Suzhou Increases Mandatory Social Insurance Contribution Cap

Jun. 18 – A topic of great interest for the business owners in China is social insurance. This is a mandatory contribution that both employer and employee make to the Government and it can make the cost of hiring an employee rise up to 45 percent higher than the gross amount payable. Nevertheless, a contribution base cap has been set in order to make it more affordable for companies and employers in China to hire upper-level employees.

The same as with the rates of the payments for the “five social insurances” (maternity, medical, unemployment, pension and work related injury) and housing fund, the base contribution caps are different according to the region. In April this year, Suzhou increased its social insurance contribution base cap and businessmen and investors in this area should be aware of it.

The contribution base cap established by the Suzhou Government was fixed at RMB 14,407 per month. This quantity is equal to three times the average salary per month in Suzhou. This cap means that companies and employees should calculate their mandatory benefits payments on the basis of RMB 14,407 every month, even if their salaries are higher. The social insurance contribution cap is higher in Suzhou than its neighboring cities, Kunshan and Wujiang, where the cap is only at RMB 12,915, however the base cap for these cities will also rise in the coming weeks as they release their updated average salary figures.

Furthermore, it is expected that Jiangsu Province’s minimum wage increase for 2013 will take place soon. To find more details and stay up to date with the most recent changes and data, people interested should check the Suzhou Government web site www.suzhou.gov.cn.

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