Social security for foreign workers

China Daily, October 16, 2011

Foreign workers in China will be included in the country's social security system as a new regulation took effect on Saturday.

The Social Insurance Law passed in July allows foreign workers to enjoy retirement, medical, work injury, unemployment and maternity benefits similar to those for Chinese citizens.

According to the new ruling, all registered foreign workers with a valid work permit in China will be covered, including foreign workers employed by Chinese and overseas-funded enterprises, social groups, law firms, accounting firms and foundations that register in China, as well as foreign workers assigned to China by overseas registered companies.

The latest census in 2010 recorded nearly 600,000 foreigners living in China. Approximately 231,700 had work permits.

Being included in the program means the foreign workers' take-home pay will shrink, because part of their wages will be placed in a pension fund, and their employers will also have to pay more.

In China, workers pay 8 percent of their salary and employers pay 20 percent of workers' wages each month to the pension accounts. Workers must contribute to the pension accounts for at least 15 years to collect a pension after retiring.

Workers and employers also share the costs of medical and unemployment insurance but employers are responsible for work injury insurance and maternity insurance.

Many foreign workers welcomed the move, and say being included in the social security program would help them feel more secure and comfortable working and living in China.

But there are some who say they do not want to pay the extra charges.

"I am already paying social insurance bills in the United States and I do not want to double my payments," said Janine Coughlin, who moved to China three and half years ago and now works for a Chinese magazine in Beijing.

"I do not know how long I will stay in China and I am afraid it would be very troublesome when I leave here and try to get the money in my pension account back," she said.

For employers, the rise in cost is a big concern.

"Our cost will increase remarkably," said Li, a human resource manager with a consultancy firm in Xiamen, Fujian province. He said his company would likely reduce headcounts next year in order to offset rising personnel costs.

But Philip McMaster, co-founder of a Beijing-based research institute on commerce, said his company could handle the extra costs.

"It's fair and good for foreign workers to enjoy such benefits in China and that may make them more loyal to the company if we pay those insurance bills for them," he said.

Workers from countries that have signed social insurance agreements with China can avoid paying some of the fees, according to Xu Yanjun, the deputy director of the social security center with the Ministry of Human Resources and Social Security.

So far, Germany and South Korea have signed such agreements.

Lu Xuejing, a social security expert at Beijing-based Capital University of Economics and Business, said China should negotiate and sign social insurance agreements with more countries to avoid foreign workers being double charged, and to better protect their rights.

The new regulation stipulates that a foreign worker eligible to enjoy the pension but who has left China can still make arrangements with the nearest Chinese embassy to continue to receive the pension.

Current regulations also allow remaining money in the pension account to be inherited by the children, upon the pensioner's death.

A foreign worker may also continue paying social security bills if he or she leaves China and then returns to work. The worker can get pension contributions returned when the account is closed.