Company Social Insurance Burden Reduced in Many Cities of China

In order to reduce the operation cost of companies, many local governments issued new regulations to reduce social insurance payment ratio since beginning of 2016.

Shanghai government announced that the payment ratios of pension insurance and health insurance borne by the company are reduced by 1%, the payment ratios of unemployment insurance borne by the company is reduced by 0.5% since 1 January 2016. Guozhou government announced that the payment ratios of unemployment insurance borne by the company is reduced by 0.7% since 1 March 2016. During the second half year of 2016, the health insurance borne by the company will be gradually reduced by 5.5%. Besides the companies from Tianjin, Yunnan, Gansu and Fujian governments may also enjoy the lower social insurance burden in different degrees.

On 14 April 2016, Ministry of Human Resources and Social Security and Ministry of Finance jointly issue a circular <Ren She Bu Fa [2016] No.36> to reduce the Social Insurance Payment Rates. As of May 1, 2016, all provinces and cities shall reduce the local social insurance payment ratio.
 

Social Insurance
 
Reducing standards
 
Basic pension insurance
  • required employer contribution rate shall be reduced to 20%, if previous rate is above 20%;

  •  required employer contribution rate shall be reduced to 19%, if previous rate is 20% and the cumulative balance of the basic pension insurance fund for enterprise employees by the end of 2015 is sufficient to pay for more than nine months of such contributions;

  •  the reduced rates shall be implement temporarily for two years.

Unemployment insurance 
  • individual contribution rate shall not exceed 0.5%

  • overall unemployment insurance payment rate may be reduced periodically by 1-1.5% on the basis of the one-percentage-point reduction in 2015 

  •  the reduced rates shall be implement temporarily for two years.

work-related injury insurance & maternity insurance payment
  • continue to implement the decisions of the State Council on the reduction of the average payment rate for work-related injury insurance by 0.25% and the reduction of the maternity insurance payment rate by 0.5