What the social insurance reductions mean for labor management

June 21, 2016 | BY

Katherine Jo &clp articles

The ministry of human resources has cut companies' social insurance payment requirements, bringing both short- and long-term benefits to employers, employees and the overall economy

The Ministry of Human Resources and Social Security (MOHRSS), together with the Ministry of Finance, issued the Circular on Reducing Social Insurance Premium Rates in Stages (Circular) on April 14, 2016, in accordance with the PRC Social Insurance Law. The Circular proposes to reduce old-age and unemployment insurance premiums in stages, and to merge the maternity and basic medical insurance schemes. It is aimed at relieving enterprises' cost burdens in light of the economic slowdown.

While the Circular has left the housing fund insurance rate unchanged, the Ministry of Housing and Urban-rural Development is currently working with the National Development and Reform Commission, the Ministry of Finance and the People's Bank of China on the Circular on Regulating and Appropriately Reducing in Stages the Percentage of Contributions to Housing Reserve Funds. This addresses issues such as capping contributions to the housing reserve fund at 12%; reducing the percentage of contributions in stages and implementing the policy from May 1, 2016 for a provisional period of two years; and permitting enterprises that are experiencing production and operational challenges to also apply for deferring their housing fund contribution payments.

The social insurance Circular

Merged maternity and basic medical insurance

Each region will continue to implement policies and provisions to reduce the insurance premium rates for work-related injury by 0.25% and maternity by 0.5%. The actual consolidation of maternity and basic medical insurance is subject to the State Council's directions—the central government will soon put forth the implementing procedures for merging these two schemes.

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