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Case 8:Minimum Living Standard SecuritySystem in ChinaIn 1993, the Chinese government began to reformthe social relief system in cities, at the same timeseeking to try out a minimum living standard securitysystem. In 1999, this security system wasestablished in all cities and county towns throughoutthe country. In the same year, the Chinesegovernment officially promulgated the Regulationson Guaranteeing Urban Residents’ Minimum Standardof Living to ensure the basic livelihood of allurban residents. This has been decided ‘primarilyon the basis of urban residents’ average incomeand consumption level per capita, the price levelof the previous year, the consumption price index,the local cost necessary for maintaining the basiclivelihood, other connected social security standards,the materials for the basic needs of food,clothing and housing, and the expenditure on under-agechildren’s compulsory education.’ 91Funds for this purpose are included in the fiscalbudgets of the local people’s governments, whichdetermine the minimum living standard accordingto the cost necessary for maintaining the basiclivelihood of the local urbanites. Urban residentswith an average family income lower than the minimumliving standard can apply for the minimumliving allowance. Investigation of the family’s incomeshall be conducted before issuance of theminimum living allowance, the level of which iscalculated in terms of the difference between thefamily per-capita income and the minimum livingstandard.Case 9:Labour protection for subcontractsin ChileIn 2006, a law regulating subcontracting was introducedin Chile. According to the Ministry ofLabour, 35 percent of workers in Chile are notdirectly hired by large firms finding work insteadthrough subcontractors or other providers of personnel.At present, responsibility for labour obligationsrests with the hiring firm. Compliance isoften low and capacity to pay limited, particularlyin the case of personnel suppliers who can operatewith little capital. In this way, labour obligationsare thoroughly diluted. The situation is such thatsome hiring firms are themselves creations of theprincipal firms.The law introduced in Chile regulates both typesof arrangements, but the objective is to limit thesupply of labour to only short-term replacementworkers. In the case of subcontracting, the objectiveis to promote it but to ensure compliance withall the labour obligations, as follows:• A deposit of a re-adjustable guarantee (nearlyUS$9000 at recent exchange rates) is requiredfor the providers of labour, and the deposit canbe used in cases of non-compliance and a timelimit of six months has been introduced for thecontracts.• In the case of subcontracting, provisions wereintroduced on responsibility for the labour obligations,which affect both subcontractors andthe main firms regarding responsibility for thelabour obligations. Direct responsibility lies withthe subcontractors, but the main firms have theright to request from the subcontractor a certificateof compliance (issued by the labour inspectorateagency), and they also have the right towithhold payments for subcontractors in cases ofobligations still pending. In fact, the law transformsthe principal firm into an instrument of la-184