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Guangzhou slashes insurance premiums

By Liang Qiwen (China Daily)
Updated: 2009-04-09 09:59

GUANGZHOU: Social insurance premiums will be cut to help combat the economic downturn, the labor and social security bureau said.

Cui Renquan, the bureau's director, said about 9 million people will save a total of about 3 billion yuan ($441 million) from the temporary discount.

The move follows similar reductions on insurance premiums in other cities around China.

Cui said: "We hope the new and temporary insurance policy will help enterprises to overcome economic difficulties and maintain their labor force."

The bureau said it could afford to fund the cut because it had up to 8 billion yuan ($1.3 billion) of insurance funds at present.

Under the new policy, the price of unemployment, medical and industrial injury insurance will be discounted until the end of the year, but the cost of maternity and retirement insurance is unchanged.

Local businesses said they hoped the cheaper premiums would continue into next year.

"We can save on the cost of labor thanks to the new policy, but it is just a temporary measure," Huang Jin, a shoe factory owner, said. "What if the economy is even worse next year?"

From May 1, the industrial injury insurance premium will decrease from between 0.5 and 1.5 percent of an employee's monthly salary to 0.4 percent.

Medical insurance premiums for urban employees will drop from 7-8 percent to between 3-4 percent.

About 6.2 million people in the province will save a total of 785 million yuan ($115 million) from the reduction in these two premiums.

The announcement yesterday follows a decision in January to cut premiums for unemployment insurance.

Nearly 3 million people are covered by unemployment insurance in Guangzhou and the discount represents a saving of 2.2 billion yuan.

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