Legal loophole leaves retirees with no medical insurance

27 March 2008

When local governments formulate state-owned enterprise (SOE) restructuring programmes and policies, they very often do not think through the long-term consequences of those polices. The focus is generally on closing down or merging inefficient enterprises, with little attention paid to the plight of those who will lose their jobs.

SOEs and local governments are supposed to ensure that laid-off workers receive adequate compensation and the benefits they are entitled to by law, however in many cases the compensation provided is too low and or the benefits not forthcoming, leading to long-running disputes, as documented in CLB’s Research Report on the Workers’ Movement in China, 2005-06.

In November 2007, CLB Director Han Dongfang talked to Lin Duxia, an advocate for workers at a canned food factory in Fujian’s Zhangzhong city that employed about 3,000 people before it closed down in 2000 and was finally declared bankrupt in 2004. In 2000, many employees accepted an early retirement agreement, only to discover later that they no longer had any medical insurance. While this particular problem is relatively unusual, it is nevertheless indicative of the kind of long-term problems that can arise when SOE reform and restructuring programmes are pushed through without adequate consultation of the employees affected.

Lin explained how in October 2000, the Zhangzhou municipal government sent a work team to his factory as part of its SOE reform programme. The government team met with factory employees aged between 55 and 59 years old, within five years of retirement age, and promised them that if they agreed to terminate their labour contracts, they would still be entitled to their full pension benefits when they reached 60 years of age. As a result, about 50 workers chose to terminate their labour contracts.

Lin agreed to terminate his labour contract at the age of 58, after 40 years of service at the factory. The employees were given a lump sum compensation of 450 yuan for each year of service; as such Lin received 19,000 yuan. Two years later, when he applied to a local health insurance firm for an insurance policy he was told he was not eligible because he was over 60. “We wanted to apply for a health insurance card, but they wouldn’t give us one,” he said.

Lin and his fellow retirees had also tried to apply for health insurance through the local pension bureau, but their applications were refused. As Lin recalled, a pension bureau official, citing government regulations forbidding retirees over 60 from applying for health insurance, told him, “You’re over 60, so you can’t apply for health insurance.”

An incensed Lin said; “Health insurance should cover old folks. How is it that old folks can’t apply for health insurance? I joked with them, why don’t you ask kindergarten kids to apply? How can people wait for insurance when they might soon die? How can they afford the hospital fees?”

After discovering in 2002 that he could not get health insurance, Lin took his case to various local government departments, but with little success. “They don’t care! The Fujian provincial government would pass my case to the Zhangzhou city government, but the Zhangzhou government basically wouldn’t even look at or hear my case.”

The premature retirement contract which Lin and his colleagues signed with the factory stated that after leaving the company, after reaching retirement age, workers who signed the contracts should enjoy the same benefits as those still working. “Those still employed have health insurance, so we should also have health insurance. Only then can that be called equal treatment,” he said.

Some of the officials who Lin approached did not deny the validity of his case. They told him they would consider his case and urged him to stop worrying and go home, but the problem was not resolved. “I’ve petitioned the local government for three years now, still no news,” he said.

Now if Lin wants to see the doctor, he needs to pay the healthcare fees out of his own pocket. Each medical checkup costs about 300 yuan. He claimed that he had enough money to live on, but barely enough to cover healthcare costs. Among the 28 former workers who were lobbying the government with Lin for healthcare insurance, two had fallen sick, he said, and because they could not afford clinical healthcare, they had resorted to buying traditional Chinese medicine.


Han Dongfang’s interview with Lin Duxia was broadcast in three episodes in November 2007. To read the full Chinese transcript or listen to the audio file of the broadcast please go the workers’ voices section of our Chinese language website and follow the links.

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