China’s Ministry of Human Resources have clarified the new measures that will be implemented to ensure that expatriates and foreign workers in China participate in the social security system. From October 15th of this year all foreigners that work in China and their employers will need to contribute to five different social insurance policies:
- Basic pension
- Work-related injury
- Medical insurance
Under a mutual agreement on exemption, Koreans and Germans are exempt from the retirement pension.
Both employers and their employees will need to pay the insurance fees and the amount charged for the insurance premium will vary from region to region. In Beijing, for example, expats will pay approximately 10.2% of their pay in insurance premiums and their employer will be charged 32.8 percent. It is anticipated that the new laws could increase expatriate living costs by RMB5,000, approximately $780USD, per month.
Failing to make the necessary payments will not be taken lightly and any employers who do not register their foreign workers will be penalized by up to three times the social insurance fee due, up to a maximum of RMB3000.
Many people have criticized the new regulations, stating that the premiums will prevent the attraction of top talent into the region and will impact companies that recruit workers from their own countries. The Chinese government have defended the decision to introduce social security payments for expatriates, arguing that the new measures will allow foreign workers to gain access to vital services and assistance. However, many expatriates already have access to the majority of benefits as part of their employment contracts. Discussing the new insurance in an article published by The Telegraph, one expatriate commented: “Like many other expats, I already have more than adequate medical coverage from my employer, so for me it makes no sense to pay this tax. I’d rather keep the money than pay it to the government.”