In June of 2011, the draft of the "Provisional Measures for Foreigners Working in China regarding Participation in the Social Insurance Scheme" was publicly released, stating that starting from July 1st, foreigners would have to pay into the Chinese social security system, and consequently sparked worries about what that exactly meant and whether or not we could opt out of it. Just a few months later, on September 6th, 2011, despite our hopes that it would simply disappear, the China’s Ministry of Human Resources and Social Security issued the "Final Provisional Measures" which will take effect starting on October 15th, 2011. While the "Final Provisional Measures" cleared up a few of the initial ambiguities about how exactly foreigners would pay into China’s social insurance system, many foreigners are still very sceptical about the actual benefits they can derive from contributing, and since this final draft still leaves many questions unanswered, it does little to quell anyone’s resentment. Given the complexity of the situation, and though it remains to be seen how this policy will take shape or form, it is important that foreigners working in China understand the "who, what, when, why etc." of what is about to happen.
, 3lian
What is it?
The "Provisional Measures for Foreigners Working in China regarding Participation in the Social Insurance Scheme", "Social Insurance Law", or simply "The Law" for short, mandates that all people employed in China have the same right to enjoy China’s social insurance system, which consists of five types of insurance:
1) Basic pension
2) Basic medical
3) Unemployment
4) Maternity
5) Work-related injury
Who does it affect?
Chances are, if you are reading this article and are not a full-time student (or working illegally), this policy will affect you. According to "The Law", all foreigners employed by either Chinese or overseas-funded businesses, foundations, organisations, social groups etc., who have worked in China for longer than six months must participate in the social insurance system, i.e., pretty much all foreigners working in China (in the current version of "The Law", it remains unclear whether or not this includes Hong Kong, Macau and Taiwan residents who work in mainland China). Those hoping for some sort of "opt-out" option are also out of luck, as is stated numerous times through the various legislation and press releases… this is mandatory. Having an international insurance will not get you a ticket to bypass "The Law". The only chance you have at opting-out is if you are a foreign employee from one of the nations which has entered into a social insurance treaty with China, which is currently a very short list: Germany and South Korea. Even then, only under certain circumstances will you be given permission to opt-out.
When does it start?
When the first draft of "The Law" was released in June, it stated that starting July 1st, foreigners would begin paying into the social insurance system. After a few months of official silence on the matter, it was announced on September 6th that the "The Law would be taking effect starting October 15th." Also currently unclear is whether or not foreigners will owe back-pay for July, August and September.
How much is this going to cost?
Monthly social insurance fees will be paid by both the foreign employee and by the employer in accordance with the regulations set by "The Law". The fee will vary depending on the average salary in the city where you work. As such, expect to pay more if you live in one of the Tier 1 cities. For example, foreigners living in Beijing, Shanghai and Guangzhou must all pay about 11 percent of the first 12,000 RMB of their monthly salaries. Oddly, earnings above that amount are not taxed, which means that any foreigner living in Beijing, regardless of whether they pull in 10,000 RMB per month or 100,000 RMB per month, are all going to pay about 200 USD for social insurance (low-level teachers are no doubt pretty annoyed with this). In addition to this, employers are required to contribute even more to the social insurance system – double or triple the amount (up to three times the average salary in the city):
Beijing = about 32 percent of the foreigner’s monthly salary
Shanghai = 37 percent of the foreigner’s monthly salary
Guangzhou = about 24 percent of the foreigner’s monthly salary
Why?
And now for the big question that is on every foreigner’s mind: Why? The official line is that this policy will help foreign workers enjoy the same social security benefits in China as Chinese nationals do! While for many foreigners who already had insurance, this seems unnecessary, but this is exciting news for foreigners employed in China who currently have no insurance policy. But what about the rest of us? Expat criticisms to this plan have ranged from rationally upset: this plan punishes teachers and other "low wage" foreign employees in China while turning a blind eye to the millionaire businessmen and consultants; to overtly derogatory: the government is tired of foreigners working in China stealing all of the good jobs and earning a king’s ransom.
Although it is unlikely to be reported as such by the Chinese media, many people believe that the underlying intention of the new policy is to use this influx of cash to alleviate some of the pressure on China’s social safety net that is likely to occur in the near future as more and more Chinese reach the age of retirement. The numbers behind "The Law" seem to support this notion: according to one estimate, the new regulations mandating foreigners contribute to the social insurance system are expected to raise as much as 1.5 billion USD a year. As a foreigner working in China, I am obviously not thrilled about this idea…but I’ll be damned if that isn’t a brilliantly masterminded scheme!
Other Problems
So let's hypothetically say that the goal of this policy was not to use foreigners' money to pay for China’s soon-to-be massive wave of retirees… does the social insurance system actually benefit foreigners? Experts who have already studied "The Law" in depth seem pretty concerned about its ambiguities, vagueness and inability to provide details: the specifics of how to actually reclaim a pension after leaving the country, if it is 100 percent reclaimable, whether or not it is taxed and other questions remain unclear; how and where foreigners can use their medical insurance in China, i.e. in the international sections of Chinese hospitals or in international clinics, is also unknown; how foreigners can take advantage of the unemployment insurance, if as is often the case, visas do not allow them to live in China long-term without employment etc. The overarching concern however is what "The Law" will do to the job market prospects for foreigners in China. Besides the irritation that every foreigner employee in China just took a mandatory pay-cut of about 1,000 RMB per month, will employers still be willing to hire foreigners if they have to pay an additional social insurance contribution fee of 3,000-4,000 RMB a month? Time will tell.
Related links
Are Foreigners in China Overpaid?
2010 Expatriate Income Tax Planning in China
How To: Avoid Employment Scams in China
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Keywords: Foreign employee mandatory social insurance China foreign employee in China social insurance China “The Law” China foreigners insurance for foreigners in China
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Did all this go through? I have not heard a peep from MY Company. I STILL get my full salary
Oct 28, 2012 07:17 Report Abuse
The news say it is to be implemented gradually and start with Beijing first. It has also said some countries like Germany and Russia have already negitiated with China to get their citizens to be exempted from this insurance policy and US and several other countries are negotiating with China for the same.
Oct 29, 2011 12:44 Report Abuse
its fair enough to contribute somthing But on the very low salary say from a university in china it is haardly worth the time and trouble to come to china and teach Will the shools pay more to cover the short fall NO they will employ chinese /teachers or those willing to put up with low wages sorry well thought out but i dont think you have thought of this aspect that many will decide sorry i am not working for so little the loss of say 1000 rmb on a 4000 amonth salary come on , IT IS NOT GOING TO HAPPEN. i FOR 1 WILL CALL IT A DAY AFTER 3 HAPPY YEARS i dont mind in the least contributing say 250 a month but thats it on a 4500 salary plus house allowance
Oct 18, 2011 01:04 Report Abuse
All people who believe that this new is actually a great thing will be shocked when it starts being implemented on them. In Shanghai, this means that we will have to pay 11% and our employers 37% of our salaries which means 48% in total, which is much higher that Chinese are paying (I just saw a tax payment receipt for two of my Chinese colleagues - 2240 yuan for borh (1120 yuan per person) and their salaries are around 8000 yuan.
The law does not state what actual benefits we will have from paying such high taxes. We will not be able to collect our pension (they made sure of that since they know that no one is going to be here for 15 years - and even if that happens, they will come up with a new law that says that you need to be here for 20 or 25 years in order to be able to collect your pension) and since health check is mandatory for all work visa applicants (if you're not in good health, you can't get a visa), I would say that this law is just a hefty fine for being here. If someone in the government believes that foreigners love China so much that they would happily allow to have their salaries cut to 50%, I can only one thing: they are delusional.
I predict that the outcome of this law will be:
1. Big number of foreigners will start leaving
2. Others will transfer to business and tourist visas and work illegally
3. Not only that the government will not a get a significant revenue from this, but they'll also have income tax revenue in a free fall.
As for people offending Americans and other foriegners, this only shows that you discriminate against them, which is not fair since many people from the US do their jobs really well here. If there is a bonehead from the US working here, that does not mean there are no competent Americans here. Xenophobia in China is getting worse, but really strucks me is that so many Chinese want to immigrate (and often succed) to Australia, New Zealand, the US, Canada... So we are not good for them (I can see that from many comments here), but our money is?
Living in China until a few years ago was great, but it's becoming so stressful that I'm afraid that it's going to seriously harm my health. But, even if something goes wrong in that aspect, I doubt my medical expenses would be covered under this law.
Oct 14, 2011 19:34 Report Abuse
I don't know if the school where I'm working is going to pay those 37%. They still seem confused and I think they'll try to ignore it for a while, but I have a feeling that the outcome will not be good. What troubles me is that I have been here for five years, I have a girlfriend, friends and whole life here. This is literally wrecking my life and I'm sure that will be the case with many people here.
We have to see how this will look like, but I have to admit that I'm still in shock.
Oct 14, 2011 21:55 Report Abuse
Teachers... it not the money you pay to the government that you should worry much about..but more that the employer is paying to the government.. teachers pay 11% the employer pays the other 26%... how long do you think the employer will be able to afford foreign teachers? Someone has to pay for these higher costs.. the schools? chinese parents? I see a snowball sitting on top of a hill and starting to roll.
Oct 13, 2011 16:14 Report Abuse
Yes, everyone pays taxes in their respective countries when working and living there; that's not the issue. It's the amount they want and the fact that we won't actually get to claim it if at all until after 15 years. When I lived and worked in the U.S. for many years there were different levels for single, maried and those having dependents. Why is it one lump some accross the board here? Being single in the US I was taxed 15% a month and then given back 10% of the total after 1 year, every year. My health insurance through my job was another 6% and my 401k I gave 5% to which was optional. I don't understand why they don't make the non retirement aspect of it optional here at least if you can prove you have coverage back in your home country. It's unfair and unacceptable.
Oct 13, 2011 01:39 Report Abuse
Does anybody know how much somebody who's having 6000 Yuan as salary in Shanghai will pay every month after the new law enter in function ?
Oct 12, 2011 01:22 Report Abuse
11% of 6k would be 660rmb, which means you'd take home 5340 and your employer would be forced to pay 37% of the 6k, which would be 2210rmb. And the employer suposedly must pay the 11% on your behalf. So someone making 6k would be forced by the government for their employer to pay a total of 2870 more a month to keep you on which is insanity because most universities and public school that employ teachers with a "Z" visa legally already can't pay as much as private language centers that mostly hire illegally and have employees on 'L' and 'F' visas. So I'm not sure if anyone knows what will happen but at this moment it looks as though either Universities and International Schools will be forced to allocate more money for their foreign born teachers or hire them illegally like many private schools. A 48% tax out of nowhere just seems insane to me and I can't believe more people aren't discussing it yet. Perhaps because many still don't know. It's like knowing a asteroid is imminent and there's nothing that can be done about it. This should be optional. If someone were sick enough that they would actually require this much health and social security they would be forced out of the country anyway to take care of it or stay and pay whatever they had to because chances are it would be 10 times cheaper here than back in their home country anyway. Why not make it mandatory unless you can prove you have health insurance back in your native country? It's totally unfair to anyone making less than 15k a month. The only people that don't seem to have a problem with it are the rich and old. It seems they relish on hating on the young "whippersnappers" Maybe they think it will give them more status or the special status they had before the influx of the 20 something crowd came. Or maybe they've never had to scrape and claw for anything in life because their degrees were paid for by their rich Mommies, Daddies and grand-daddies and are unwilling to feel sympathetic to those that have come here and earn much less than them. I have worked along side "teachers" that were more concearned with partying and dating and didn't appreciate the opportunity they'd been given and wished they'd go away, but this isn't the solution. What about all the ones that come here and do appreciate the opportunity and do take their job seriously and are willing to make less money than some office job because they genuinely enjoy their job and the satisfaction of knowing they did their best. This is so unfair to them, to me.
Oct 12, 2011 03:40 Report Abuse
I don't know what will happen for teachers in China. They are already under paid now and now they are going to hit them up for money that they can't really afford. Unemployment benefits that they can never collect because the moment a foreign is unemployed, the visa is cancelled. Retirement plan that we won't get and sub-standard medical care by doctors than don't even know how to take a blood pressure properly.
Maybe the real plan is to encourage foreign English teachers to move to other countries instead and leave China or to encourage Chinese School to break the laws and employ foreigners illegally.
I do know one thing, in order to educate Chinese children, parents will be forced to pay much much more to offset theses social benefits that the foreigner will never collect.
Oct 11, 2011 00:28 Report Abuse
For a start this is not Mandatory at all, get your facts straight. When i heard about this i presented it to my employers, which is a top 3 Chinese enterprise, they contacted the department in question, and were informed that it is optional.
Oct 10, 2011 19:03 Report Abuse
Will foreigners with the chinese green card be affected by this?
Oct 10, 2011 07:55 Report Abuse
You could say the 'bad' teachers are being weeded out, but I think you are ignoring the fact that China is short about 300,000 native English speakers throughout all of China. Let us not forget how many people are in China. Granted that may be less the case in the larger cities (maybe), it is still definitely true. I'd be happier if the real effect of this law was to get more foreigners to go to smaller cities because they might be able to save more after taking into account the cost of living in the larger cities. However, the real effect will likely just be making China a less appealing place for foreigners to work and having more schools be less willing to give foreigners a legal working visa (taking away the peace of mind that many expats would like to have while working here). I like to follow the laws of different countries I work in, but if laws like this are passed it will make it harder for me to do so because it will become harder to find teaching jobs at the pay I'm looking for that also offer the legal working status.
In regards to the criticism about any random college degree not really being a legitimate teaching credential: I agree that this holds quite a bit of validity, but I am still quite convinced that the shortage of English teachers in China is the bottom line. Having a college degree, regardless of what the degree is in, at least shows that the person had the discipline to further their education and get one. Correct me if I'm wrong on this, but isn't the main thing that foreigners teach in China oral English? I think 22 years of being alive and speaking English in a country with English as a first language is a pretty good start at being qualified to teach oral English. Correct me on this one too if I'm wrong, but don't most of the schools that hire teachers with no teaching experience also make those teachers use a set curriculum? Granted this still won't leave the Chinese students with the ideal English learning experience, but you can't pull of the ideal with such a shortage of native English teachers coming to China to teach.
Also, the average college graduate from the US is in about $20,000 of debt upon graduation (in my case it is unfortunately almost double that). So we do actually need to make significantly more money if we want to consider China an option. Every bit of that paycheck makes a difference. At $20,000 of college debt, the minimum payment per month would be around $300 or more. There goes almost 2000RMB. Adding another 10% that wasn't there before could be a real difference in affordability for a lot of college graduates who are needed, if not but strictly due to the 300,000 shortage in native English teachers in China.
Directed at the people saying some Chinese people have achieved a level of excellent English: That doesn't mean those Chinese people want to be English teachers. It is probably about the least lucrative position they could choose for their excellent English. Almost all Chinese people want to make as much money as they can with the skillsets as they can. This is hardly different from other countries. I don't expect most of the Chinese people who have achieved an excellent level of English to take up a job in one of the lowest paying jobs that requires a decent amount of education to be genuinely qualified for. Do you?
Hopefully my little rant has been both fair and rather accurate. I encourage debate on what I bring up, as I am only beginning to be familiar with the issues at hand.
Best,
Fruit is good -_-
Oct 10, 2011 10:20 Report Abuse
Uh, Traveler, I don't think a licensed, native English speaker necessarily makes you an English teacher IN CHINA either. There are several types of English teaching positions in China. There are those that are for specific and/or technical language. There are those who teach grammar at International schools and usually make more than any other teacher in China. There are those who legitimately do a good job, but are hired for their "white face" and serve as an advertisement more than an actual teacher. Then, there are the losers. who are either too drunk to get another job, or enjoy beating or molesting the children. My point is that there are many types of "teachers" in China. Most of them are here because of the "face" or reputation that it brings to the school. The secondary function for these teachers is to teach English. I am convinced that you can be absolutely retarded and still teach English in China. It's not rocket science, and the students aren't tested on the material most of the time. It is more just a Bullsh*t gig to give the school some clout. The criteria to judge who is a teacher and who is not, is lower than the standards you put forth. You sound like a first year teacher who is pissed because he finally realizes that the effort that he has been putting into building creative lesson plans is worthless, either because the students are so naughty that you can't teach the material anyway or because you see the scum that comes to China to teach. Either way, I feel your discouragement. I taught for several years before I made the right connections to find other, more rewarding work in China. My advice to you would be the same. What did you do back home? Even the smallest thing you have experience with will be decades ahead of what a Chinese college grad with the same degree knows how to do, so really explore everything you have experience with and you will be surprised at how easy it is to find and succeed at a job that is not teaching. In my opinion, I think that a Westerner who has a legitimate Bachelor's degree from a Western Institution, has the same, if not better, qualifications as most Ph. D's issued in China. If you disagree, then ask all of the engineers who work here for two years, ask any foreigner working in management. You automatically come into any company with the title of Expert. Because your education IS that much more superior than the Chinese system can offer. Try it! Seriously. You'll be shocked at how little the Chinese actually know. I introduced the concept of "timesheets" to my company and they were frozen with amazement at such a profound and useful tool to log hours. Warning: they are better at long division.
Oct 11, 2011 07:45 Report Abuse
foreigners will not benefit at all for the social benefits package. First of all, we will not be allowed to stay in China once we reach retirement age. There are work visas, visiting visas, business visas and student visas but no retirement visas. Once we stop working, we must leave. In addition, the retirement monthly pay is 1800yuan a month and in 15 years and even today, thats nothing. Second, medical benefits, for every month the foreigner pays into the social benefit system, we get 30yuan, after one year of paying we are allowed to go to the hospital but will only have 360yuan the government will pay. This amount won't even pay for an x-ray.
Most foreigners are already paying income tax at a minimum of 25% and some are paying as high as 45% however, most foreigners don't know until they get back to their own countries, they have to pay taxes their too, for money that they already paid taxes for in China. In Canada, taxes are around 35%.
Before you ask, I am an employer in China of foreign teachers and Canadian, I know more than the artical tells and this new social benefit system might destroy the foreign teacher industry. Teachers aren't like these high paid foreigner who come to China making 80,000-100,000yuan a month, we are poor and make barely enough to live and afford to visit our families back in our own country every one or two years. Summer 2011, my wife and I went to Canada to visit my family, for the first time in 10 years, it cost for the cheapest flight 25,000yuan.
Oct 13, 2011 15:54 Report Abuse
I guess all the English teachers n China will be form Germany now; way to go PRC : / I already know one that teaches n a Unversity here in Shanghai; I guess she's set. All us native speakers will be working illegally on business visas now. What are they thinking?!? No school, public or private, is going to be willing to pay an extra 4 to 5000 RMB a month to employ them. Even the most successful private language centers are mostly owned by penny pinching bosses who are always looking for ways to save a buck. I honestly can't see that this is going to work, unless by "work" the governments intent is to have all of it's English classes, public and private taught by Chinglish speaking Chinese natives. No offence but I don't think that's the way to go. Whatever taxes are being paid as of now by all companies that employ foreigners will be lost because the ones willing to stay will all switch to business visas and work illegally. It seems they're shooting themselves in the foot here. How can they not see this??? As if we're not considered white buffalo already here outside of the big cities, now it seems seeing a foreigner in China post 2011 will be as rare as seeing one in the 70's and 80's. What a slap in the face. I love my job and am passionate. I don't make a lot of money as it is and put my heart and soul into it. And now this???? I really can't believe it.
Oct 10, 2011 05:28 Report Abuse
To Joneeboy:
*** "chip on your shoulder" (no "s" at the end of "your")
*** "if all you can do to occupy yourself is contradict" (no second "to" needed after "is"
*** "a proper university" (lowercase "u"; it's not a proper noun)
*** "those two teets on ..." ("two" is a number; "too" means "also")
Don't you hate when you make several errors in a post after beginning said post by criticizing someone else's English? =/
You pretentious prat, you!
Oct 13, 2011 07:34 Report Abuse
HAhahhhh!@!! the guy got you good with logic, and you got angry Mark D.. I have 1 for you..
LOOOOOOSSSSSSEEEEEERRRRRR!!!!!
learn to loose a battle biatch!
Mar 03, 2012 00:13 Report Abuse
retirement benefits- you must pay into for 15 years before you can collect
medical benefits- starts immedately however it is based on 30yuan/mth (if you work and pay into the benefit system, after 1 year, you can get 360yuan back from the government)
Oct 13, 2011 16:01 Report Abuse
I don't want to be included. I want to spend my couple years here and go home unnoticed.
Oct 09, 2011 18:37 Report Abuse
It seems like your idea of making foreigners feel included is to speak to them in English and put up English signs.
In actual fact, when Chinese people insist on speaking to me in English even though I address them in Chinese, that makes me feel very un-included.
Oct 09, 2011 19:27 Report Abuse
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