Latest news with #Supreme People's Court
Bloomberg
6 days ago
- Business
- Bloomberg
China Torn by ‘Anxiety and Panic' After Social Security Verdict
A ruling by China's highest court has made it impossible for workers and their employers to waive social insurance contributions, raising the risk of a shock to the labor market and triggering a broader discussion about inequalities in the welfare system. The decision this month by the Supreme People's Court bars informal arrangements between companies and their employees to opt out of mandatory social insurance payments from Sept. 1. If enforced, the rules are especially a threat to small and medium-sized businesses, according to Societe Generale SA, which estimates they could increase costs to workers and employers by about 1% of gross domestic product.
South China Morning Post
11-08-2025
- Business
- South China Morning Post
China's pension system needs an overhaul because it is neither fair nor sustainable
Mainland China's pension system has again become an issue of debate after the Supreme People's Court ruled that any private agreement between employers and employees to evade payment of retirement funds was invalid. Advertisement While the legal interpretation reiterated existing laws and regulations, it struck a nerve with the population and triggered doubts about the pension system's fairness and sustainability. China's pay-as-you-go system, which requires workers to contribute funds into a state-managed pool to pay for their retirement, essentially serves as a 'social security tax' levied on both employers and employees. An employer must pay an amount equivalent to about 19 per cent of an employee's salary to the pool, while the employee pays an additional 8 per cent to an individual account. That is often collected on a monthly basis, along with other payments for healthcare and unemployment social insurance. The levy has been deemed so high that many private employers attempt to evade it. One way they do so is to set an artificially low taxable wage. Advertisement An employer, for example, may report to the Ministry of Human Resources and Social Security that an employee only makes 3,000 yuan (US$418) as a monthly salary even though the worker actually earns 5,000 yuan.
