprises and other substitute industries.
iv establishing special fund for economic transformation in resource based cities, which is the same way as to support poverty stricken area
Special fund for economic transformation is proposed in Panzhihua, which is the same way as to support poverty stricken area. There are 4 purposes for this fund.
The first is for social security of resource based cities, including pension and medical fares of retired staff, unemployment compensation, and the lowest living expenditure for urban residents.
The second is for reinforcing vocational training. According to experiences home and abroad, the maximum difficulty in industrial transformation is the transformation of employees, because most employees in resource based enterprises are with low education background, single skill, and poor adaptability. It’s hard for them to be employed in other industries. Therefore, training must be reinforced, and training on vocational skills must be developed according to requirements in development of industries in the city and personal will. At the same time, the employees in economic transformation shall be encouraged to start a business or to find new jobs by themselves with support of preferential policies, thus to create excellent environment and atmosphere for individual business, which are fundamental motivation for a city in its continuous prosperity and development.
The third is for investment in primary schools, middle schools, public security organs, fire fighting organs etc that used to be financed by resource based enterprises.
The fourth is for improvement of ecologic environment and infrastructure construction in resource based cities, in order to improve investment environment and to increase attraction for foreign investors. The most urgent task for environment improvement is to relocate residents from coal mining subsidence area which has been a great threat to life and property safety for local residents. The biggest difficulty in construction of infrastructure is that the roads are obsolescent and aging, and that the water supply system is imperfect. The appearance of the city should be improved as soon as possible.
v reinforcing investment in education, thus to supply equal education opportunity for children in poor families
It’s the most effective method for children in rural and urban poor families to receive good education if they want to improve their lives. But they often go through thick and thin in education and in employment due to poor economic conditions. It’s difficult for children of poor families to receive education due to four reasons. The first is that their time for study can’t be guaranteed. As there is lack of young labors in rural poor population, the children begin to bear family burdens since they are very young. It’s difficult for them to pay much attention to study if they are not studious by nature. There are few children of poor families who can finish education in university. The second is that there is no good supervision by parents. Generally speaking, the parents of poor population didn’t receive much education, so they are not able to assist their children in study, and they also can’t afford to take their children to all kinds of training classes or tutorial classes. Some parents go to other cities for a living, and entrust their children to the elderly or to the relatives; so they pay little attention to the education of their children. The third is the problem of children who stay at hometown while their parents go to other cities for a living, as there is lack of social concern. The fourth is that people don’t pay much attention to education. It’s relatively harder for college graduates to get jobs nowadays, so many parents feel no difference whether the children receive education or not. The parents often can’t afford to finance their children for higher education even if their children passed the entrance examination for universities, so they would like to let their children quit study earlier and then earn a living. Generally speaking, the children of poor families would go out for a living or do farming when they are very young. The government has been trying to solve the actual difficulties in education of children of poor families all the time. The policy of “subsidy and relief of two kinds of fees” was implemented in 2004 for the education of children in poor families; 197,300 children of poor families were assisted during spring and autumn semesters in 2007; the subsidy for meat is implemented in rural areas in 2008, which ensures that there are two meat meals every week for children of poor families. Basically, the children of poor families can successfully finish the nine years of compulsory education, but the higher costs for education in senior school and in university is mainly born by the family. RMB￥5,000 to 10,000 of tuition fees and living fees every year is quite high for the poor population, as it’s hard for them even to obtain food. As introduced by Panzhihua Education Bureau and General Labor Union, there is lack of regular measures in helping the children of poor families for education in senior middle school and in university, the assistance are mainly from society and enterprises at present. The government shall reinforce the assistance for children of poor families in education of senior middle school and of university, offer regular subsidy for children of poor families in senior middle school or in university. At the same time, more attention should be paid to the vocational education of children in poor population. It must be ensured that the children of poor families can master certain special skills before they begin to work by way of subsidy policy and enrollment free of charge.
vi improving living standard for urban poor population by improving the lowest security policy
The main assistance measure for poor families in town of Panzhihua is the lowest security, RMB￥220 per person every month. The extremely poor population can also get subsidy of RMB￥80-150 per person every month, which plays a certain role in relieving the living difficulties for them. But according to our survey, there are some problems with the current lowest security policy in securing the lives of poor families.
1. The lowest income standard is less than the lowest security standard for a family of 3 persons, so considerable labors are not willing to find jobs. The survey indicates that the income and living status for migrant workers are generally better than that of the poor population in town. It’s the hardworking spirit that helps the migrant workers to support their family. The laid-off persons in town are always in a state of unemployment, because they are not as hardworking as the migrant workers, and they find it easier to profit from the lowest security than to work. The lowest income standard in Panzhihua is RMB￥550 per month. If a family with 2 adults and 1 child get profit from the lowest security, the lowest security for them is RMB￥660 per month. Besides, the family can also get profit from other subsidies such as price subsidy, relief of fees for basic medical insurance for urban residents, refund of social security paid by individuals, relief of fees for public services etc. Therefore, the actual income of the family from the lowest security could be higher than that when one person works.
The government should continuously increase the lowest income standard as the prices rise; and reinforce the execution of labor law, to ensure proper rights of employees.
2. All assistance measures are aimed at persons who enjoy the lowest security, while marginalized people are difficult to live. Marginalized people are those whose income is approximate to or a little higher than the standard for lowest security. They lead a hard life, but they can’t get profit from the lowest security. Some of them do not meet the standard for lowest security for many reasons. As many departments are involved in all kinds of assistance measures, and the departments work separately in lack of communication or cooperation; almost all assistance policies are aimed at persons who enjoy the lowest security, and marginalized people are ignored. So the living conditions of some marginalized people outside the lowest security are poorer than those of persons who share the lowest security with relatively fewer difficulties. The criteria mechanically established for the lowest security conceal social unfairness to some extent. So it’s imperative for the Party and the government to let the marginalized people share the profit of supporting measures for lowest security while the standard for lowest security is strictly implemented; and prevent them from being put in hot water. At present, the policy of “temporary assistance” begins to work for the marginalized people, but this work is in lack of successful experiences and sufficient support of capital.
vii increasing housing subsidy and gradually solving the housing problem for rural and urban poor population
The housing conditions of the poor population are relatively simple, crude and crowded. They cannot afford new houses with high prices, although they have strong will for improving their housing conditions. The method to solve the housing problem of persons with low and medium income is to construct affordable houses and low-cost renting houses. The prices of affordable houses have come to RMB￥1200-1500 per m2 as the construction cost rises, so the poor population can’t afford any more. The construction cost of low-cost renting houses rises to RMB￥1500-2000 per m2. Thanks to limited financial revenue, there had been only 504 sets of low-cost renting houses constructed in Panzhihua by the end of 2007, they are far inadequate address the housing requirement of the poor population. A proportion of fund in revenue from land sale should be used as special fund for construction of low-cost renting houses, to solve the housing problem of poor population. Most of rural poor population lives in houses with straw cover. Their houses can’t shade rains in summer or stop winds in winter. The survey indicates that the most urgent need for 95.7% of poor rural population is to solve housing problem. The government should increase investment , and gradually improve the housing conditions of rural poor population.
viii reinforcing social security, making rural persons and migrant workers share more social welfare
The results of our survey indicate that the problem of supplying food for rural poor population is basically solved, and the most urgent need is housing and medical care. The lives of rural poor population have been greatly improved after many years of supporting policy for the poor population. There are two ways to consolidate the poverty alleviating achievements. One is to buildup the income-generating capacity of rural poor population; the other is to move forward with insurance programs in rural areas on the basis of the lowest security system. 44% of rural poor population is a result of illness, and minor illness for many of them turns into grave disease as it is not timely cured. At present, the basic system of medical care insurance for urban residents has been set up in town, but there is only cooperative medical service insurance in rural areas. The rural insurance does little good for alleviating the medical burdens of rural residents as only small proportion of fees can be reimbursed. It is suggested that the medical insurance system in rural areas should be improved, and at first minor illness can be cured free of cost.
The survey indicates that more than half of migrant workers in Panzhihua have worked in the city for more than 3 years, and 32% for more than 5 years. They came to the city with their family members, earned a living for all the family by hardworking. They are tolerant with poverty without fear of hardship or tiredness, thus they are calm and optimistic to face hardship in lives. It is worth noting that the first generation of the migrant workers can calmly accept all kinds of social unfairness as they see themselves as “outsiders”, but it would be hard for their children to accept the social unfairness because they see themselves as “natives”. The social security system is suggested to cover the migrant workers who work for many years in Panzhihua, and the housing problem should be solved based on guidance by government, participation by enterprises and operation by market.