Kadamba
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Chinas new pension rules hit foreign firms in the wallet
Doing business in China is about to get more difficult for foreign companies.
Earlier this month the Chinese government quietly passed new regulations requiring all foreign employees and their employers to pay into its national social security benefits program.
Government officials say theyre only requiring the same as what any other government requires of foreign guests in their respective country. But with employers required to contribute up to 37 per cent of each employees salary, foreign chambers of commerce are warning it will be a significant expense for small companies already struggling to establish themselves.
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In addition to the employer contribution, foreign employees will be required to pay about 11 per cent of their income, on top of regular income taxes. Though numbers are still unclear, reports have suggested employee contributions in some cities will be capped at around 1,200 yuan, or about $187.50, per month, while the employer share will be a maximum of 4,300 yuan, or $672, per month.
For that, at least in theory, employees are offered a share in Chinas pension plan, unemployment and disability insurance, maternity benefits and health care.
But in reality, an unemployed foreigner loses his or her work permit and thus is required to leave immediately, and its unclear how any foreigner would be permitted to stay legally in retirement. Maternity benefits are generally granted only to city residents with a permanent hukou, or residence permit -- which foreigners cannot obtain. And while foreigners would be entitled to the same health care as Chinese nationals, those who can afford it usually obtain private insurance to get around long queues and care that is generally well below Western standards.
AmCham-China is concerned that foreign employees may have no practical means to collect the benefits outlined, due to the restrictions on residency and a number of other reasons, reads an official statement by the American Chamber of Commerce in China. In addition, the measure would create substantial new financial obligations that could in some cases threaten the competitive standing of our member companies.
For the foreigner to enjoy social insurance in this country meets common practice around the world as well as in their countries, said Xu Yanjun, deputy director general of the national social security management centre at the Ministry of Social Services, who fielded questions for nearly two hours from foreign journalists -- also subject to the regulation -- at a briefing in Beijing on Friday. He acknowledged some disconnect between the regulation as written and how it can be implemented but said government agencies would work to rectify discrepancies. There is a bit of a gap in terms of implementation and we cannot at the moment address all questions once and for all, he said. I hope you can trust that the Chinese government is a responsible government.
There has been public speculation that the move is in part motivated by China trying to shore up its national benefits program in the face of an aging population -- a suggestion dismissed by Mr. Xu.
China’s new pension rules hit foreign firms in the wallet - The Globe and Mail
Looks like nice employee friendly move by the Government by putting breaks on companies who want to run their businesses like sweat shops. Can any Chinese member shed more light ?
Doing business in China is about to get more difficult for foreign companies.
Earlier this month the Chinese government quietly passed new regulations requiring all foreign employees and their employers to pay into its national social security benefits program.
Government officials say theyre only requiring the same as what any other government requires of foreign guests in their respective country. But with employers required to contribute up to 37 per cent of each employees salary, foreign chambers of commerce are warning it will be a significant expense for small companies already struggling to establish themselves.
---------------------------------------------
In addition to the employer contribution, foreign employees will be required to pay about 11 per cent of their income, on top of regular income taxes. Though numbers are still unclear, reports have suggested employee contributions in some cities will be capped at around 1,200 yuan, or about $187.50, per month, while the employer share will be a maximum of 4,300 yuan, or $672, per month.
For that, at least in theory, employees are offered a share in Chinas pension plan, unemployment and disability insurance, maternity benefits and health care.
But in reality, an unemployed foreigner loses his or her work permit and thus is required to leave immediately, and its unclear how any foreigner would be permitted to stay legally in retirement. Maternity benefits are generally granted only to city residents with a permanent hukou, or residence permit -- which foreigners cannot obtain. And while foreigners would be entitled to the same health care as Chinese nationals, those who can afford it usually obtain private insurance to get around long queues and care that is generally well below Western standards.
AmCham-China is concerned that foreign employees may have no practical means to collect the benefits outlined, due to the restrictions on residency and a number of other reasons, reads an official statement by the American Chamber of Commerce in China. In addition, the measure would create substantial new financial obligations that could in some cases threaten the competitive standing of our member companies.
For the foreigner to enjoy social insurance in this country meets common practice around the world as well as in their countries, said Xu Yanjun, deputy director general of the national social security management centre at the Ministry of Social Services, who fielded questions for nearly two hours from foreign journalists -- also subject to the regulation -- at a briefing in Beijing on Friday. He acknowledged some disconnect between the regulation as written and how it can be implemented but said government agencies would work to rectify discrepancies. There is a bit of a gap in terms of implementation and we cannot at the moment address all questions once and for all, he said. I hope you can trust that the Chinese government is a responsible government.
There has been public speculation that the move is in part motivated by China trying to shore up its national benefits program in the face of an aging population -- a suggestion dismissed by Mr. Xu.
China’s new pension rules hit foreign firms in the wallet - The Globe and Mail
Looks like nice employee friendly move by the Government by putting breaks on companies who want to run their businesses like sweat shops. Can any Chinese member shed more light ?