Adapt to new law by selecting suitable social insurance for all workers
November 09, 2010 | BY
Janice QuSocial Insurance Law consolidates provisions in various social insurance-related regulations
China's top legislature, the Standing Committee of the National People's congress, promulgated its PRC Social Insurance Law (社会保险法) on October 28. The new law will entitle foreign nationals working in China to the same benefits as Chinese citizens. Foreign investors will assume the same social insurance responsibilities as local Chinese enterprises.
The new law will come into effect on July 1 2011. It is the first time the government has legislated a social insurance system on a national level, and it has put foreign-invested companies, state-owned and private local enterprises all on the same playing field.
George Lu, the managing partner of Shanghai HR&L Law Firm advised: “To adapt to the new law, foreign investors should make a more economical expenditure on social insurance, such as selecting the insurance that could attract talents. This could help to control the insurance cost while getting the best insurance outcome.”
Lu also noted the importance of maintaining fair treatment among employees. “Due to varied social insurance systems, companies would have different internal management structures,” he said. “It is time to streamline them in order to ensure all the employees could enjoy a fair treatment.”
The Social Insurance Law has prescribed more social insurance responsibilities on the part of the government. This demonstrates that the insurance system has received sound support and is to be regarded as good news to foreign-invested companies.
In an example of how the new law will be beneficial for foreign investors, Article 5 stipulates that governments above the county level should offer “necessary monetary support” to social insurance development.
“Although the level of social insurance depends on the regional economic development, this would become one of the key factors that attracts foreign investment in the future,” said Lu.
Additionally, Article 95 brings migrant workers from rural areas into the social insurance system. This will be helpful to improve the balance of use of labour resources among employers. Lu said: “Foreign investors will be able to obtain high quality labour forces from broader regions.”
Commentators noted that given the complex nature of China's social situation, there is still ample room left by the legislation for further reform. More specific and regional regulations are likely to be issued in the future, and companies and employers will need to keep an eye on developments.
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