China to permit social security payment cuts for employees

China will cut social security payment requirements to lower the burden on businesses and increase efforts to stabilise employment, Premier Li Keqiang has said as his government is struggling to cope with the slowdown of the economy that threatens millions of jobs.
"The government will support various localities, in light of their local conditions, to reduce contributions to the five major insurance programmes and housing provident funds," Li said at a forum in Beijing on the national economic situation.
He said that this will be conducted "in a step-by-step fashion and under a unified national framework", state-run China Daily reported.

The five programmes cover endowment, medical insurance, unemployment, employment injuries and maternity insurance.
Under the current arrangement, employers must pay just over 39 per cent of their payrolls into the five social insurance programems. It is not clear whether the government will compensate the employees.
His remarks follow his promise at the end of the national legislative session in March, when he said local governments would be authorised to cut this percentage adequately.

No specific measures were announced but Li said that a national guideline on the change will be available very soon.
Zeng Xiangquan, head of the School of Human Resources at Renmin University of China in Beijing, said China's social insurance programmes are among the world's most expensive, meaning excessively heavy burdens for enterprises and workers.

"Lowering the percentage is an important way to implement supply-side structural reform," Zeng said. "It aims to relieve the burden on enterprises and local governments."
Li also reiterated the need to cut the tax burden on companies by carrying out the business tax to value-added-tax reform, which is expected to cut tax by more than 500 billion yuan (USD 77 billion) for enterprises this year.
He also called on local governments to conscientiously shoulder the responsibility of ensuring people's well-being, and to take more effective measures to deliver "sound employment performances".
Li listed college and vocational school graduates as well as demobilised servicemen as the priorities for employment.

Last year, authorities said the military would demobilise 300,000 personnel by the end of 2017. This year, at least 7.6 million university students are expected to enter the job market, according to Chinese media reports.
Niu Li, director of macroeconomics at the State Information Centre, said unemployment pressure mounted this year as the steel and coal industries in some northern and central areas shed workers to cut overcapacity and improve efficiency.
Reports quoting officials said about five to six million workers may loose their jobs including about 1.8 million in the energy and steel sectors.
Chinese economy slowed down to 6.9 per cent last year and the government fixed 6.5 to 7 per cent as target for this year. The World Bank in its latest forecast saidChinese economy will further decline to 6.7 per cent this year and contract to 6.5 per cent next year.