Recently, the central government has issued three consecutive documents targeting pension reform, salary adjustment, and rank reform for civil servants. These documents are: “Decision on the Reform of the Pension System for Employees of Government Agencies and Public Institutions” (State Council Document [2015] No. 2), “Notice from the General Office of the State Council Forwarding the Ministry of Human Resources and Social Security and the Ministry of Finance on Adjusting the Basic Salary Standards for Employees of Government Agencies and Public Institutions” (State Council Office Document [2015] No. 3), and “Opinions on Establishing a Parallel System of Positions and Ranks for Civil Servants Below the County Level” (Central Office Document [2015] No. 4). The issuing units of these three documents are different, being the State Council, the General Office of the State Council, and the Central Office of the State Council, respectively, but they all address the same issue—civil service reform.

I. Basic Content

• Document No. 2: Abolish the dual-track pension system for civil servants. Civil servants will pay pensions and occupational annuities according to enterprise standards and will receive retirement salaries based on their pension contributions after retirement.
• Document No. 3: Increase the basic salary of civil servants. For example, the salary of a clerk will rise from approximately 800 yuan to 1,500 yuan. Reduce work subsidies for civil servants, with clerks seeing a reduction of 250 yuan. Local governments are prohibited from independently increasing subsidies and allowances.
• Document No. 4: Implement a parallel system of ranks and positions for civil servants below the county level. For instance, a clerk can be promoted to a section member after 8 years, a section member to a deputy section chief after 12 years, a deputy section chief to a section chief after 15 years, a section chief to a deputy department head after 15 years, and a deputy department head to a department head after 15 years.

II. Direct Impact

• Document No. 2:

  1. Civil servants will no longer receive retirement benefits based on their rank but will instead receive pensions calculated based on the duration and amount of pension contributions during their employment.
  2. Civil servants will start paying for their own pension insurance (ratio: 8% individual + 20% employer).
  3. Civil servants will start paying for their own occupational annuities (ratio: 4% individual + approximately 8% employer).

• Document No. 3:

  1. The salary of a 24th-level clerk will increase from 880 yuan to 1,710 yuan; subsidies will decrease by 250 yuan, resulting in a direct salary increase of about 580 yuan. For a 19th-level section chief, the increase is approximately 900 yuan; for a 16th-level department head, about 1,300 yuan; for a 10th-level bureau chief, about 2,500 yuan; and for a 6th-level minister, about 3,000 yuan.
  2. Local governments are prohibited from independently increasing other types of subsidies and allowances, freezing them at their original amounts.

• Document No. 4:

  1. Starting from a 24-year-old college graduate entering the civil service, they would become a clerk at 25, a deputy section chief at 37, a section chief at 52, a deputy department head at 67 (reaching retirement age), and a department head at 82.
  2. For someone entering the civil service at 35, they would become a clerk at 36, a deputy section chief at 48, a section chief at 63, and retire at 65.

III. Cross-Impact

Document No. 2 and Document No. 3:

Conclusion: For clerks in impoverished areas, the increase is approximately 200-300 yuan; for clerks in more affluent areas, the decrease is about 300-400 yuan. For civil servants at the department head level and above, the higher the rank, the greater the increase. The reform is clearly beneficial for national ministries and has little impact on local governments.

Document No. 2 and Document No. 4:

For civil servants below the county level, the original promotion path was typically one year of probation before becoming a clerk, and then two to three years as a clerk before being promoted to a deputy section chief (not legally stipulated).The transition from deputy section level to full section level takes two to three years (not stipulated by law), and then another two to three years to reach the deputy division level treatment. Generally, it takes about 10 years to complete the transition from clerk to deputy division level treatment. However, Document No. 4 directly restricts this transition to 12 years, which is a mandatory change to local regulations.

In units below the county level, more than 90% of civil servants (accounting for 70% of the total number of civil servants nationwide) can only reach the deputy section position or full section level treatment on their career advancement path. This reform claims to implement a parallel system of positions and levels below the county level, but in reality, it is not much different from the original local practices and is even more stringent. If a civil servant does not receive any promotion (below the county level, promotion to deputy section position is extremely difficult, and full section level seems like an impossible task), it would take 28 years to receive full section level treatment. Even if one joins the civil service at the age of 24, by that time they would already be 52 years old, making deputy division level treatment no longer possible.

As for deputy division level and full division level treatments, if one wishes to receive deputy division level treatment before the age of 65, they need to achieve full section position/treatment before the age of 50 (in districts and counties, this generally refers to positions like bureau chiefs, town mayors, or party secretaries). Achieving this task before the age of 50 is extremely rare in county-level politics. Alternatively, if one can attain a deputy section position around the age of 35 and then be rated as an outstanding civil servant for 20 consecutive years, they might also receive deputy division level treatment by the age of 65, but this is even more difficult. As for receiving full division level treatment before the age of 65, one would need to achieve deputy division position/treatment before the age of 50, which is almost unheard of at the county level, requiring an exceptionally strong background.

Combining Document No. 2 and Document No. 4, we can conclude that even if a civil servant works extremely hard and has excellent connections, achieving deputy division or full division level treatment before retirement at 65, what can they really do? At most, they might work in a leadership position for a few years, contribute a bit more to their pension, and after retirement, they will no longer enjoy the “deputy division level retirement treatment” or “full division level retirement treatment” under the dual-track system.

Cross-impact of Document No. 2, No. 3, and No. 4:

Below the county level, the higher the salary of a civil servant, the more their actual income decreases after this adjustment, but their retirement benefits will be slightly better. These three documents will actually discourage many civil servants from seeking promotions, unless local governments intentionally increase position subsidies in the future, which is unlikely in the short term because Document No. 3 has already restricted this aspect.

Other Aspects:

Pension is the most critical part of this series of reforms, with the current national pension gap being approximately 2 trillion yuan.

After this reform:

Individual contribution of 12% + employer contribution of 28% + basic salary of 600 yuan (equivalent to 15% of civil servant salary) = 55% of the total income of public employees.

This reform affects both civil servants and public institution employees, totaling nearly 40 million people (7 million civil servants + 30 million public institution employees).

After this adjustment, local governments will need to bear an additional 30,000 to 40,000 yuan per person annually, totaling over a trillion yuan.

In 2014, the total fiscal revenue of local governments was about 6 trillion yuan.

Additionally, there are nearly 3,000 counties and districts nationwide, with at least half having annual fiscal revenues of less than 500 million yuan. 80% or more of the fiscal revenue is used to pay the salaries of civil servants and public institution employees (in many central counties and cities, fiscal revenue accounts for only about 20% of public employee salaries, almost entirely relying on central fiscal transfers). This new 55% increase will place additional pressure on local finances.