Employer attitudes towards social insurance compliance in Shanghai, China

Abstract

Managing employer social insurance compliance is a particularly difficult governance challenge in emerging economies that have weak regulatory regimes. Utilizing qualitative evidence from eight case studies conducted in Shanghai, the People's Republic of China, this article details how employers respond to attempts by the State to manage social insurance behaviour. Five concerns arose from employers' perceptions and responses to the established policies and regulatory structures: construction of an effective policy, level playing field, cost control, firm reputation, and recruitment and retention. Further, the findings indicate that there are three enterprise features that could affect compliance behaviour: risk factors, skill composition of the workforce, and form of ownership. It was anticipated that firm size may affect compliance behaviour, but no clear pattern emerged.i ssr_1412 73..98

Labor market conditions and social insurance in China

“…Relating the estimated effect to the trends of increased tightness over the period, almost half of the increase in participation can be accounted for by this factor. Notably, these results should, however, not be interpreted as an equally important impact on the share of workers covered because of segmentation in coverage within the firm (Nyland et al, 2011;Lu et al, 2010). Non-zero payments nevertheless represent an important first step of participation, and the statistical relationship between this first step and labor scarcity is highly robust to, among other things, including firm fixed effects and restricting the sample to control for measurement error in the main dependent and independent variables.…”

“…From a macroeconomic perspective, these increasing savings have been a main contributor to the declining share of consumption in China's GDP (Lardy, 2007). 3 Nyland et al (2011) report evidence from an interview study of six firms, finding cost containment to be the major motive for evasion, and recruitment of skilled labor to be a major driver of participation. Yao and Zhong (2010) and Lu et al (2010) show that unionization of firms is conducive to improved social insurance coverage of the workforce.…”

“…In the analysis of each of the social insurance variables I exclude the upper one percent tail of the ratio of that particular insurance expenditure to firm employment. (Nielsen and Smyth, 2007) or use strategies of internal segmentation by contract types to cut insurance costs (Nyland et al, 2011). In the 2006 cross section of 4,000 private firms studied by Lu et al (2006) the average firm provided only one fourth of the employees with medical and pension insurance respectively, and only one fifth of the employees had unemployment insurance.…”

“…This has also been the insight from the, rather scarce, studies on Chinese firms; because the program premiums are quite high, there is a lot to be saved by evading participation. Nyland et al (2011) conduct interviews with human resource staff and managers, trade union staff members and senior management at eight firms, all of which considered social insurance to be a key factor in profitability. To contain costs, most firms implemented some stratification between different segments of the workforce.…”

“…Anecdotal evidence gathered from interviews with firm managers (Sha, 2007;Jiang and Si, 2006) suggested that workers (for the reason of uncertainty associated with the future benefits from coverage, as well as with the transferability of one's accumulated account balance across regions) preferred wage compensation over nonwage benefits in the form of social insurance. In Nyland et al's (2011) interviews, worker demand was not mentioned by firms as a factor in their insurance decision. The motive for providing cover to more educated workers was not described in terms of a greater demand from this group, but rather to reduce turnover costs by providing them with benefits that were not transferred between workplaces.…”