Economy

Social security set to cover foreign workers

By Shan Juan, Li Jing and Peng Yining (China Daily)
Updated: 2011-06-29 14:47

Employer costs

For employers, the cost might be the top concern.

Some US companies think the new law may decrease their profits and increase their personnel management costs in China.

Shanghai-based law firm Haworth & Lexon estimated that a foreigner holding a work visa in Shanghai will pay up to 1,285 yuan a month to the central government under the law. The employer will need to pay up to 4,323 yuan to the social insurance program.

David Dai, senior manager of human resources at the Chinese offices of Jones Lang LaSalle, a global real estate management group, said, "We may change a series of HR policies, like a revision of commercial insurance for foreigners. Salary structure due to tax exemptions (up to 38 percent) may no longer be legal."

"Once the new regulation comes into practice, our cost will increase substantially," said a human resources manager who didn't want to be named at a Chinese company employing about 60 foreigners.

For the health insurance alone, "We have to spend 800,000 yuan more."

Two business newspapers reported that the European Union Chamber of Commerce in China has urged the Ministry of Human Resources and Social Security to make contributions for foreigners optional.

Workplace fallout

Some foreigners worry that the increased costs could result in a deteriorated working environment if employers try to dodge the increased expenses.

A foreign worker at an overseas-funded manufacturing services company in Shanghai, who didn't want to be named, said he's afraid his employer may want to lower his salary when the new policy takes effect.

He pays for his own commercial medical insurance in China. "I'd rather have control over how the money is spent myself."

The Filipino who works in Xiamen also is concerned. "If the new program increases expenses too much, I'm afraid that some companies will likely to reduce the number of full-time legal foreign employees, so you may see an increase in a labor black market, employing foreigners illegally."

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She said she and many foreigners come to China to experience the country. "What I do is to travel for a period of time, then work to make some money, and then hit the road again. And of course I won't stay in the country for too long, so I don't really need the social insurance.

"I think China should be really careful when making the rules and policies for the social insurance program, which should be more focused on its citizens," she said.

Yang Yansui, a public policy and management professor at Beijing-based Tsinghua University, said an agreement on social insurance between China and a foreign country is a prerequisite for including expats in China's social insurance programs.

The agreement should include detailed arrangements for the contribution of social insurance and how the benefits will be transferred between two countries, she said. "Without such arrangement, it is unreasonable to force foreigners to join China's social insurance program."

Bai Liangze at the Chinese Academy of Personnel Science countered that the new social insurance program gives equal treatment to foreigners working in the country and follows international practices.