Press conference on corporate social insurance premium reduction to support epidemic prevention and control

A press conference was held Thursday afternoon to brief the media about issues on provisional reduction or exemption of employers' social insurance and medical insurance contributions and deferral of corporate payments to the housing provident fund.

China SCIO February 22, 2020

CNBC:

How will this policy impact this year's central budget? How should we interpret this policy in the light of a tight balance? How can we guarantee the proper implementation of the policy? From the perspective of supporting employment, what kind of enterprises will benefit from this policy and what kind of measures will be employed?

Yu Weiping:

As of now, the social insurance system is in a very healthy state. According to the budget of the social insurance fund for 2020, in 2019, the revenue of the seven items of the fund totaled 8.1 trillion yuan, the expenditure was 7.5 trillion yuan, and the balance was 0.6 trillion yuan. The accumulated balance reached 9.4 trillion yuan. The new policy is expected to cut enterprises' social insurance contribution burden by 600 billion yuan. Clearly, this year's fund revenue will decrease a little bit, but the overall impact will be manageable.

This year we will continue the proactive fiscal policy, focusing more on improving efficacy and structural adjustment. Reduction and exemption of social insurance contributions during this period might lead to a drop in the overall revenue of the fund in the short term in some regions. But from a macro and medium to long-term perspective, it could reduce the pressure on enterprises and further spur the vitality of the market. Moreover, an increase in the profits of enterprises and expansion of the tax base will gradually lead to an increase in the fiscal revenue. Therefore, we will actively work with relevant departments to firmly implement the policies on reduction and exemption of social insurance contributions, easing the pressures on enterprises to stimulate their growth.

In order to maintain stable employment, following the deployment of the CPC Central Committee and the State Council, the Ministry of Finance, together with other departments, has introduced a series of policies to increase support to micro, small and medium-sized enterprises and key groups, so as to encourage them to resume production.

Besides the reduction and exemption of social insurance contributions, the Ministry of Finance, together with other related departments, has also introduced other measures to ensure employment stability and support business start-ups. As time is limited, I will only outline key measures.

First, we will refund enterprises more with the unemployment insurance funds.

Second, we will raise the subsidies for vocational training.

Third, we will give full play to the role of guaranteed loans for business start-ups.

Fourth, we will use structural adjustment funds and subsidies to support stable employment of relevant enterprises.

Fifth, we will ensure migrant workers' employment and provide guarantee for them to start businesses.

Next, working together with related government departments, we will focus on the following three areas: First, we will guide local fiscal organs to refine policies on reducing burdens of enterprises, including the reduction and exemption of social insurance contributions. With further elaboration of this policy, we hope to ensure the implementation and expect early results. Second, we will enhance research and analysis of the current situation. By keeping a close eye on the employment of key groups, industries and regions, we will adjust and refine the current policies according to the reality in a timely manner. Third, we will ensure that the required funding is in place to support local governments to implement policies on employment stability and reduction of social insurance contributions during the period of virus control and prevention.

You Jun:

Minister Yu has explained the policies in a very detailed manner. The epidemic will inevitably have implications for employment. For example, the employees' return to work will be delayed as many companies have put off their production, and some micro, small and medium-sized companies are facing pressure. There is also some imbalance in the labor market. But I believe all of these are short-term problems. After the virus is brought under control, the economy will stabilize and the consumption and investment will rapidly rebound, and the demand for labor will also increase. The fundamentals of China's long-term growth trajectory have not changed, so do the fundamentals of the overall employment situation. Thank you.

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