In China, there are basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance, maternity insurance and other social insurance systems established for employees in order to maintain their right to receive material assistance from the state and society in the case of seniority, illness, work-related injury, unemployment, maternity or other circumstances.
According to Chinese law, the social insurance premium is contributed by the employer and the employee at certain percentage of the employees’ aggregate wages and the personal wages respectively. The contribution rate of the social insurance premium borne by the employer and employee is not uniformed but varies from one place to another and may be changed or updated by local governmental authority.
Although the social insurance system may bring lots of advantages and benefits to citizens, some Chinese employees are reluctant to contribute as they bear high percentage of social insurance obligations according to Chinese laws and regulations. Once, the compensation rates of the social insurance premium paid by an employee for a month could amount to more than 28% of the monthly salary in some areas of China. In consideration of preventing the occurrence of social conflicts, the Chinese government plans in their 13rd Five-Year-Plan to gradually and adequately reduce social insurance contribution rates, and relevant changes are already implemented or will be implemented in the near future.
Below is the reference sheet indicating the current contribution rates of social insurance premium provided in the most famous cities in China:
|
City |
Pension
|
Medical
|
Unemployment
|
Maternity
|
Work-related injury (%) |
|||||
|
Employer |
Employee |
Employer |
Employee |
Employer |
Employee |
Employer |
Employee |
Employer |
Employee |
|
|
Beijing |
19 | 8 | 10 | 2 | 0.8 | 0.2 | 0.8 | N/A | 0.2-0.5 | N/A |
|
Shanghai |
20 | 8 | 9.5 | 2 | 0.5 | 0.5 | 1 | N/A | 0.2-1.9 | N/A |
|
Guangzhou |
12 | 8 | 8 | 2 | 1.5 | 0.5 | 0.85 | N/A | 0.5 | N/A |
|
Tianjin |
19 | 8 | 11 | 2 | 1 | 0.5 | 0.5 | N/A | 0.5-2 | N/A |
|
Xi’an |
20 | 8 | 7 | 2 | 2 | 1 | 0.5 | N/A | 0.5 | N/A |
|
Chengdu |
19 | 8 | 6.5 | 2 | 0.6 | 0.4 | 0.5 | N/A | 0.4 | N/A |
|
Hangzhou |
14 | 8 | 11.5 | 2 | 1 | 0.5 | 1 | N/A | 0.3-1 | N/A |
|
Nanjing |
20 | 8 | 9 | 2 | 1 | 0.5 | 0.5 | N/A | 0.2-1.9 | N/A |
According to the new policies published and enforced by the State Council, the Ministry of Human Resources and Social Security together with the Ministry of Finance, since 2015, it has been required to reduce the average payment rate for work-related injury insurance by 0.25% and to reduce the maternity insurance payment rate by 0.5%.
Besides, as of May 1, 2016, the places where the required contribution rate for employers to the basic pension insurance of employees is more than 20%, such required rate shall be reduced to 20%; in places where such required rate is 20% and the cumulative balance of the basic pension insurance fund for employees by the end of 2015 is sufficient to pay for more than nine months of such contributions, the required employer rate may be periodically reduced to 19%. In a meanwhile, the overall unemployment insurance payment rate may be reduced periodically by 1-1.5% on the basis of the one-percentage-point reduction had been made in 2015, and the individual contribution rate shall not exceed 0.5%.
The period for the implementation of such reduced rates shall be set temporarily as two years, and the detailed implementation plan for each place will be determined by local authorities. Due to these reductions, during the 13rd Five-Year-Plan period, the costs of enterprises and employees on social insurance premiums will be reduced to some extent.