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Social security for 54% of expats

By Dong Zhen  (Shanghai Daily)

08:47, September 11, 2012

MORE than half the foreigners legally working in China have subscribed to the country's social security system so far and efforts are ongoing to expand coverage by making it more practical for workers and employers, the Ministry of Human Resources and Social Security said yesterday.

More than 120,000 expats are now covered by the social security system since China started offering cover to foreigners late last year, Hu Xiaoyi, vice minister, told a press conference in Beijing yesterday. That is around 54 percent of the 220,000 foreigners currently working legally on China's mainland.

The social insurance scheme, which took effect last October, allows foreigners to receive the same retirement, unemployment, medical, work injury and maternity benefits as Chinese citizens.

The scheme is backed by the Chinese Social Security Law which came into effect in July last year. It says foreigners working in China are subject to be covered by the domestic social insurance system.

The ministry is currently communicating with foreign organizations and enterprises in China to solve problems in the detailed implementation of the scheme.

The scheme so far comes with no mandated punishments for companies who don't comply, leading to confusion about whether the scheme is compulsory or not.

Under the scheme, foreign workers and their employers have to pay into the local social security system based on a percentage of monthly salaries.

While the plan to include foreigners in the scheme was announced by the central government, it is local authorities who are supposed to be implementing it. A lack of clarity over how the process should work, as well as the relatively short time in which to put necessary frameworks in place in many localities, has resulted in the confusion.

In Shanghai, both foreign employees and companies have to agree on joining the scheme.

The city's human resources bureau yesterday said it couldn't provide figures on how many foreign workers in Shanghai are covered.

The scheme will increase the cost of labor for companies and for foreigners who already subscribed to social security in their home countries and who expect to work in China for just a short time. They may be reluctant to join the Chinese scheme because they see it as an unnecessary expense, according to Chinese labor experts.

There is also a lack of clear guidelines on how some long-term accounts, such as for pensions and unemployment insurance, will be paid back to foreigners who leave their jobs and return home.

China is currently in talks with 13 foreign countries and regions, including Japan, France and Sweden, in a bid to achieve bilateral agreements.

China has so far signed agreements with Germany and South Korea. Foreigners from those countries as well as their employers in China do not need to pay some social security insurances if Chinese nationals working there are granted the same treatment.

The agreement with Germany took effect in 2001 and covers pensions and unemployment insurance. The Sino-South Korea agreement, which took effect in 2003, covers pensions.

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