In a bid to stamp out widespread social insurance fraud in China, the State Council has decided that from next year the tax bureau will be responsible for collecting social insurance contributions directly from enterprises.
It is estimated that more than 70 percent of companies are involved in some kind of social insurance malpractice such as using the minimum wage rather than the workers’ actual salary as the basis for calculation or not including workers’ bonus payments in the total, according to the China Enterprise Social Insurance White Paper of 2018.
Although the tax bureau has more sophisticated calculation and collection capabilities, the new policy is unlikely to have a major impact. Companies in Guangdong, for example, are already seeking ways to avoid payment by setting up shell companies and hiring workers on temporary contracts.
In many cases, it will still be up to the workers themselves to force their employer to pay not only the contributions they are owed now but the arrears that have accumulated over many years, even decades. Social insurance claims have been an important element in worker protests for many years, especially during factory relocation and bankruptcy disputes, as detailed in CLB’s Workers’ Movement Report 2015-17. And these disputes continue to erupt on a regular basis. In September this year, for example, CLB’s Strike Map recorded nine such cases, two of which are discussed in more detail below.