Urban poverty: a critical social problem
Original, GPIG, 04-26-2018
Before the 1990s, poverty was thought to be exclusively found in rural areas. But as the income gap between urban residents started to widen and incidents of unemployment and lay-off kept surging, while reforms to the social security system lagged behind, the problem of urban poverty worsened.
The number of urban poor increased. Contrary to the downward trend in the number of rural poor, the problem of urban poverty is gaining momentum. According to the Annual Report of Urban Development in China released by the Chinese Academy of Social Sciences in 2011, there were about 50 million urban poor and the figure kept rising. Anyone getting an average annual income less than 7,500 yuan fell below the urban poverty line in China.
Since 2000, China has been paying more attention to urban poverty, as a lot of research showed that urban poverty had risen at an alarming speed and had reached a critical level. By the end of 2013, over 20 million people in urban areas fell into the low-income family category.
Currently, the coverage of the social security system in the world’s developed countries is above 10%, while it is as low as 6% in developing countries (such as India). As for China, the coverage rate should be between 6% and 8%, which means that the social security system in China should cover about 36 million to 48 million urban poor.
The old houses of the shanty-town residents
Absolute poverty and relative poverty co-exist in urban areas. Absolute poverty refers to substantial poverty, where one's minimum living conditions are not guaranteed and one still suffers from lack of food and clothes. Relative poverty refers to those who no longer suffer from the lack of food and clothes, but whose living conditions fell far below the basic living standards.
Urban poverty not only means that the income of impoverished populations were insufficient to meet their basic living standards, but also means being impoverished in terms of money, social status, cultural intake, and even physical or mental impoverishment. On the surface, poverty results from not being able to meet the minimum living standards, having insufficient resources and thus having less access to a healthy, long, free and decent life. Such people are more likely to be marginalized. But the ultimate reason for urban poverty is the lack of ways, capabilities and opportunities. Unlike in rural areas, living in the city involves a lot more expenses, food alone costs hundreds of yuan each month. With the rising prices, urban poor are under greater pressure.
Multiple reasons lead to urban poverty. From the macro perspective, one of the most important reasons for urban poverty was the reform of the economic system since the Reform and Opening-up period. The Third Plenary Session of the Fourteenth CPC Central Committee passed the "Decisions of CPC Central Committee on the Establishment of a Socialist Economic System" in 1993. The change from a planned economy to a market economy meant that state-owned enterprises (SOEs) had to face tough competition. But some SOEs and their employees found that it was hard to adjust to market competition after so many years of state protection. Therefore, some were bankrupt while others merged to remain competitive. There were massive layoffs, while other bigger entities split into more efficient, smaller business units. If protection policies for enterprises had continued along with parental employment arrangements for employers and if social welfare for urban residents were provided before the 1990s, the sudden and large-scale "flood of laid-off workers" and the resulting surge in unemployment in several cities, which created the biggest challenge to Chinese society, may have been circumvented. As the economic system and social environment changed, laid-off workers in urban areas form the majority of the urban impoverished population.
At the end of the 20th century, due to the inadequate support system after institutional reforms, many laid-off workers did not get enough guarantees or chances of reemployment. Many people encountered the lack of access to medical care and medicines, falling into poverty because of the high fees for medication due to the inadequate medical care system and reformed medicine distribution system. More and more urban people fell into abject poverty due to the rising cost of living, the weak social security measures, the surging house prices, the severe unemployment rate and the widening gap between the rich and poor.
From the macro perspective, the more people there are in each household, the heavier the burden on the one who is employed, and the lighter the rate of poverty; level of education and professional skills could also affect poverty. How healthy or educated the urban residents are has an intimate relation to their living conditions.
Along with the adjustment of social structures, transitioning of the economic system and the development of the market economy, the constitution of urban impoverished populations kept changing. Besides the individuals who fell into the traditional "Three No's" classification (no working capability, no income, no one to depend on), there were also laid-off workers, migrant workers, farmers without farmlands, and retired people with low income. These impoverished people put the problem of urban poverty on the center-stage. The distribution of urban poor is almost the same as the distribution of rural poor, mostly found in the Middle and West China, where there are resource-oriented cities that no longer have adequate resources, hub cities whose status dropped after the transportation structure was changed, cities with backward industries, old industrial bases in the Northeast China, cities with a mono industrial structure and cities dependent on natural resources.
Original, GPIG, 04-26-2018
Before the 1990s, poverty was thought to be exclusively found in rural areas. But as the income gap between urban residents started to widen and incidents of unemployment and lay-off kept surging, while reforms to the social security system lagged behind, the problem of urban poverty worsened.
The number of urban poor increased. Contrary to the downward trend in the number of rural poor, the problem of urban poverty is gaining momentum. According to the Annual Report of Urban Development in China released by the Chinese Academy of Social Sciences in 2011, there were about 50 million urban poor and the figure kept rising. Anyone getting an average annual income less than 7,500 yuan fell below the urban poverty line in China.
Since 2000, China has been paying more attention to urban poverty, as a lot of research showed that urban poverty had risen at an alarming speed and had reached a critical level. By the end of 2013, over 20 million people in urban areas fell into the low-income family category.
Currently, the coverage of the social security system in the world’s developed countries is above 10%, while it is as low as 6% in developing countries (such as India). As for China, the coverage rate should be between 6% and 8%, which means that the social security system in China should cover about 36 million to 48 million urban poor.
The old houses of the shanty-town residents
Absolute poverty and relative poverty co-exist in urban areas. Absolute poverty refers to substantial poverty, where one's minimum living conditions are not guaranteed and one still suffers from lack of food and clothes. Relative poverty refers to those who no longer suffer from the lack of food and clothes, but whose living conditions fell far below the basic living standards.
Urban poverty not only means that the income of impoverished populations were insufficient to meet their basic living standards, but also means being impoverished in terms of money, social status, cultural intake, and even physical or mental impoverishment. On the surface, poverty results from not being able to meet the minimum living standards, having insufficient resources and thus having less access to a healthy, long, free and decent life. Such people are more likely to be marginalized. But the ultimate reason for urban poverty is the lack of ways, capabilities and opportunities. Unlike in rural areas, living in the city involves a lot more expenses, food alone costs hundreds of yuan each month. With the rising prices, urban poor are under greater pressure.
Multiple reasons lead to urban poverty. From the macro perspective, one of the most important reasons for urban poverty was the reform of the economic system since the Reform and Opening-up period. The Third Plenary Session of the Fourteenth CPC Central Committee passed the "Decisions of CPC Central Committee on the Establishment of a Socialist Economic System" in 1993. The change from a planned economy to a market economy meant that state-owned enterprises (SOEs) had to face tough competition. But some SOEs and their employees found that it was hard to adjust to market competition after so many years of state protection. Therefore, some were bankrupt while others merged to remain competitive. There were massive layoffs, while other bigger entities split into more efficient, smaller business units. If protection policies for enterprises had continued along with parental employment arrangements for employers and if social welfare for urban residents were provided before the 1990s, the sudden and large-scale "flood of laid-off workers" and the resulting surge in unemployment in several cities, which created the biggest challenge to Chinese society, may have been circumvented. As the economic system and social environment changed, laid-off workers in urban areas form the majority of the urban impoverished population.
At the end of the 20th century, due to the inadequate support system after institutional reforms, many laid-off workers did not get enough guarantees or chances of reemployment. Many people encountered the lack of access to medical care and medicines, falling into poverty because of the high fees for medication due to the inadequate medical care system and reformed medicine distribution system. More and more urban people fell into abject poverty due to the rising cost of living, the weak social security measures, the surging house prices, the severe unemployment rate and the widening gap between the rich and poor.
From the macro perspective, the more people there are in each household, the heavier the burden on the one who is employed, and the lighter the rate of poverty; level of education and professional skills could also affect poverty. How healthy or educated the urban residents are has an intimate relation to their living conditions.
Along with the adjustment of social structures, transitioning of the economic system and the development of the market economy, the constitution of urban impoverished populations kept changing. Besides the individuals who fell into the traditional "Three No's" classification (no working capability, no income, no one to depend on), there were also laid-off workers, migrant workers, farmers without farmlands, and retired people with low income. These impoverished people put the problem of urban poverty on the center-stage. The distribution of urban poor is almost the same as the distribution of rural poor, mostly found in the Middle and West China, where there are resource-oriented cities that no longer have adequate resources, hub cities whose status dropped after the transportation structure was changed, cities with backward industries, old industrial bases in the Northeast China, cities with a mono industrial structure and cities dependent on natural resources.
