China is set to draft a new social security law in the next few years, which will be the biggest legal step ever made covering medical insurance, pensions and unemployment benefits. It will cover workers in State-owned firms, which are undergoing major restructuring schemes to help them meet global competition.

Chen Gang, a senior official with the Ministry of Labour and Social Security, said yesterday that a draft of the law has already been drawn up and is expected to be submitted to the State Council for review before June.

"After discussions and review by the central government, the draft will be handed over to the top legislature for approval," said Chen. "It will come out in the next few years."

The social security law has become one of the top priorities for the National People's Congress, the top legislature, according to Chen.

If all goes well, workers in State-owned firms,which Chinese workers have long relied on for cradle-to-grave welfare benefits, will have their interests better protected by law, said Han Feng, a senior official in charge of pensions in China.

"We have initiated a lot of policies and supporting measures to help unemployed and retired workers from State-owned firms.

"Many of them have had trouble getting benefits as their employers have withheld payments because there are no proper laws to regulate them," said Han.

This lack of proper laws has resulted in poor delivery of pensions, unemployment payments and medical healthcare in the last few years.

To solve this problem, the government is phasing in reforms so pensions, medical care and unemployment schemes are supported jointly by the State, State-owned firms and workers themselves.

This will allow State-owned firms to reform while it will make sure citizens have access to benefits.

The efforts are paying off.

By the end of last year, a total of 43.3 million people in China had enrolled into a medical insurance scheme.

The scheme will cover 80 million people nationwide by the end of this year as medical reforms spread to 90 per cent of cities in China.

Meanwhile, a new pension scheme had already been set up for 29.2 million people by the end of March, covering 95.4 per cent of people entitled to join.

"We will make sure that by the end of 2005, pension, unemployment and medical insurance will cover workers across China," according to Liu Yongfu, a spokesman for the Ministry of Labour and Social Security.

However, there are still challenges ahead.

China aims to keep a lid on the growth of unemployment in the next five years so it is no more than about 5 per cent.

During the same period, 40 million will find new jobs and 40 million rural labourers will move to towns and cities, said Liu.

But Zhang Xiaojian, director-general of the department for training and employment at the ministry, admitted that "about 50 million people will seek jobs in the next five years, but we can only create 40 million jobs.

"We face a big gap," said Zhang.

The problem has been caused by China's ongoing industrial restructuring and imminent entry into the World Trade Organization, which require the country to strengthen enterprises' competitiveness by cutting workers.

China also has a growing number of senior citizens, putting pressure on its fledgling pension and medical care insurance schemes.

Zhang said funneling laid-off workers through re-employment centres and then onto new jobs will be the top priority in the next few years.

A total of 100 cities in China will be required to map out plans to help unemployed workers.

Training programmes are expected to help over 12 million laid-off workers in China in the next three years to help them improve skills so they can find new jobs. The first such programme in 1998-2000 trained 11 million people, said Zhang.