Firms set to save US$2.1b in costs
Print Edition
COMPANIES in Shanghai may save 13.5 billion yuan (US$2.1 billion) in operational costs this year after being allowed to pay less to a social security fund for their employees.
Shanghai has decided to cut the proportion that companies pay to the social security fund by 2.5 percentage points to ease their operational costs as part of supply-side reforms, the city government said yesterday.
Companies need to pay the equivalent of 20 percent of their employees’ income to a pension fund account, down from 21 percent, and 10 percent to a medicare fund, down from 11 percent. The rate of payment to the unemployment fund was reduced to 1 percent from 1.5 percent.
The policy became effective from the start of this year. Companies will be refunded for the difference between the old and new rates during the period from January 1 to yesterday.
“The move responds to the call of supply-side reforms,” said Vice Mayor Shi Guanghui.
The lower rates should help firms manage better their cash flow, he said, although the proportion that employees have to pay for the fund does not change.
Shi assured that thanks to a sufficient surplus in the social security fund, the new policy will not affect employees when claim their social security benefits.
Shanghai’s social security fund posted a surplus of more than 40 billion yuan in 2015 and an accumulated surplus of 300 billion yuan.
“There is no problem for the fund to make ends meet at the moment, and the government will make fast adjustment if there are any possible risks,” Shi said.
Shanghai pledges to be a pioneer in China’s supply-side reforms, which are expected to generate sustainable and quality growth through the lowering of barriers to production.
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