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a centre plank of this years Parliamentary session has been the CCP's vow to start phasing out the Hokou (Household Registration) system which divides Chinese citizens as either Rural or Urban residents and apportions benefits accordingly.
http://news.xinhuanet.com/english2010/chin.../c_13198008.htm
The rigidity of the system has been blamed for inflicting hardships on migrant workers, but it has also been a factor in maintaining stability during the downturn when millions of unemployed worlers were able to return to the family land and support themselves and national food production during what could otherwise have been a difficult time.
Clearly though reform needs to start now to speed up the trnasfer of those who have clearly left the land and teken root in the cities. It is interesting to note that this reform applies mainly to smaller cities and towns and I wonder if the rights will be limited to urban areas only a short distance from the place of current household registration. This then would be a measure to prompt interior development and prevent the coastal cities from being swamped.
It also recognises I beleive that a criticla juncture in Chinese Agriculture is being reached. With so many young rural workers moved to the cities, the average ago of a Chinese farmer must be well above forty. This means that much of China's food production is coming from the mature or elderly, with many farmers reaching the end of their useful working lives. The challange for China then is to secure its food production through modern large intensive farms and to enable the old subsistance farmers to surrender the plots and enjoy retirement with their children in the cities.
One can see a confluence fo factors driving these reforms.
China to reform Hukou system
#1
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Posted 07 March 2010 - 11:59 AM
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#2
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Posted 07 March 2010 - 04:31 PM
An Article from China Daily, discusses the issues
http://www.chinadaily.com.cn/bizchina/2010...ent_9537547.htm
http://www.chinadaily.com.cn/bizchina/2010...ent_9537547.htm
Quote
Sustainable cities key to growth
By You Nuo (China Daily)
Some social reform champions are calling for the immediate abolition of the hukou system, or the notorious household registration system that was designed to block rural-urban migration half a century ago.
Abolishing, or to a large extent relaxing the system, would open the floodgates for up to 300 million rural people to enter cities.
However, a rather cruel reality is that most cities, large and small, are only poorly prepared for accommodating those people. A rush job in social reform could turn into an economic and ultimately political disaster.
The nation's leaders must take the initiative to reform city-level public financial systems before local governments can work in a responsible way.
Citizens deserve the equal Constitutional right of freedom of migration. And all the discriminatory rules against the migrant workers and their children are morally unacceptable. But the practical problem is that few city governments are equipped with the adequate financial capabilities to provide a decent life for their would-be new residents.
Some people say the abolition of the hukou system can start in small cities, so as to avoid having all the large cities, already under heavy population pressures, to further stretch their capabilities. Such a proposal would be almost nonsense if the small cities continue to have limited financial autonomy and expertise.
Arranging new urban lives for migrant workers requires a nationwide program ultimately coordinated by the central government and with some city-level financial reform as a necessary component.
Now, there is little doubt that China's forthcoming annual parliamentary session will talk about how to change the hukou system, but the debate must remain sober enough as to avoid letting empty moral arguments hijack it. There is also a moral duty to lay good groundwork for the inevitable change.
If some 70 percent of its population are living in the cities, as economists predict will be the case once the hukou barrier is removed, China is qualified to be an urban society.
But that would be something that China has never experienced before. In financial management, it means that it is no longer a country of a distant sovereignty, run by a learned political and economic elite, shielding thousands of small villages dispersed across a vast territory as it basically has been for almost two millenniums.
It will become a country of a central government, which plays a guiding and regulatory role rather than controlling all resources, dealing with a limited number (say several hundred) of larger and certainly more active communities each striving to flourish based on their distinctive economic and cultural potentials.
Moreover, cities tend to form clusters. In such a cluster, one major city tends to form its business "biosphere" including many small nearby towns supporting a common network.
How the Chinese system can facilitate such a change will be a very tough challenge. Many cities do not have independent financial resources other than the revenue from the sale of land-use rights and are in no way near any dependable self-government.
In Beijing, the capital city, it is said more than half of its GDP in 2009 was contributed by land rights auctions. The same is more or less true for other rich cities along the coast. As a result, local revenues grow only where the property industry is bubbling.
This is a highly risky economic model that cannot last long. Cities will fall hostage to one industry's ups and downs if they don't learn other ways to finance local public projects and feed their employees.
And if that happens, what services would they provide to their residents, old and new?
That is the lesson that they will have to learn in the next phase of the nation's development.
Apart from having an overall national plan, the central government should make the cities learn this lesson quickly.
That would include, economically, being more active in raising development funds from capital markets, setting up local banks, issuing municipal bonds, working with national and international companies, and, politically, building up a stronger people's congress to supervise the plan and the use of local public funds.
These are the institutional guarantee of a harmonious urban society, including decent homes for millions of new city dwellers. But China is still far from having this ready yet.
The author is business editor of China Daily.
By You Nuo (China Daily)
Some social reform champions are calling for the immediate abolition of the hukou system, or the notorious household registration system that was designed to block rural-urban migration half a century ago.
Abolishing, or to a large extent relaxing the system, would open the floodgates for up to 300 million rural people to enter cities.
However, a rather cruel reality is that most cities, large and small, are only poorly prepared for accommodating those people. A rush job in social reform could turn into an economic and ultimately political disaster.
The nation's leaders must take the initiative to reform city-level public financial systems before local governments can work in a responsible way.
Citizens deserve the equal Constitutional right of freedom of migration. And all the discriminatory rules against the migrant workers and their children are morally unacceptable. But the practical problem is that few city governments are equipped with the adequate financial capabilities to provide a decent life for their would-be new residents.
Some people say the abolition of the hukou system can start in small cities, so as to avoid having all the large cities, already under heavy population pressures, to further stretch their capabilities. Such a proposal would be almost nonsense if the small cities continue to have limited financial autonomy and expertise.
Arranging new urban lives for migrant workers requires a nationwide program ultimately coordinated by the central government and with some city-level financial reform as a necessary component.
Now, there is little doubt that China's forthcoming annual parliamentary session will talk about how to change the hukou system, but the debate must remain sober enough as to avoid letting empty moral arguments hijack it. There is also a moral duty to lay good groundwork for the inevitable change.
If some 70 percent of its population are living in the cities, as economists predict will be the case once the hukou barrier is removed, China is qualified to be an urban society.
But that would be something that China has never experienced before. In financial management, it means that it is no longer a country of a distant sovereignty, run by a learned political and economic elite, shielding thousands of small villages dispersed across a vast territory as it basically has been for almost two millenniums.
It will become a country of a central government, which plays a guiding and regulatory role rather than controlling all resources, dealing with a limited number (say several hundred) of larger and certainly more active communities each striving to flourish based on their distinctive economic and cultural potentials.
Moreover, cities tend to form clusters. In such a cluster, one major city tends to form its business "biosphere" including many small nearby towns supporting a common network.
How the Chinese system can facilitate such a change will be a very tough challenge. Many cities do not have independent financial resources other than the revenue from the sale of land-use rights and are in no way near any dependable self-government.
In Beijing, the capital city, it is said more than half of its GDP in 2009 was contributed by land rights auctions. The same is more or less true for other rich cities along the coast. As a result, local revenues grow only where the property industry is bubbling.
This is a highly risky economic model that cannot last long. Cities will fall hostage to one industry's ups and downs if they don't learn other ways to finance local public projects and feed their employees.
And if that happens, what services would they provide to their residents, old and new?
That is the lesson that they will have to learn in the next phase of the nation's development.
Apart from having an overall national plan, the central government should make the cities learn this lesson quickly.
That would include, economically, being more active in raising development funds from capital markets, setting up local banks, issuing municipal bonds, working with national and international companies, and, politically, building up a stronger people's congress to supervise the plan and the use of local public funds.
These are the institutional guarantee of a harmonious urban society, including decent homes for millions of new city dwellers. But China is still far from having this ready yet.
The author is business editor of China Daily.
New Century China Forum:
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
#3
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Posted 08 March 2010 - 05:33 AM
The system itself should not be abandoned, unless a better registration system is in place to succeed it. Some kind of registration is required for a country's administration and society management.
But the implementations and the rules & laws related to it should be changed drastically preventing unfairness and unequality.
An example, in Shenzhen, an employer is obliged to put 13% of the gross salary of a SZ Hukou to the Shenzhen Housing Fund. But this social security ruling does not apply to non-SZ Hukou, and even when we digged into how to still deposit for our non-SZ Hukou employees, the SZ government feedback is a simple as: although on paper it is possible, but in practice this is impossible.
Or for example, while in Shenzhen the employees, both SZ resident and non-SZ resident needs to pay the same amount for the Individual Pension Fund, but a non-SZ resident will loose all this if they have not paid for a consecutive of 20-25 years (rules keeps on changing). And even by then, when they move back to their original Hukou place, such as Xiamen, then they are only alleged to the maximum cap of Pension set by Xiamen, which is considerably lower than SZ. Thus even though they paid much higher, than their benefits will still be much lower.
Lot's more of these kinds of weird rules and regulations, it is still confusing me majorly, and a pain to handle the Human Resources.
But the implementations and the rules & laws related to it should be changed drastically preventing unfairness and unequality.
An example, in Shenzhen, an employer is obliged to put 13% of the gross salary of a SZ Hukou to the Shenzhen Housing Fund. But this social security ruling does not apply to non-SZ Hukou, and even when we digged into how to still deposit for our non-SZ Hukou employees, the SZ government feedback is a simple as: although on paper it is possible, but in practice this is impossible.
Or for example, while in Shenzhen the employees, both SZ resident and non-SZ resident needs to pay the same amount for the Individual Pension Fund, but a non-SZ resident will loose all this if they have not paid for a consecutive of 20-25 years (rules keeps on changing). And even by then, when they move back to their original Hukou place, such as Xiamen, then they are only alleged to the maximum cap of Pension set by Xiamen, which is considerably lower than SZ. Thus even though they paid much higher, than their benefits will still be much lower.
Lot's more of these kinds of weird rules and regulations, it is still confusing me majorly, and a pain to handle the Human Resources.
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
#4
- Tai Pan
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Posted 08 March 2010 - 11:31 PM
IchiNiSan, on Mar 8 2010, 05:33 AM, said:
The system itself should not be abandoned, unless a better registration system is in place to succeed it. Some kind of registration is required for a country's administration and society management.
But the implementations and the rules & laws related to it should be changed drastically preventing unfairness and unequality.
An example, in Shenzhen, an employer is obliged to put 13% of the gross salary of a SZ Hukou to the Shenzhen Housing Fund. But this social security ruling does not apply to non-SZ Hukou, and even when we digged into how to still deposit for our non-SZ Hukou employees, the SZ government feedback is a simple as: although on paper it is possible, but in practice this is impossible.
Or for example, while in Shenzhen the employees, both SZ resident and non-SZ resident needs to pay the same amount for the Individual Pension Fund, but a non-SZ resident will loose all this if they have not paid for a consecutive of 20-25 years (rules keeps on changing). And even by then, when they move back to their original Hukou place, such as Xiamen, then they are only alleged to the maximum cap of Pension set by Xiamen, which is considerably lower than SZ. Thus even though they paid much higher, than their benefits will still be much lower.
Lot's more of these kinds of weird rules and regulations, it is still confusing me majorly, and a pain to handle the Human Resources.
But the implementations and the rules & laws related to it should be changed drastically preventing unfairness and unequality.
An example, in Shenzhen, an employer is obliged to put 13% of the gross salary of a SZ Hukou to the Shenzhen Housing Fund. But this social security ruling does not apply to non-SZ Hukou, and even when we digged into how to still deposit for our non-SZ Hukou employees, the SZ government feedback is a simple as: although on paper it is possible, but in practice this is impossible.
Or for example, while in Shenzhen the employees, both SZ resident and non-SZ resident needs to pay the same amount for the Individual Pension Fund, but a non-SZ resident will loose all this if they have not paid for a consecutive of 20-25 years (rules keeps on changing). And even by then, when they move back to their original Hukou place, such as Xiamen, then they are only alleged to the maximum cap of Pension set by Xiamen, which is considerably lower than SZ. Thus even though they paid much higher, than their benefits will still be much lower.
Lot's more of these kinds of weird rules and regulations, it is still confusing me majorly, and a pain to handle the Human Resources.
You have my interest, as I have never had to deal with China's individual taxation regime. You are right to examine this area however as the transfer of accrued entitlements and benefits etc are an important factor in a scheme like this.
Can you quickly break down the taxes/deductions that a worker has to pay and explain precisely what each part is?
It sounds as though most of the welfare are city based rather than national and it becomes easy to appreciate the difficulties for migrant labour.
Are the categories of tax and deduction consistent throughout the mainland with local governments only able to vary rates and caps or does the structure of personal taxation etc vary throughout the country?
New Century China Forum:
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
#5
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Posted 08 March 2010 - 11:55 PM
Sampanviking, on Mar 8 2010, 06:31 PM, said:
You have my interest, as I have never had to deal with China's individual taxation regime. You are right to examine this area however as the transfer of accrued entitlements and benefits etc are an important factor in a scheme like this.
Can you quickly break down the taxes/deductions that a worker has to pay and explain precisely what each part is?
It sounds as though most of the welfare are city based rather than national and it becomes easy to appreciate the difficulties for migrant labour.
Are the categories of tax and deduction consistent throughout the mainland with local governments only able to vary rates and caps or does the structure of personal taxation etc vary throughout the country?
Can you quickly break down the taxes/deductions that a worker has to pay and explain precisely what each part is?
It sounds as though most of the welfare are city based rather than national and it becomes easy to appreciate the difficulties for migrant labour.
Are the categories of tax and deduction consistent throughout the mainland with local governments only able to vary rates and caps or does the structure of personal taxation etc vary throughout the country?
Social insurance entitlement is different from taxation. Personal income tax is uniform across the nation. It is relatively much much lower than western rates. A typical white collar worker (not migrant) in a major city pays about 5-10% income tax.
Businesses are required to register their employees with the local social insurance bureau, and money is paid into the "five funds" (unemployment, workplace injury, old age, housing) each month -- one part deducted from employee's salary, one part contributed by the business directly.
Under certain conditions like the worker deciding to buy a house money can be withdrawn from the appropriate fund. Otherwise, it just sits there. You can take the fund with you as long as you are in the same locale, but as IchiNiSan said it's when you're moving about that the administrative system doesn't work properly. For example if a PRC national has medical insurance through work in one province but gets very sick in another province, he would have no coverage unless he physically goes back to his home province!
Most businesses pay only some of the funds, or even none at all. This social insurance system is for PRC nationals only, not foreigners or HKers.
Take a look at the Beijing bureau's webpage ... it's even got a little picture "Learn from Lei Feng"
http://www.bjld.gov.cn/
#6
- Tai Pan
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Posted 09 March 2010 - 12:22 AM
So presumably all these funds are under the direct control of local government itself?
Would this be at city, county, prefecture or Provincial level?
Would this be at city, county, prefecture or Provincial level?
New Century China Forum:
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
#7
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Posted 09 March 2010 - 12:30 AM
The actual problem starts from the top. We have a Country level LABOUR LAW, and then we go down to Provincial Level of directives how to implement this LABOUR LAW in the province, but then we have a Regional Level of how the LABOUR LAW is actually being implemented and practiced.
The catch on this system is that it is at CITY LEVEL, local governments in each City "市“, which I rather call Shenzhen and/or Dongguan a Region than a City. At these Regional governments the different minimum wages are set, differnet percentage points, different "Average Annual Salary base", etc etc etc.
And it is these Regional Governments who control the different Funds, hence why they prefer non-SZ Hukou does not participate in the SZ Housing Fund, as they has NO system built in yet how to handle the non-SZ Hukou Housing Fund withdrawel.
An official registration system, which the ID card number is used is in place to register all the employees to the Social Welfare bureau.
Roger summed up some of the major bottlenecks and the issue related to it. As you can see here below a Labour Accident Insurance is paid every month, but additional as a company it is utterly important you also buy a nation-wide Accident insurance coverage. A quality controller working for a Shenzhen company who goes out to Dongguan for a QC would face tremendous risks, and there are so many gaps and holes in the actual official Labour Accident Insurance system that we rather not count on it.
Of course like Roger said, most businesses only pay up partly and or none at all, but this does not count for the bigger companies and foreign invested offices anymore. They do have some extra tricks which they play around, and usually it is the un-informed employee who simply does not know what their rights are, AND in even more cases SIMPLY do not believe in these Social Welfare system and therefore choose voluntarily to "pay less taxes".
However, ever since the new Labour Law was introduced in 2008, and starting from the end of 2007, there are a hugeload of lawsuits instigated by greedy Lawyers to sue the employers for non-paid Over-time and other breaches of the Labour Law. There are stories that employees are sueing to get compensated for ALL OT up until 10 years ago, you make the sum.
This Social welfare system is unlike Roger said applicable to Hong Kong and Taiwanese. There are some extra admistrative procedures we need to go through though. Outside Guangdong province a Hong Hong resident (thus another Hukou) does need to apply for a working permit, same as Taiwanese who need to apply for one in the whole country, and has to have a Taiwanese ID "台胞证".
Summary of some breakdowns:
So social welfare is city per city based (Per Hukou), so percentage and capped figures are only suitable for Shenzhen. And for some of the social welfarehs a minimum payment.
Breakdown into two major categories:
Company (单位部分) = The employer is obliged to pay these social security based on the Gross salary or maximum capped City-Level Average Annual Salary.
Individual (个人部分) = The employee is obliged to pay these social insurances
Breakdown per category (Per month, and percentage is based on gross salary):
Overall
Company Social Security (单位部分)
Pension fund (养老保险) = 11% for SZ Hukou, 10% for Non-SZ Hukou
Medical insurance (医疗保险) = 4.5% for any employee [Note: minimum base salary is set at RMB 2173]
Unemployment insurance (失业保险) = 3621*0.4% [Note: 3621 is based on the Shenzhen annual Average Annual Salary survey)
Maternity insurance (生育保险) = 0.5% for any employee [Note: minimum base salary is set at RMB 2173]
Labour Accident insurance (工伤保险) = 0.25% for any employee
Housing Fund (住房公积金) = 13% only SZ Hukou
Individual Social Insurances (个人部分)
Pension Fund (养老保险) = 8% for any employee
Medical Insurance (医疗保险) = 2% for any employee
My HRM company has split one extra post out, which is not categorized in either the Company or Individual:
Disability insurance (残疾人保障金) [Payable by the company]= 3621*0.4% [Note: 3621 is based on the Shenzhen annual Average Annual Salary survey]
And then you will have Individual Income Tax (个人所得税), this is on country level and should be the same for everyone:
The IIT is based on the Individual Base Salary (扣税基数 ) after deduction of the Individual Social Insurances.
IIT Tax percentage (扣税比例) = Based on a progressive rate, the higher the income the more income tax, it can go as far as to 50%. The rates are actually from ZERO to 50%.
Gross Salary breakdown:
There are specific rules set by the Regional governments for the major breakdowns of the gross salary:
Contractual Basic Gross Salary (基本工资) = What is agreed upon as the contractual monthly salary
Actual Basic Gross Salary (出勤工资) = Based on the days worked per month
Bonus (奖金) = Capped at a certain level per month
Over-Time Payments (加班工资) = Restricted at a certain amount per month
Housing Allowance (住房补贴 ) = Now this one is confusinga and special, SZ Hukou is NOT applicable for this Housing allowance, only non-SZ Hukou. There is a mximum an employer can reimburse the non-SZ Hukou employee for the housing.
Previous month salary amendment (补发上月工资) = Just whatever you still did not settle with the employee for the previous months salary
Individual Base Salary (扣税基数) = All these Gross Salary summed up and then deducted with the Individual Social insurance.
Some other issues:
Medical insurance = To get a Social card and get insured first, every employee is obliged to do a full body check. Every insured employee get a so-called Social card, and this card they can use it to see the doctor, hospital. But the medical insurance allowance is maximized to what is actually depositted in the card! This means, if over 2 years you only accumulated 600 RMB of medical insurance (paid by Individual and Company) in the Social Welfare card, and you use it up during a hospital visit, the rest you have to pay in cash, and for some services the Social Welfare card can not be used. Normally for the common sicknesses like the Flu and occasionally checkup, the Social Card is sufficient, but you can imagine in times of emergencies and for a oe severe disease this card is not sufficient, thus requiring the employee to buy additional Medical insurance and/or the company buy some extra voluntarily Welfare insurance for the employee. And please be always noted that you have to be physically in the region you are insured before any benefits can be used.
Pension Fund = As you can see in SZ there is a certain Fixed percentage set for the pension fund, BUT the issue is for the non-SZ Hukou, when they move back to Xiamen, or even worse to a small town in Anhui province, then they can only get a retirement based on the local pension regulation, instead of what they actually had paid for years. There is also another huge issue, that is that what I understood is that a non-SZ Hukou should be working in SZ for a certain amount of years before being applicable to certain benefits related to this fund. Exact regulation and how it works out in practice I have no clue, something I just noted down for my next meeting with our HRM consultant.
Housing Fund = Officially you can take money out of this fund IF you are going to buy a house, and/or not working for the company anymore. But in practice, even if you just quit the job, it would take a while before you can get the Housing fund. You really need to move outside the Region in order to be applicable for it. As for when buying a house, there is certain restrictions and rules involved.
The catch on this system is that it is at CITY LEVEL, local governments in each City "市“, which I rather call Shenzhen and/or Dongguan a Region than a City. At these Regional governments the different minimum wages are set, differnet percentage points, different "Average Annual Salary base", etc etc etc.
And it is these Regional Governments who control the different Funds, hence why they prefer non-SZ Hukou does not participate in the SZ Housing Fund, as they has NO system built in yet how to handle the non-SZ Hukou Housing Fund withdrawel.
An official registration system, which the ID card number is used is in place to register all the employees to the Social Welfare bureau.
Roger summed up some of the major bottlenecks and the issue related to it. As you can see here below a Labour Accident Insurance is paid every month, but additional as a company it is utterly important you also buy a nation-wide Accident insurance coverage. A quality controller working for a Shenzhen company who goes out to Dongguan for a QC would face tremendous risks, and there are so many gaps and holes in the actual official Labour Accident Insurance system that we rather not count on it.
Of course like Roger said, most businesses only pay up partly and or none at all, but this does not count for the bigger companies and foreign invested offices anymore. They do have some extra tricks which they play around, and usually it is the un-informed employee who simply does not know what their rights are, AND in even more cases SIMPLY do not believe in these Social Welfare system and therefore choose voluntarily to "pay less taxes".
However, ever since the new Labour Law was introduced in 2008, and starting from the end of 2007, there are a hugeload of lawsuits instigated by greedy Lawyers to sue the employers for non-paid Over-time and other breaches of the Labour Law. There are stories that employees are sueing to get compensated for ALL OT up until 10 years ago, you make the sum.
This Social welfare system is unlike Roger said applicable to Hong Kong and Taiwanese. There are some extra admistrative procedures we need to go through though. Outside Guangdong province a Hong Hong resident (thus another Hukou) does need to apply for a working permit, same as Taiwanese who need to apply for one in the whole country, and has to have a Taiwanese ID "台胞证".
Summary of some breakdowns:
So social welfare is city per city based (Per Hukou), so percentage and capped figures are only suitable for Shenzhen. And for some of the social welfarehs a minimum payment.
Breakdown into two major categories:
Company (单位部分) = The employer is obliged to pay these social security based on the Gross salary or maximum capped City-Level Average Annual Salary.
Individual (个人部分) = The employee is obliged to pay these social insurances
Breakdown per category (Per month, and percentage is based on gross salary):
Overall
Company Social Security (单位部分)
Pension fund (养老保险) = 11% for SZ Hukou, 10% for Non-SZ Hukou
Medical insurance (医疗保险) = 4.5% for any employee [Note: minimum base salary is set at RMB 2173]
Unemployment insurance (失业保险) = 3621*0.4% [Note: 3621 is based on the Shenzhen annual Average Annual Salary survey)
Maternity insurance (生育保险) = 0.5% for any employee [Note: minimum base salary is set at RMB 2173]
Labour Accident insurance (工伤保险) = 0.25% for any employee
Housing Fund (住房公积金) = 13% only SZ Hukou
Individual Social Insurances (个人部分)
Pension Fund (养老保险) = 8% for any employee
Medical Insurance (医疗保险) = 2% for any employee
My HRM company has split one extra post out, which is not categorized in either the Company or Individual:
Disability insurance (残疾人保障金) [Payable by the company]= 3621*0.4% [Note: 3621 is based on the Shenzhen annual Average Annual Salary survey]
And then you will have Individual Income Tax (个人所得税), this is on country level and should be the same for everyone:
The IIT is based on the Individual Base Salary (扣税基数 ) after deduction of the Individual Social Insurances.
IIT Tax percentage (扣税比例) = Based on a progressive rate, the higher the income the more income tax, it can go as far as to 50%. The rates are actually from ZERO to 50%.
Gross Salary breakdown:
There are specific rules set by the Regional governments for the major breakdowns of the gross salary:
Contractual Basic Gross Salary (基本工资) = What is agreed upon as the contractual monthly salary
Actual Basic Gross Salary (出勤工资) = Based on the days worked per month
Bonus (奖金) = Capped at a certain level per month
Over-Time Payments (加班工资) = Restricted at a certain amount per month
Housing Allowance (住房补贴 ) = Now this one is confusinga and special, SZ Hukou is NOT applicable for this Housing allowance, only non-SZ Hukou. There is a mximum an employer can reimburse the non-SZ Hukou employee for the housing.
Previous month salary amendment (补发上月工资) = Just whatever you still did not settle with the employee for the previous months salary
Individual Base Salary (扣税基数) = All these Gross Salary summed up and then deducted with the Individual Social insurance.
Some other issues:
Medical insurance = To get a Social card and get insured first, every employee is obliged to do a full body check. Every insured employee get a so-called Social card, and this card they can use it to see the doctor, hospital. But the medical insurance allowance is maximized to what is actually depositted in the card! This means, if over 2 years you only accumulated 600 RMB of medical insurance (paid by Individual and Company) in the Social Welfare card, and you use it up during a hospital visit, the rest you have to pay in cash, and for some services the Social Welfare card can not be used. Normally for the common sicknesses like the Flu and occasionally checkup, the Social Card is sufficient, but you can imagine in times of emergencies and for a oe severe disease this card is not sufficient, thus requiring the employee to buy additional Medical insurance and/or the company buy some extra voluntarily Welfare insurance for the employee. And please be always noted that you have to be physically in the region you are insured before any benefits can be used.
Pension Fund = As you can see in SZ there is a certain Fixed percentage set for the pension fund, BUT the issue is for the non-SZ Hukou, when they move back to Xiamen, or even worse to a small town in Anhui province, then they can only get a retirement based on the local pension regulation, instead of what they actually had paid for years. There is also another huge issue, that is that what I understood is that a non-SZ Hukou should be working in SZ for a certain amount of years before being applicable to certain benefits related to this fund. Exact regulation and how it works out in practice I have no clue, something I just noted down for my next meeting with our HRM consultant.
Housing Fund = Officially you can take money out of this fund IF you are going to buy a house, and/or not working for the company anymore. But in practice, even if you just quit the job, it would take a while before you can get the Housing fund. You really need to move outside the Region in order to be applicable for it. As for when buying a house, there is certain restrictions and rules involved.
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 09 March 2010 - 12:40 AM
Please do
Already though, I have a sense of the problems behind this aspect of the system and therefore the problems in trying to change it.
Already though, I have a sense of the problems behind this aspect of the system and therefore the problems in trying to change it.
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Posted 09 March 2010 - 02:01 AM
Sampanviking, on Mar 9 2010, 08:40 AM, said:
Please do
Already though, I have a sense of the problems behind this aspect of the system and therefore the problems in trying to change it.
Already though, I have a sense of the problems behind this aspect of the system and therefore the problems in trying to change it.
As you noticed, there are very different rules and Funds which are already ongoing for decades based on the Hukou system. So, it will be a administrative disaster if the Hukou system is abandoned overnight. A reform of this Hukou system should be in place, but as long as the gap between developed places and under-developed places are so huge, even within the same province, then the reform would take a long time and willingness of all levels to get it through.
What I personally do not understand is the discussion about the Hukou system is that it is supposedly restricting different Hukou to migrate within the country. However, I do not sense and feel this difficulty in migrating of peasants to the Coastal provinces. Isn't it like that most of the factory workers are actually holding a farmer's hukou? Where is the restriction? Even the Shenzhen official border gates are like either abandoned or simply putting some officials to keep them busy with something......
Noted it is difficult to officialy "emigrate" and change Hukou, BUT if you have a living address within a Region, and you have a job, then you can apply for changing your Hukou to the Hukou of working place. Several of my employees succesfully changed from a town Hukou in Anhui & HuBei to the Shenzhen one. The issue might be related to the Factory workers, who are mostly living in the dormitories.
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 09 March 2010 - 04:38 AM
IchiNiSan, on Mar 8 2010, 07:30 PM, said:
This Social welfare system is unlike Roger said applicable to Hong Kong and Taiwanese. There are some extra admistrative procedures we need to go through though. Outside Guangdong province a Hong Hong resident (thus another Hukou) does need to apply for a working permit, same as Taiwanese who need to apply for one in the whole country, and has to have a Taiwanese ID "台胞证".
You don't need to pay "five funds" social insurance for non-PRC nationals. Although of course you need a work permit.
Sampanviking, on Mar 8 2010, 07:22 PM, said:
So presumably all these funds are under the direct control of local government itself?
Would this be at city, county, prefecture or Provincial level?
Would this be at city, county, prefecture or Provincial level?
The central government delegates down to provincial level by national legislation and then what provincial level does (the level of delegation) is up to it. There are social insurance bureaus existing at both provincial and municipality levels.
IchiNiSan, on Mar 8 2010, 09:01 PM, said:
What I personally do not understand is the discussion about the Hukou system is that it is supposedly restricting different Hukou to migrate within the country. However, I do not sense and feel this difficulty in migrating of peasants to the Coastal provinces. Isn't it like that most of the factory workers are actually holding a farmer's hukou? Where is the restriction? Even the Shenzhen official border gates are like either abandoned or simply putting some officials to keep them busy with something......
The migrant workers don't have any problems working and living in the tier one cities without local hukou, but they bump into bureaucratic obstacles to marrying and having kids.
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Posted 09 March 2010 - 04:52 AM
Roger604, on Mar 9 2010, 12:38 PM, said:
You don't need to pay "five funds" social insurance for non-PRC nationals. Although of course you need a work permit.
Hmmmm, weird, as I understood from a Taiwanese friend he is in the actual social welfare program. Will double-check on that.
Quote
The migrant workers don't have any problems working and living in the tier one cities without local hukou, but they bump into administrative obstacles to marrying and having kids.
How about tier 2? I just wonder which cities are considered tier 2, Dongguan, Huizhou, Zhongshan in Guangdong also don't face issue recruiting non locals. The administrative obstacles for marrying and having kids are something new to me though. How does that work out? You must marry the same Hukou????
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 09 March 2010 - 05:03 AM
^ I think it has something to do with permits for marriage, giving birth, medical care for mother and baby, education for the child and so on.
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Posted 09 March 2010 - 05:24 AM
Roger604, on Mar 9 2010, 01:03 PM, said:
^ I think it has something to do with permits for marriage, giving birth, medical care for mother and baby, education for the child and so on.
The maternity insurance is covering a lot for the mother and baby. I had a pregnant employee who has a Chengdu hukou, but in Shenzhen enjoyed all medical and birth rights in a Shenzhen hospital etc. As for the education I am not so sure. You know, one funny scenario you can see at teh Hong Kong/Shenzhen border each early morning is that you will see bunches of children going to HK for school, these are probably those born in HK but living in Shenzhen and therefore not applicable for the free education in Shenzhen.
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 09 March 2010 - 09:28 AM
Thanks again, there is a lot of meat to digest here and it will take more than one sitting.
Problem No:1 as I see it for reform is that it would mean the cities relinquishing control over very considerable funds of money. Even assuming that the funds were properly managed and audited, no organisation would willingly surrender control of such largess.
Clearly Hokou is system rooted in the past when people lived and worked in the same area all their lives. Social Mobility is not something factored into this system.
When think of many of these issues, I see it purely from a local UK perspective, but I wonder if some of these problems are not replicated in the EU for migrants from the East coming to work in the UK or other Western European countries. In Europe each country runs its own Welfare system and likewise it seems unlikely that migrants are able to apply for or transfer these benefits between countries. My point in raising this particular point is that it may not be a uniquely Chinese problem, but one that effects a large "developed world community" as well.
Whenever you hear solutions being proposed to such problems, they usually come via the two pillars of 1) Money following the individual and 2) turning to the Corporate Insurance/Pension industry for a solution.
Before going any further, I think I would like to pose a few hypothetical examples, just to help me get a proper handle on how the system works. It will though need to wait until the end of business (day just started here) so I will try and continue this evening.
Problem No:1 as I see it for reform is that it would mean the cities relinquishing control over very considerable funds of money. Even assuming that the funds were properly managed and audited, no organisation would willingly surrender control of such largess.
Clearly Hokou is system rooted in the past when people lived and worked in the same area all their lives. Social Mobility is not something factored into this system.
When think of many of these issues, I see it purely from a local UK perspective, but I wonder if some of these problems are not replicated in the EU for migrants from the East coming to work in the UK or other Western European countries. In Europe each country runs its own Welfare system and likewise it seems unlikely that migrants are able to apply for or transfer these benefits between countries. My point in raising this particular point is that it may not be a uniquely Chinese problem, but one that effects a large "developed world community" as well.
Whenever you hear solutions being proposed to such problems, they usually come via the two pillars of 1) Money following the individual and 2) turning to the Corporate Insurance/Pension industry for a solution.
Before going any further, I think I would like to pose a few hypothetical examples, just to help me get a proper handle on how the system works. It will though need to wait until the end of business (day just started here) so I will try and continue this evening.
New Century China Forum:
Challenging Consensus! Standing for a New World Order!
Proud of China! Proud to be Chinese!
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Posted 09 March 2010 - 10:48 AM
Sampanviking, on Mar 9 2010, 05:28 PM, said:
Thanks again, there is a lot of meat to digest here and it will take more than one sitting.
Problem No:1 as I see it for reform is that it would mean the cities relinquishing control over very considerable funds of money. Even assuming that the funds were properly managed and audited, no organisation would willingly surrender control of such largess.
Clearly Hokou is system rooted in the past when people lived and worked in the same area all their lives. Social Mobility is not something factored into this system.
When think of many of these issues, I see it purely from a local UK perspective, but I wonder if some of these problems are not replicated in the EU for migrants from the East coming to work in the UK or other Western European countries. In Europe each country runs its own Welfare system and likewise it seems unlikely that migrants are able to apply for or transfer these benefits between countries. My point in raising this particular point is that it may not be a uniquely Chinese problem, but one that effects a large "developed world community" as well.
Whenever you hear solutions being proposed to such problems, they usually come via the two pillars of 1) Money following the individual and 2) turning to the Corporate Insurance/Pension industry for a solution.
Before going any further, I think I would like to pose a few hypothetical examples, just to help me get a proper handle on how the system works. It will though need to wait until the end of business (day just started here) so I will try and continue this evening.
Problem No:1 as I see it for reform is that it would mean the cities relinquishing control over very considerable funds of money. Even assuming that the funds were properly managed and audited, no organisation would willingly surrender control of such largess.
Clearly Hokou is system rooted in the past when people lived and worked in the same area all their lives. Social Mobility is not something factored into this system.
When think of many of these issues, I see it purely from a local UK perspective, but I wonder if some of these problems are not replicated in the EU for migrants from the East coming to work in the UK or other Western European countries. In Europe each country runs its own Welfare system and likewise it seems unlikely that migrants are able to apply for or transfer these benefits between countries. My point in raising this particular point is that it may not be a uniquely Chinese problem, but one that effects a large "developed world community" as well.
Whenever you hear solutions being proposed to such problems, they usually come via the two pillars of 1) Money following the individual and 2) turning to the Corporate Insurance/Pension industry for a solution.
Before going any further, I think I would like to pose a few hypothetical examples, just to help me get a proper handle on how the system works. It will though need to wait until the end of business (day just started here) so I will try and continue this evening.
Sorry, just a quick comment: Can you change the "Hokou" to "Hukou"?
It still confuses me on a daily base and comparing to the European Union nation is close I think.... And people tend to not believe in the system, hence why so many rather does not register and/or get paid partly through the official channels.
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 09 March 2010 - 11:38 PM
Quote
Sorry, just a quick comment: Can you change the "Hokou" to "Hukou"?
Done
I was going to ask some insightful and surgically analytical questions on this, but its been a hell of a day and very very long
So back to basics, we have been discussing the Hukou benefits as attached to an urban registration. With most migrants however, not only are you dealing with people from different and geographically distant places of registration, but also people who are rural residents. I understand that there are significant differences between the benefits offered to rural and urban residents and so once again, wonder how this is manifest in the way contributions are paid and entitlements received for rural migrant workers.
I suppose that this is an area of particular interest, as much of the target reform areas seem to be related to transforming rural residents into urban.
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Proud of China! Proud to be Chinese!
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Posted 10 March 2010 - 01:25 AM
Sampanviking, on Mar 10 2010, 07:38 AM, said:
Done
I was going to ask some insightful and surgically analytical questions on this, but its been a hell of a day and very very long
So back to basics, we have been discussing the Hukou benefits as attached to an urban registration. With most migrants however, not only are you dealing with people from different and geographically distant places of registration, but also people who are rural residents. I understand that there are significant differences between the benefits offered to rural and urban residents and so once again, wonder how this is manifest in the way contributions are paid and entitlements received for rural migrant workers.
I suppose that this is an area of particular interest, as much of the target reform areas seem to be related to transforming rural residents into urban.
I was going to ask some insightful and surgically analytical questions on this, but its been a hell of a day and very very long
So back to basics, we have been discussing the Hukou benefits as attached to an urban registration. With most migrants however, not only are you dealing with people from different and geographically distant places of registration, but also people who are rural residents. I understand that there are significant differences between the benefits offered to rural and urban residents and so once again, wonder how this is manifest in the way contributions are paid and entitlements received for rural migrant workers.
I suppose that this is an area of particular interest, as much of the target reform areas seem to be related to transforming rural residents into urban.
Thanx!
Btw, too many complicated question regarding this I will just call up the HR consultant and see what his responses are. Let's say, even my staff with all at least BsC degrees, who are all from rural areas also don't understand the exact rules too much. And 2 of them successfully changed Hukou to SZ. Besides some peculiar Social welfare rules between Hukou and non-Hukou, one of the biggest difference would probably be the rights to apply for a HK Visit permit and those kinds of stuff too.
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 10 March 2010 - 09:02 AM
I realise its getting complex, but I want to understand the reforms as they come in and to do so I think a good grounding in the existing system is crucial.
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Posted 10 March 2010 - 03:37 PM
Sampanviking, on Mar 10 2010, 05:02 PM, said:
I realise its getting complex, but I want to understand the reforms as they come in and to do so I think a good grounding in the existing system is crucial.
You nailed a big issue over here, I sincerely wonder if those in Beijing discussing the Hukou system reforms do actually have a "good grounding in the existing system.".
Deng Xiaoping: "If a party or nation does everything based on dogmatism, if it's rigid and obsessed by personality cult, then it cannot advance and its vitality withers. In the end, such a party or nation will collapse."
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Posted 11 March 2010 - 12:03 AM
I think it illustrates once again (and very nicely) that for a state often perceived and presented abroad as a centralised monolith, there is a high degree of decentralisation of power and resources and to a degree you would seldom if ever find in a Western country.
In that sense, I wonder if Hukou reform is on one level, a battle for power between the centre and the provinces?
In that sense, I wonder if Hukou reform is on one level, a battle for power between the centre and the provinces?
New Century China Forum:
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Proud of China! Proud to be Chinese!
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