"It's up to the social security program to help all these people retain a minimum standard of living," said Liu Kegu, vice-governor of the province.

Unemployment has been a serious problem in Liaoning for years, as unprofitable or inefficient, outdated state-owned businesses dominate local economy and are struggling to upgrade themselves.

The Chinese government selected the province as a testing ground for the country's planned social security system, and last July an experiment was launched and it included all employees and retirees connected with state firms based in the province.

If successful the pilot program will help China set up a nationwide social security system, officials say.

In 2001, Liaoning's social security expenditure totaled 21.47 billion yuan (US$2.6 million). Its gross domestic product over the same period rose nine percent on an annual basis, higher than the national average.

By the end of last year, over 9 million employees in Liaoning Province had joined the social pension scheme, almost half the total urban population.

Unemployment insurance already covers over 6 million people and laid off workers from local businesses have the benefit of this scheme, which is important to the establishment of a social security system that is independent of businesses and institutions.

Last year's 515,000 laid off workers received 3.23 billion yuan (US$390 million) from the provincial government and local businesses.

Some 170,000 of those laidoffs were made redundant by state firms. Laying them off will cut operation costs and make local businesses more competitive, said Provincial Governor Bo Xilai.

The pilot program is benefiting the disadvantaged groups in society, particularly the aged and the sick.

Today, all retired employees, even those from bankrupt enterprises, now get their basic pensions regularly.

All 14 cities in Liaoning and over a half of its counties provide medical insurance to citizens, i.e. about 3.5 million employees.

At present, 1.06 million urbanites in need now enjoy a monthly basic living allowance to maintain the minimum living standards.

Liang Shulan's family in downtown Shenyang, the provincial capital, is most grateful to the social security program.

Liang, laid off in 1996 because of poor sight, also lost her temporary job as a janitor last year. As a result, her three-member family could hardly make ends meet for years as their only income was the 214 yuan (US$26) received by Liang's ill husband, who had remained jobless for years. So their only son, a senior high school student, was on the verge of quitting learning.

From last July, with the help of their community, the family received an extra allowance of 300 yuan per month.

Liang told Xinhua she felt "quite fortunate", as she would not have known how to manage the family expenses were it not for help from the government.

Governor Bo Xilai envisages more challenges ahead this year, as another 500,000 workers are expected to lost their jobs from state firms across the province.

The provincial government has pledged to provide basic living allowances to all urbanites living under the poverty line and medical insurance to 70 percent of the urban citizens.

"Communities will help the unemployed obtain insurance, reach the minimum living standard and find new jobs at an early date," said Bo.

Improved social security devices were at the top of the agenda of this year's annual meeting of people's deputies from China's top legislature. Many other provinces have followed Liaoning's suit and have launched pilot programs in certain cities, in preparation for a comprehensive nationwide social security network.

(Xinhua News Agency April 3, 2002)