Institutional constraints for the extension of social insurance coverage to informal economy workers in China

Briefing note | 20 November 2020
This research brief considers institutional and administrative barriers for expanding social insurance coverage to workers in the informal economy in China.

While urban employee social insurance has widened significantly in recent years, workers in the informal economy lack pension and medical coverage to the extent and at the levels of adequacy enjoyed by urban formal employees.

China’s fragmented and decentralized social protection delivery and fiscal systems limit the country’s capacity to implement national policy guidelines promoting social insurance coverage.

The decentralisation of social insurance administration creates opportunities for service innovation, responsiveness, and adaptation to local social and economic circumstances.

However, the mismatch between national policy objectives and local capacities and incentives for their implementation crowd out efforts to secure the adequate protection of workers in the informal economy.

The brief presents some of the causes of these misalignments and illustrates some ways through which China is attempting to overcome regulatory and administrative barriers to policy implementation.