Ministries reduce insurance, housing fund costs for employers

The central government has recently taken several measures to reduce social insurance and housing fund contribution costs for employers.

On 4 April 2016, the Ministry of Human Resources and Social Security and the Ministry of Finance jointly issued a notice on reducing the contribution rates for social insurance (which is inclusive of five types of insurance schemes, i.e., pension, medical, unemployment, work injury and maternity insurance).

According to the notice, within two years from 1 May 2016, the employer portion of the pension contributions should be reduced to 19-20%, while the total unemployment insurance rates for employer and employee (which were reduced from 3% to 2% in 2015), will be further reduced to 1-1.5%, with the employee contribution rate being capped at 0.5%. In addition, local authorities will continue to implement a 2015 national notice on reducing work injury insurance by 0.25% and maternity insurance by 0.5%.

Business Law Digest is compiled with the assistance of Baker & McKenzie. Readers should not act on this information without seeking professional legal advice. You can contact Baker & McKenzie by e-mailing Danian Zhang (Shanghai) at: danian.zhang@bakermckenzie.com