1. Advancing social inclusion for China’s internal
rural-to urban migrant workers
To: Ministry of Human Resources andSocialSecurity of P.R.
China & the State Council of P.R. China
From: Xintong Hou

2. I. Policy Problem: internal migration, hukou systemand social exclusion
Since the 1978, China has experienced the largest internal migration in human history.
Nearly 160 million people, which are 12 percent of the total population, left rural
areas to seek work in the cities. Between 2001 and 2010, migration contributed to
nearly 20 percent of China’s economic growth.
In recent years, the new generation of migrant workers--rural youngsters who were
born after 1980 --has become the main part of migrant workers. They are now
accounting for 61.7 percent of the total migrant workers. Compared with the old
generation, they have several differences: a) they have higher levels of education.
Statistics show that 66% second-generation migrant workers have received junior
high school education, 11.5% have received senior high school education and from 16%
to 30% of the above two groups of migrant workers have received some kind of
vocational training; b) they have higher self expectations and are eager to become
urban residents. Although still registered as rural residents, some of them have
actually grown up in big cities and familiar with urban lifestyles. Most of them don’t
know how to do farm works. Therefore unlike the previous generations, they want to
stay in cities permanently; c) they have stronger awareness of protecting legal rights.
They will pay more attention to labor contracts and various social insurances when
finding jobs and they ask for equal access to education, medical treatment and
employment as urban residents
Despite their contribution to China’s spectacular economic development and poverty
reduction, current residential registration system, hukou system which divides

3. residents into urban residents with urban hukou and rural residents with rural hukou
has not yet been completely reformed and thus serving as a fundamental barrier to the
integration of internal rural-to-urban migrant workers.
This problem is a social exclusion problem. Firstly, the current social security system,
based on hukou system and a large number of local pools, discriminates against
migrant workers because of their mobility and the lack of mechanisms to transfer
benefits between pools.
In 2005, the Institute of Population and Labor Economics (IPLE) of the Chinese
Academy of Social Sciences (CASS) conducted the second round of the China Urban
Labor Survey (CULS) in 12 cities. According to the survey (See Table 1 at Appendix),
the participation rates of migrant in pension, unemployment, work injury and medical
insurances is much lower compared with urban residents.
The reasons for the low coverage may include: a) There is no compulsory requirement
for local governments and private enterprises to provide social insurance for migrant
workers; b) Local governments will face an additional financial burden by extending
social insurance system to migrant workers; c) Migrant workers are not willing to
afford the current individual contribution rate of social insurances, which is 8% of
wage for pension insurance, 1% for unemployment insurance, and 2% for medical
insurance. Besides, they will lose money in pooling accounts contributed by their
employers if they change jobs; d) the high mobility of migrant workers increase
management costs for providing social insurance for them.
Secondly, migrant workers are also deprived of opportunities for pursing more

4. ambitious life and career dreams since they could not have equal access to education,
housing .and employment opportunities as the urban residents. Migrant workers have
hardly any opportunity to receive formal education after entering the city. The only
and probably the most feasible way of enhancing their human capital and
work-related skills is through on-the-job training. Many work units, however, do not
provide such an opportunity for migrant workers. The situation for the education of
their children is also a matter of grave concern. The CULS survey shows that the
share of migrants who send their children to schools in local urban areas rose from 52
percent in 2001 to 62 percent in 2005, but most migrants have to pay extra fees.
Tuition fees differed by more than 50 percent between students with and without local
hukou in 2001, declining to around 30 percent in 2005. The difference is similar in
large and small cities (See table 2 at Appendix). As a result, their children will face
the risk of being locked into generational inequality.
Finally, this social exclusion of migrant workers also has spatial dimension. Because
migrant workers are relatively poor and have few channels for expressing their
interests and protecting their rights, they tend to live in poor communities and receive
less and poorer social services. Also, the local governments are usually less
responsive to their social services needs.
In general, the social exclusion of migrant workers will reinforce inequality and
undermine sustainable development. With the new generation of migrant workers who
are more sensitive to their social rights and know how to use modern communication
technology to organize becoming the majority of migrant workers, this social

5. exclusion problem has become more visible and more urgent. So the state council and
the ministry of human resource and social security should adopt policies to enhance
inclusion and social protection of internal rural-to-urban migrant workers.
II. Case Comparison
ILO: MIGSEC Project
The ILO Regional Office for Africa, in collaboration with the ILO International
Migration Program and the Social Security Department in Geneva implemented the
MIGSEC Project titled “Strategies for extending social security to migrant workers
and their families from and within Africa” from 01 Oct 2008 to 31 Dec 2010. This
project, funded by the German government, targeted African migrant workers and
their families in 13 countries in Sub-Saharan Africa. These countries include Ghana,
Senegal, Mauritania, Mali (ECOWAS); Tanzania, Kenya, Burundi, Rwanda, Uganda
(EAC); South Africa, Zambia, Mauritius (SADC) and Ethiopia.
The project aims to assist governments, in consultation with the social partners,
namely employers’ and workers’ organizations, to map out national and regional
social security strategies for migrant workers and their families. Project activities
focus on: a) consolidating information and building knowledge about African migrant
workers’ social security coverage and potential strategies to extend it; b) developing
institutional capacities of entities responsible for planning and implementing
strategies and policies for extending social security coverage to migrant workers; and

6. c) implementing operational measures to offer social security benefits to migrant
workers and their families.
The project expected outputs are: a) the development of national social security
strategies/policies for migrant workers from and within Africa; b) the negotiation of
social security agreements between recipient and sending countries, including
bilateral and sub-regional instruments to ensure maintenance of acquired social
security rights or in course of acquisition for migrant workers and their families; c)
the development of mechanisms for extending social security coverage to migrant
workers’ families, in particular to those left behind in origin countries, through health
micro-insurance initiatives financed by remittances.
MIGSEC by its design was a top-down project with a wide geographical coverage. Its
main interventions are mainly from constitutional frameworks, national policies, and
institutional arrangement level. In general, it succeeded in achieving nearly all
planned project activities, outputs and outcomes. The few unachieved activities and
outputs were mainly due to inactivity or non-responsiveness on the part of project
countries. For example, there was practically no direct collaborative work between
MIGSEC and ECOWAS, the reason being that ECOWAS was not quite responsive to
initial contacts made by MIGSEC. SADC, on the contrary, showed keen interest in
tapping the resourcefulness of MIGSEC to address social security coverage
challenges amongst its member states. MIGSEC, therefore, creditably performed its
duty of providing the technical assistance required to prepare social security
agreements. Besides, it is fair to conclude that MIGSEC was very effective in

7. reaching out to its indirect beneficiaries, i.e. government officials and representatives
of employers’ and workers’ organizations who participated in capacity building
training programs, attended workshops, had hands-on training in drafting agreements,
etc. Finally, the financial scheme- micro-insurance schemes- played an important role
from technical perspective to enhance migrant workers’ social protection. Enhancing
the portability of long-term social security benefits was also used as a very useful tool
to encourage migrants to participate in the formal sector and thus gaining more
protection.’
Despite its general success, there are also several weaknesses: a) just as mentioned, its
success in sub-region depends a lot on countries’ own willingness to act; b) although
throughout its implementation, MIGSEC had the benefit of working with many
experts and consultants, it failed to create a database of African experts on social
security and migration as well as to collect more data and information on these issues;
c) regular monitoring and evaluation was absent for the project. Also, the project did
not outline any objectively verifiable indicators (OVIs), which would be helpful for
monitoring and evaluation purposes. As a result, it was impossible for the project to
modify its weakness accordingly; d) it failed to use external opportunities to further
the project. In December 2011, the EU Parliament and the EU-Council passed the
“Single Permit” Directive, directing member countries to, within 2 years, adapt their
individual national laws to guarantee equal treatment of legally employed migrant
workers. This is with regard to conditions of work, social security rights, including the
right to have their pensions transferred to the migrant workers’ countries of origin.

8. With the support of the ILO, this project should have taken full advantage of this
progressive development in the EU.
World Bank: Urban Poverty Project
The initial Urban Poverty Project (UPP) was designed to target urban poor in
Indonesia in response to the 1997 Asian Economic Crisis. Through a bottom-up and
transparent approach, the project’s objective was to improve basic infrastructure in
poor urban neighborhoods and to promote sustainable income generation for its poor
urban residents who are mostly long-term poor, have incomes eroded by high
inflation, or lost sources of income in the economic downturn. Also, the project seeks
to strengthen the capability of local agencies to assist poor communities. Specific
activities include a) organize the poor into groups which would receive micro-credit
loans for income generation or grants for tertiary level infrastructure; and b) promote
the development of community organizations (Badan Keswadayan Masyarakat or
BKM) at the ward (kelurahan) level that would receive block grants that the BKM
would manage as a revolving fund. It was designed to last from May 18 1999 to June
30 2004, with a budget of 100 million.
After UPP’s original goals were surpassed at the end of Phase I (completed in 2002),
however, through the large network of facilitators and field implementers, four
observations came to the forefront: a) income poverty is a limited view of
poverty-poor people demand improvements in various infrastructure and social
services in addition to income generation; b) even well-run micro- credit systems are
not a very effective way to reach the poorest; c) although poor communities value

9. loans, the main strength of the project is the opportunity it has given them to create an
organization that they elect, with leaders that they trust, and an opportunity to discuss
issues of poverty together as a community; and d) the relationship between the BKM
and local governments needs to be clarified and strengthened.
In response to the above, the Government of Indonesia requested additional financing
to scale-up UPP to UPP2 that evolved in the following directions: a) developing
broad-based community organizations by placing more emphasis on the process of
electing community representatives to the BKM; b) assisting communities to
formulate Community Development Plans that address the multi-dimensional nature
of poverty; c) supporting the formation of city level federations (BKM Forum) which
bring together BKMs from all the kelurahans within the city; and d) encouraging a
partnership between local governments and BKMs through the introduction of the
Poverty Alleviation Partnership Grant (PAPG), which finances activities jointly
proposed by local government agencies and BKMs.
With Phase I1 was under implementation, in 2005, a proposed project as the third
series of UPP requested by the highest levels of Indonesia government, asked to
further expand the coverage of UPP to the rest of the country to make it a national
program. UPP3 aimed to: a) establish and support representative and accountable
community organizations that are able to increase the voice o f the poor in public
decision making; b) make local governments more responsive to the needs of the poor
by increasing cooperation with community organizations; and c) transparently
funding community based organizations and local governments to provide basic

10. municipal services to the urban poor. The project also provided additional institutional
support and grants to further strengthen about 660 ward-level community
organizations selected in UPP1 and UPP2 and in new development areas.
To sum up, ultimately the UPP project was funded by the World Bank and conducted
by Indonesia’s ministry of settlement and regional infrastructure from 1999-2011,
with a total cost of US$186.10 million. The project has four components: finance
community development and local government capacity building; finance Kelurahan
Grants; fund a poverty alleviation partnership grant and provide implementation
Support. According to the report, the outcome of UPP is satisfactory, with highly
likely sustainability and substantial institutional development impact.
The main reason for the huge success and sustainability of this project, as I see it,
roots in: a) from the beginning of the project, its implementation was bottom-up and
transparent. And instead of the traditional approach of formal evaluation after
completion of each project phase, this project adopted a culture of continual learning,
self-evaluation and improvement; b) developing and giving grants to community level
organizations was an optimal way to empower the disadvantage group. Besides, this
could also give the community more initiative to decide particular social services they
need; c) gradually involving local governments and building partnership between
local governments and BKMs at a more mature level was a more pragmatic way to
ensure both transparency and effectiveness of the project; d) the success of the project
depended fundamentally on the facilitators. Instead of management structure that
supervises the facilitator, the project adopted the "facilitator support" oriented

11. management that combines vertical support from higher levels of management with
sharing and learning among the facilitators, such as regular meetings, timely coaching
and mentoring, free communication between the facilitators on UPP website; e)
building a strong relationship between government departments and the bank was also
a decisive factor for the success of the project. The Bank’s performance in
identification, preparation and appraisal is rated satisfactory and its performance in
supervision is rated fully satisfactory. It played an instrumental role in converting
what started off as individual projects, into two national programs, which now form a
pillar of the government’s poverty alleviation program.
Comparison
By comparing the outcomes, outputs and sustainability of these two projects, several
lessons could be learnt: a) all stakeholders should be involved by a combination of
top-down and bottom-up approaches to collaborate to achieve the planned objectives;
and collaboration mechanism between different stakeholders should also be
established or improved; b) data and information collection are limited for both
projects, and thus future efforts to improve this is necessary; c) external pressure or
opportunities could be used to boost internal change; d) regular monitoring and
evaluation are decisive for the success of a project; e) rather than setting ambitious
objectives and broad coverage initially, gradual expansion, innovation and
modification based on lessons learnt during the implementation of the project is more
pragmatic and more sustainable; f) capacity building of stakeholders at different
levels and during the whole process of project implementation is important.

12. III. Recommendations
First, the State Council and the Ministry of Human Resources and Social Security
should collaborate with the National Consensus Bureau to improve data and
information of internal migration. The shortage of information restricts the extent to
which strong conclusions can be drawn and meaningful policies and interventions can
be proposed. Consensus on the definition of the term ‘migrant’ is a precondition to
better data. There is also a need to gain more information so as to get a better
understanding of the diversity in migration streams in terms of who goes (men only,
men and women, entire families, groups of adolescent girls or boys etc.), the duration
(one week to several months), distance (within the district, to the neighboring district
or cross country) and different groups ( registered versus unregistered migrants, intra-
versus inter-provincial migrations, male versus female migrants, construction workers
versus service staff) in order to tailor support to their very different needs.
Second, from top-down perspective, specific mechanisms are required to safeguard
migrant workers’ social security rights and to overcome the restriction faced under
hukou system. Thus ministry of human resources and social security and the state
council should support bilateral and multilateral agreements between local
governments as for equal treatment of migrant workers. For bilateral agreements,
formal bilateral agreements between sending and receiving provinces, employers and
training institutions, and employers and labor bureaus should be expanded as a safe
and efficient means of managed migration. For multilateral agreements, the two
agencies could firstly target areas with high development level and compatible

13. bureaucratic and fiscal capacity to ensure the effective implementation of the
agreements. For example, they could help the eastern coastal areas to build regional
network which will require the whole areas adopt the same standard of social security
coverage and social services delivery for migrant workers floating within this region.
Still, the two agencies should work with legal system to issue more acts to protect and
enhance migrant workers’ social rights. And to minimize the gap between what on
the paper and the reality, the two agencies should supervise the implementation of
relevant agreements and laws and do regular monitoring and evaluation so as to
modify their components accordingly in time.
Third, instead of setting the goal beyond the current institutional, bureaucratic and
fiscal capacity, the two agencies should gradually enlarge both geographic and
categorical of social security coverage for migrant workers. And the
multi-dimensional features of migration require enhanced coordination between
relevant government agencies. Information on best practices and lessons learned
should also be shared more widely between these government bodies, provincial
governments and local governments. Pilot programs should be experimented at first in
provinces that show real optimism and determination as well as are more urgent to
increase social security coverage for migrant workers. Such provinces include main
sending provinces like Sichuan, Anhui, Hunan and main receiving provinces like
Guangdong, Zhejiang, Jiangsu, etc. Similarly, the effort to increase the social security
coverage should be initially focus on specific categories. In this case, work injury
insurance, health insurance and pension insurance are the most urgent ones. The

14. perceived healthcare priorities for the migrant population should include a better
targeting of young female migrants for reproductive health services, better access for
pregnant women to appropriate pre- and post-natal care, and immunization of the
children of migrant worker.
Fourth, the provision of services to communities should be a joint responsibility of
communities and local governments. So the two agencies should work with other
ministries to promote two parallel processes- strengthening community capacity to
organize, aggregate and articulate their needs and priorities, and building the
capacities of local governments- to respond to and work with communities. The 1994
decentralization laws place local governments in charge of providing services to their
citizens. With limited resources, however, local governments will inevitably face
tradeoffs in terms of what and to whom they deliver. They will meet the demands of
the population only if officials understand community priorities and are accountable
to them. This, in turn will require communities to be organized, to aggregate and
prioritize their needs and demands, and to articulate these priorities to government.
Thus, the community should be given the right to develop community level
organizations that are owned and trusted by the communities as well as be able to
carry the aggregated demands of communities to higher levels of government and
demand better services from the government. However, not all community level
services should be provided and managed by communities. Many urban services have
significant network factors and are best managed at a level higher than the community.
So the capacity of local governments to deliver services and to work with

15. communities should also be strengthened.
Fifth, the bank should be involved in the process. For one thing, the two agencies
should work with the bank to solve the portability of long-term social security
benefits problem so as to increase migrant workers’ own willingness to attend social
insurance. For another, the Bank are instrumental for pilot program designed to
enhance social security coverage for migrant workers and to transfer their remittances
to their left out family members who are still in rural areas. Through involving the
bank, the bank could learn during the process so as to improve the quality of its
financial services for migrant workers. At the same time, the government agencies and
the bank could build more trust for future cooperation.
Finally, the two agencies should also use both external pressure and internal
opportunity to boost change. For one thing, as China becomes more integrated into
international society, the two agencies should ratify more ILO labor conventions, such
as the freedom of association and collective bargaining which would give migrant
workers more leverage to pursue their rights. The two agencies should also more
frequently refer to international standards to advance social rights of migrant workers.
For another, the labor shortage has gradually become a problem since 2004 and 2010
has been called the year of strikes by social media. This opportunity could be seized
by the two agencies to build more political consensus to push local governments to
involve migrant workers and implement existed pro-migrants policies more actively.
There are several limitations of my recommendations based on the lessons from the
two projects: a) my recommendation based on community-level capacity building and

16. services delivery does not really “target” internal migrant workers. For one thing,
internal migrant workers to some extent interest with the urban poor. I believe
community level capacity building and services delivery could empower them and
make their demand more visible to the local authorities. So in the long run, as the UPP
project shows, this would advance their social inclusion. For another, due to the
multi-dimensional features and limited information of internal migrant workers, it’s
difficult to really target them in practice. In contrast, such targeting may leave some
internal migrant workers behind. For example, at present, legislation and services are
predominantly only targeted to registered migrants; the larger floating population in
the informal economy requires more access to such protection; b) since the two
projects mostly concentrated on perfecting legal framework and community-based
social service delivery, human capital building was not a main theme. But I assume
that the Urban Poverty Project, by giving grants to support community-level
sub-project, would more or less involves components like community-based
education and training; c) my recommendations are based on accepting the current
institutional constraints, including the hukou system and workers’ lack of rights to
associate. So as these constraints may be moved away in the future, more policies
would become useful for social inclusion of migrant workers; d) gender perspective is
missing in these recommendations; and e) my recommendations are based on the very
likely assumption that migrant workers want to stay at urban areas. So they do not
involve the other side of dealing with migrant workers issues-developing and
diversifying the rural economy.

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21. Appendix
Table 1.Social Insurance Coverage for Local Residents and Migrant in 2005(%)
Local residents workers Rural migrant workers
Pension insurance 59.8 6.0
Unemployment insurance 22.8 3.4
Work injury insurance 8.8 6.0
Medical insurance 50.0 4.0
Source: IPLE-CASS, the 2005 China Urban Labor Survey
Table 2 Higher Costs of Education for Migrant Children
4 large cities
(2001)
4 large cities
(2005)
5 small cities
(2005)
Mean yearly tuition of migrant
children attending school in
urban areas (RMB)
1356 1782 1572
Estimated city tuition with
hukou (RMB)
829 1304 1064
Percentage difference in means 52.6 26.8 32.3
Medium percentage difference 52 33 25
% respondents reporting that
city tuition is higher than city
tuition with a local hukou
81.9% 75.1% 58.1%
Source: 2001, 2005 Chinese Urban Labor Survey