Updated June 30th 2014
The National Personnel Management Ordinance “Ming” to Be Implemented by Companies and Institutions
The “secure job” pattern in institutions and companies will be no more starting tomorrow (report by Guangdong Ren Xuan correspondent Liao Jingwen). As announced by the executive authorities, the implementation of the Personnel Management Ordinance for institutions and companies will begin tomorrow. The Provincial People’s Bureau released the interpretation of the regulations, pointing out that the new rules introduced by this legal act, will create a big impact in institutions, where “contracts” are likely to break the lifelong employment system people were accustomed with.
The new regulations, introduce contract duration of no less than 3 years between institutions/companies and their staff. The employer may dissolve the contract within the first 15 to 30 days upon hiring new staff. Annual evaluation of unqualified work personnel which does not agree to become qualified, may lead to contract termination before term. This is particularly the case when a staff member remains “unqualified” for 2 consecutive years of annual evaluation. In such cases, the institution/company may choose to terminate the employment with a 30 day advance written notice.
The Provincial People’s Bureau through its speaker pointed out, the biggest change is the relationship between the employer and the staff itself. The staff member is hired based on a work contract, thus breaking the life-long tenure, including the establishment of contractual terms, fair competition, incentive and penalties, upholding and securing the respect of human rights, the progressive career path for internal personnel, personnel movements between ascending and descending positions, incentives and benefits, are all measures that will invigorate the employment system.
The "Regulations" define the personnel management institutions and companies as a legal person. Signing the work contract implies a clear and correct relationship between employer and employee, better human relations, the establishment of the legal status of both parties, the equality of staff before the law. Upon performing their duties, according to the contractual terms, the staff will enjoy clearly defined benefits. Since 2002, through the implementation of the employment system, more than 90% of institutions and companies have signed contracts with their employees.
The regulations also stipulate, in addition to the national policy of resettlement and in accordance with the decisions of the personnel management authority, all positions must meet a clear classification and institutions and companies should be open for recruitment to anyone willing to apply and compete for a position or another.
Recently, the State Department Minister ,Yin Yumin, said the current contracts signed in some institutions are "on paper", thus producing merely formal units. These departments do not really play a constructive role in the functioning of the institution; the contract itself does not reflect the industry needs or the job characteristics. These contracts are signed simply to make sure certain staff remains employed. The Implementation of the Ordinance is aimed at continuing the implementation of the new legal acts and to see an end to the “on paper” employment system in institutions and elsewhere.
The 31,530,000 determines staff to take part in the social security system
According to the State Council Legislative Affairs Office, the Central Organization Department, released the national employment data to our press correspondent. At present there are 1,110,000 institutions and companies in China. These hire 31,530,000 people. With the new regulations coming into effect in July 1st, some analysts expected more than thirty million staff members to begin contributing in the social insurance system.
However, also the expert points out, "Regulations" only stated the principles of the law, stating the fact that "all staff members in institutions and companies must take part in the social insurance system". Department of Personnel Management, within the Chinese Institute of Science and Technology, director Li Jianzhong expresses in an interview with our reporter, some concerns over persisting misunderstandings. He explains some reform measures have been carried out for more than 10 years, yet there is still room for misunderstanding, "the relevant supporting policies need to appear and the need to improve the policies and apply them to the realities of the day."
For example, the reform talks about “pension insurance”, yet many wonder what it is and where is the money coming from to pay for this insurance. The application rules are still missing. The Tsinghua University Employment and Social Security Research Center, director Yang Yansui, believes that the biggest problem is clarifying the means of collecting for the pensions system. He states, the pension system has 3 parts: money, money and money. The problem is not as much where to find the money, but how to determine what amount should be charged to the insurer and how to issue the money upon retirement.
Institutions to employ the new system deemed "mandatory"
The institutions and companies were already expected to employ the system in the pilot city. Data shows, in 2013, the national institutions are to increase the system implementation rate, business units’ staff contract signing rate is now higher than 90%.
However, in the process of personnel system reform, some are left aside. Certain workers cannot become competent for work overnight. Some staff members are inevitably laid-off. Carrying out a personnel dismissal system also makes people face export problems. Due to the current development the Chinese social security system is not perfect, especially the endowment insurance system of public institutions has not yet been established, although the skilled employment level is clearly achievable. Nevertheless in reality, some things do not work according to plan. For example, a “department person” cannot turn into a “social man” virtually from one day to another.
In the many years since the implementation of the employment contract, lots of problems emerged. One is the formal employment or false employment. Despite the fact that a contract has been signed, it is only a cover for a secure position, allowing the staff member to remain employed no matter what. Another problem faced by the employers, employees and candidates is the clientèle system, where internal applicants are preferred to external ones. In some cases, open access policy turned out in a stop hiring policy and this can have a serious social impact.