On 18 February 2020, the executive meeting of the State Council was held in Beijing. The meeting decided to take additional measures to stabilize the economy and labor market by provisionally reducing a company’s contributions for social insurance and defer payments for the housing provident fund etc.
The meeting stressed that, at present, one urgent task is to stabilize the labor market as a stable labor market results in stable businesses. The meeting determined to:
1. Periodically reduce or exempt companies from contributions for pensions, unemployment and work-related injuries, in order to reduce the impact of the epidemic on companies, especially SME’s, and allow them some respite following the resumption of their operations. In provinces other than Hubei, SME’s can be exempted from the above mentioned three contributions from February to June this year, and large companies can be levied in half from February to April. All companies in Hubei Province will be eligible for a waiver of contributions from February to June this year.
2. At the same time, before the end of June, companies may also apply to defer their payments to the housing provident fund. Failure by employees to repay their housing provident fund loans due to the epidemic will not be treated as a default.
In addition, according to the State Council’s press conference on joint defense and control mechanism on 19 February 2020, the Ministry of Human Resource & Social Insurance and the Ministry of Finance together introduced new measures to increase the support for SME’s. In the event that the redundancy rate of SME’s is not higher than the previous year’s control target of the unemployment rate benchmarked to the national urban survey, which is 5.5%, or lay-offs are not more than 20% for companies with less than 30 employees, such companies may claim refund of social insurance contributions as stabilization support ( Please check our previous post: Stabilizing labor relations in challenging times) .This would amount to 50% of the yearly unemployment insurance contributions such companies made in 2019.
Useful link:
Ministry of Human Resources and Social Security of the People’s Republic of China
