Written in China for China Professionals by China Professionals

Employment Overheads in China’s Social Security System

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China Briefing is a monthly magazine and daily news service about doing business in China. We cover topics relating to the Chinese economy, the market in China, foreign direct investment and Chinese law and tax. It is written in-house by the foreign investment professionals at Dezan Shira & Associates

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China’s Social Security System
The social security system in China is based upon guidelines issued by the central government, although the specifics and administration of the system is managed at the local level. This is the only practical method in a country as diverse as China, as any rigid system defining specific contributions to be made and benefits receivable could not be expected to meet the needs of citizens in cities as diverse as Lhasa, Harbin, Shanghai or Zhongshan for instance.
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Setup and Payment of Mandatory Benefits
Each company incorporated in China and employing Chinese staff should setup an account at the social insurance bureau and the housing fund bureau through which it can make the contributions necessary on behalf of its employees. To set up these accounts, various documents should be stamped and submitted to the bureaus for their records. Subsequently the accounts need to be maintained, adding new employees and removing terminated employees.
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The Changing Role of Human Resource Management
As human resource management in China becomes more sophisticated and the various government bureaus administering mandatory benefit contributions enter the "online" era the traditional role of the "HR agent" has changed radically. Whereas many companies used to outsource virtually all aspects of their HR administration to a local company, the growing trend now is to request different services from different specialist providers.
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Minimum Wages in China
A lot of attention has been focused on the level of wages in China recently, particularly since the extensive media coverage relating to the spate of suicides at Foxconn, the Taiwanese manufacturer with over 300,000 employees in Guangdong Province. One of the consequences has been increased domestic pressure on the government to look at the issue of distribution of income within Chinese society.
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