China’s Ministry of Human Resources and Social Security has confirmed that from 1 July 2011 foreign workers and their employers in China will have to pay social insurance fees for the first time. The amounts due will vary by location but foreign nationals working as executives in major cities are expected to face new bills of around £50 a month in exchange for access to retirement benefits and subsidized fees at public hospitals. Employers of foreign workers could face three times that amount per employee.
The move will ensure foreign employees in China enjoy the same social insurance benefits as locals do. At a time when labor costs are rising rapidly in China, new social insurance levies on expatriate staff could further increase the cost of doing business in China. The tax will provide expats with workplace injury insurance and subsidize fees at local hospitals, as well as other benefits.
China’s Social Security Center says that expats from countries that have bilateral social insurance agreements with China (such as Germany and South Korea) may opt out of the programme.
A detailed overview of the plan has yet to emerge, partly because individual districts are responsible for implementing the tax. Analysts expect numerous adjustments to the law once it goes into effect, especially once local and regional governments begin making amendments. In China it is not unusual for local versions of laws to vary significantly from those passed at the national level.