China removes Hukou barriers to enrolling in social insurance where people work

In June 2025, China’s central authorities issued a set of guidelines on further improving public well-being. They called for fully removing hukou-based restrictions on enrolling in social insurance at the place of employment. The reform addresses a structural mismatch: labour is highly mobile, yet eligibility and administration have often remained linked to hukou (household registration) and local administration. The Seventh National Population Census (2020) reported 493 million people living outside their place of registration, and this figure remains large. Removing hukou barriers is therefore both a coverage-quality reform and a step toward more portable and consistent social insurance rules for a mobile workforce.

Three gains: fairness, lower mobility frictions, and “people-centred” urbanisation

• Fairness and rights. Social insurance should follow work and shared risk, not registration status. Hukou-linked enrolment has often channelled internal migrants toward lower-benefit resident schemes tied to their registered locality. Removing the barrier improves access in the place where people work and reduces institutional inequities across groups.
• Lower mobility frictions. Hukou-linked enrolment has acted like an administrative barrier. It adds paperwork, complicates cross-region handling of contribution records and benefit eligibility, and reduces predictability for workers and firms. Cutting these frictions lowers the cost of moving and supports a more efficient national labour market.
• “People-centred” urbanisation. China’s “people-centred” urbanisation agenda prioritises stable settlement and equal access to basic services. If social insurance remains hukou-linked, migrants face weaker long-term security and may invest less in city life. Easier enrolment where people work strengthens security and supports long-term settlement and integration.

Huge coverage, but a two-track structure and uneven protection

For both pensions and health insurance, China runs a two-track system: an employee scheme anchored in standard employment, and a resident scheme for non-employed residents and many people outside formal jobs. The resident scheme generally features lower contributions and lower benefits, leaving persistent protection gaps despite near-universal coverage.

By end-2024, basic pension coverage exceeded 1.07 billion (including 534 million in the employee scheme), while basic health insurance covered 1.33 billion (including 379 million in the employee scheme). This shows strong headline coverage, but also that a large share of the population remains outside employee-based protection.

Two gaps stand out. First, employee-scheme participation remains limited, especially among workers in flexible arrangements. Second, coverage for key labour-market risks is incomplete: with total employment around 730 million, work-related injury and unemployment insurance covered only about 300 million and 250 million people, respectively—leaving many workers most exposed to job loss and workplace injury with weaker protection.

Empowerment, not a blanket mandate

The intent is to remove barriers, grant rights, and reduce frictions. It should not be read as a uniform requirement that everyone must enrol only in the place where they work. Under China’s Social Insurance Law, employers and employees in standard employment relationships are required to join the employee scheme and fulfil legal contribution duties. For flexible workers and many workers in new forms of employment, the law often leaves participation routes more flexible in practice. Policy implementation should therefore focus on removing hukou-based discrimination and expanding practical access—while allowing reasonable choices in scheme type and location.

Three complements to make the gains durable

• Raise pooling and strengthen risk-sharing. Moving toward higher-level pooling (e.g., provincial or national pooling) can reduce fragmentation and strengthen risk-sharing across regions. For core schemes, reforms should further strengthen pooled financing and maintain the solidarity and redistributive function of basic protection.
• Align fiscal responsibilities with actual burdens. As enrolment shifts toward the place of work, fiscal subsidies and public responsibilities should also follow people. Intergovernmental settlement should reflect where people are insured and where service costs occur. A rules-based fiscal settlement and transfer mechanism can allocate costs fairly between receiving and sending regions, supporting long-term sustainability.
• Adapt schemes to flexible and platform work. Occupational injury protection should expand through a risk-based approach that is not confined to standard employment. Unemployment protection should strengthen prevention and reemployment support, not only post-job-loss payments. Pension contributions should better fit volatile incomes through more flexible payment options and clearer income-tiered arrangements.

In sum, removing hukou barriers is a pivotal step. With parallel reforms in pooling, fiscal alignment, and adaptation to new forms of employment, it can provide workers with more stable and predictable protection across regions.

HUA Ying is an Associate Research Fellow at the Institute of Population and Labour Economics, Chinese Academy of Social Sciences (CASS). She researches social security theory and policy, publishes widely, and writes policy reports that have informed policymaking. She was recognised as an Outstanding Young Scholar in Social Security and serves as Deputy Chair of the Youth Committee of the China Association of Social Security (CAoSS).