Workers Compensation System in Transition China

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Workers Compensation SysteminTransition China

• By Mankui Li
• University of Ottawa, Canada
• Oct. 6th 2009

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• Injury arising from accident demands an attack
  on three fronts. The most important is obviously
  prevention. Next in importance is the obligation
  to rehabilitate the injured. Thirdly, there is
  the duty to compensate them for their losses.
• 
  
• 
  
  Sir
  Owen Woodhouse, 1967

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Presentation Outline
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Backgrounder
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Backgrounder

• Historical perspective Why Transition?
• Before 1949 Period of all kinds of wars
• 1949-1977 first 3 decades after PRC established
• At the beginning, there was employment insurance
  system including work injury insurance
• Then it was interrupted by persecution of
  dissidents and Cultural Revolution
• 1978 to present Opening up and Reform
• Introduction of market economy instead of command
  economy
• Transition from agricultural economy to
  industrial economy
• Formation of labor market employment contract
  system

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Transition from Agricultural Economy to
Industrial Economy

• Changes brought by migrant workers

• Original dualistic structure of society (hukou)

• Rural residents supposed to rely on land use
  right (free of charge) for subsistence and social
  security. No workers compensation
• Urban residents government had the duty to
  provide employment opportunities for them and all
  social security benefits including workers
  compensation.

• Beginning from 1980s, migrant workers rushed to
  urban areas in the hope of finding a job and earn
  a better living
• No training or skills at all, led to high
  incidence of work accidents
• Migrant workers had been regarded as peasants,
  not covered by work injury insurance program till
  2004
• Equal treatment between migrant workers and urban
  workers (improvement) since then.

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Urban Area in Chongqing
Rural Area
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Transition Reform on State-owned Enterprises

• Reform on SOEs under market economy

• State-owned and state-operated enterprises under
  command economy

• Profit-maximization not a priority
• Long term employment relationship and workers
  participation
• Steady and considerable investment on improving
  working conditions and labor protection
• Less work accidents and better labor protection.

• SOEs have to compete with private enterprises on
  an equal footing
• Profit-maximization top priority
• Short-term employment and weak participation
• Less investment on OHS.

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Legislative Framework

• 1994 Labor Law
• 1996 Provisional Ordinance on Work Injury
  Insurance for Enterprise Workers (released by
  Ministry of Labor)
• Provincial legislations on work injury insurance
• 2003 Regulations on Work Injury Insurance
• Publicly administered work injury insurance as
  part of social insurance program

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Finance and Coverage

• All the employers are required to participate in
  this insurance program (with the exception of
  government agencies and other state-owned
  non-profit institutions like universities)
• Insurance is solely funded by employers via
  premiums. Base premium rate is pretty low, less
  than 1 percent of payroll, with differential
  rates based on classification
• Both work injuries and occupational diseases are
  covered
• Insurance is administered by Work Injury
  Insurance Board affiliated with Labor Department.

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Mandatory System?

• Employers paid premiums as requested

• Employers didnt pay premiums as requested

• The work injury insurance fund will pay most of
  the compensation items medical expenses, lump
  sum payment, monthly pension, survivors
  benefits, NO loss of earning compensation.

• The employer will be ordered to do so. However,
  for the work injuries happened during this
  period, accident employers would be held liable
  for the compensation at the same rate provided by
  Regulations.

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Injured migrant worker fatally stabbed Taiwanese
employers
Migration to work Suffered work injury
Prolonged negotiation of compensation
Lengthy dispute resolution process
huge pressure and pain Suicide attempt
Fatal stabbing (homicide)
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Work Injury

• Criteria in the process, at the workplace,
  arising out of employment
• Situations shall be recognized as work injury
• Injuries caused by work-related accident
• Occupational diseases
• Injuries caused by motor vehicles on the way to
  and from workplace (similar to commuting
  accidents)
• Other situations recognized by other laws and
  regulations.

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Work injury

• Situations shall be deemed as work injury
• The worker dies of acute disease on the job and
  in the course of employment, or he suffers acute
  disease on the job and in the course of
  employment, and dies within 48 hours
• Injuries caused in the course of emergency and
  disaster relief efforts and other activities for
  the national interests or public interests
• Recurrence on the new job of injuries suffered
  due to war or for public interests when the
  worker was serving the army, and got the
  certificate of disabled revolutionary soldiers.

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Work Injury

• Situations shall not be recognized as work
  injury
• Injuries or fatalities caused by the workers
  crime or other violations of law
• Injuries or fatalities caused by worker voluntary
  intoxication
• Injuries or fatalities caused by suicide or
  self-inflicted injuries (different from Canada)

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Occupational Disease

• Diagnosis of occupational disease
• Occupational Disease List (only disease name, no
  related employment, or duration) , exhaustive
  list
• Only limited medical institutions certified by
  the government have the jurisdiction over
  diagnosis of occupational disease
• Problems caused by public monopoly regarding
  diagnosis of occupational disease

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Occupational Disease
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Open up Chest to Prove Pneumoconiosis
Exposure to dust Diagnosis of
Pneumoconiosis in other hospitals
Tuberculosis by certified medical institution
under public monopoly Take thoracotomy
(open up chest)
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Workers Compensation Claim Process

• Occupational disease

• Other work injuries

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Workers Compensation Claim Process

• Permanent Disability

Permanent Disability (1st Degree to 10th Degree)
Consolidation
Assessment
Medical Period (Maximum one yearextension)
Disability in Capacity of living
independently (Totally unable, unable in a large
part, partially unable)
1st Degree to 4th Degree total loss of earning
capacity 5th Degree to 6th Degree partial
loss of earning capacity 7th Degree to 10th
Degree no adversely effect on earning capacity.
Totally dependent Dependent on a large
part Partial dependent
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Benefits under Work Injury Insurance

• Temporary disability
• Medical expenses advanced by employers or
  injured workers, then reimbursed by work injury
  insurance board (subject to rate schedule for
  medical expenses)
• NO Loss of earning accident employers are
  required to maintain wages during medical period.
  So no loss of earning on part of injured workers,
  or on the other hand, the loss of earning was
  borne by accident employers.
• No termination of employment during the medical
  period is allowed if the term of employment is
  due to expire during the medical period, it will
  be automatically extended till the end of
  medical period.

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Benefits under Work Injury Insurance

• Permanent disability
• Medical expenses are advanced by employers or
  injured workers, then reimbursed by work injury
  insurance
• Employers maintain wages during medical period,
  thus no loss of earning for injured workers
  during medical period
• Lump sum payment is based on permanent disability
  rating and his monthly net income (earning
  ceiling 60-300 of local average income )
• 1st Degree Disability 24 times monthly net
  income
• 2nd Degree Disability 22 times monthly net
  income
• 
  
• 10th Degree Disability 6 times monthly net
  income

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Benefits under work injury Insurance

• Permanent disability (continued)
• Independence allowance 50, 40,30 local
  average monthly income based on the degree of
  dependence on personal care
• Monthly pension
• 1st Degree 90 monthly net income
• 2nd Degree 85
• 3rd Degree 80
• 4th Degree 75
• 5th Degree employer shall find suitable
  employment, otherwise, pay 70
• 6th Degree employer shall find suitable
  employment, otherwise, pay 60
• 7th to 10th Degree no monthly pension

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Benefits under work injury insurance

• Permanent disability (continued)
• Lump sum employment subsidy upon termination of
  employment (for 5th degree to 10th degree
  disability) in Chongqing
• 5th -6th Degree monthly pension for 15 years
  less period already claimed monthly pension,
  cant be less than 5 years
• 7th -10th Degree 15months, 12months, 9 months, 6
  months
• If less than 10 years from retirement, for each
  year, minus 10, cannot be less than 10
• Lump sum medical subsidy upon termination of
  employment (for 5th degree to 10th degree
  disability)
• 5th -10th Degree 12, 10, 8, 6,4 times local
  average monthly income

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Employment Status
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Death Benefits
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Rehabilitation

• Medical rehabilitation the main form of
  rehabilitation for many years
• Vocational rehabilitation not provided by work
  injury insurance provided by the employer in
  the form of lump sum employment subsidy
• Social rehabilitation the only form may be
  personal care allowance.

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Rehabilitation

• Materials from Shenzhen
• Reasons underlying these contrasting figures
• Most common rehab is medical rehab, whose
  expenses would always be counted as medical
  expenses
• Few rehab facilities, lack of professionals on
  rehab
• Injured migrant workers usually return to
  hometown, no rehab

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Dispute Resolution

• Employer paid premiums

• Not paid premiums

• Disputes are between injured workers and Work
  Injury Insurance Board
• First request for review
• Then file lawsuit against Work Injury Insurance
  Board (administrative litigation) (with
  possibility of an appeal to higher court)

• Disputes over claim adjudication are between
  injured workers and Work Injury Insurance Board
• Disputes over compensation are between injured
  workers and employers, treated in the same way as
  labor disputes
• Mediation
• Labor arbitration
• Litigation (with possibility of an appeal to
  higher court)

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Current Proposed Amendments

• Simplifying dispute resolution mechanism and
  shortening litigation process
• Increase penalty towards the employers not paid
  premiums as requested, and enhancing protection
  for injured workers
• Raising compensation rate for survivors
  benefits
• Mandating certain proportion of work insurance
  fund be used on prevention and OHS protection
• Amendment to the traditional going and coming
  rule

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Conclusion

• Chinese workers compensation system is as
  complex as yours, sometimes is contradictory, far
  from being perfect
• China is and will be a developing country.
  Workers compensation system and OHS protection
  sometimes have to yield way to economic
  development
• Structural imbalance between supply and demand of
  labor force makes issue more complex
  disincentive for state and employers to provide
  adequate OHS protection, and workers
  compensation, especially for rehab.

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The end

• Thank you!
• Merci!
• ??!
• Please send your comments, critiques, feedbacks
  to my email account limankui316_at_yahoo.com.cn