Recently, the Chinese government has strengthened enforcement efforts for companies to pay social security, explicitly prohibiting the practice of “voluntary waiver of social security” which has sparked widespread public attention. On August 1st, the Supreme People’s Court of China issued a judicial interpretation stating that “any form of ‘voluntary waiver of social security’ agreement is invalid.” This interpretation will take effect from September 1st. While the intention behind this move is to legally protect the rights of laborers, concerns about the economic consequences have been raised in reality.
In the past few days, discussions about the new regulations have been heating up on social media platforms. Many workers have expressed anxiety about the “mandatory social security” policy, fearing it could lead to salary reductions or even an increased risk of unemployment.
This week, a female netizen expressed in a video, “Why are young people unwilling to pay social security? Starting from September 1st, the new regulations will be enforced, rendering all voluntary payment waivers agreements void. Workers who report violations can receive compensation equivalent to one year and one month of salary. With a monthly income of 5000 yuan, 20% is deducted for social security. The 429 million low-income group grit their teeth and bear it, with a record high of 23% of young people discontinuing their payments. Rent consumes half of the income, and social security has become a luxury. The pension fund has a shortfall of 1.2 trillion yuan, with 13 provinces diverting 40 billion yuan to fill the gap. Young people question: in the era of empty accounts, whose old age are we saving for?”
Amid the economic downturn and difficulties in business operations, many netizens question the suitability of mandatory social security, believing that the policy may force companies to cut labor costs, leading to a “nationwide salary reduction,” further dragging down consumption, and potentially exacerbating the wave of mortgage defaults. A popular comment on various social media platforms bluntly states, “The only result of mandatory social security is a nationwide salary reduction. Because you have to eat and can’t afford to be unemployed, you can only accept lower wages. Salary cuts will lead to a decrease in purchasing power, and more mortgage defaults.”
These opinions have resonated with many. A Weibo user commented, “Employees are not unwilling to pay social security, they just can’t afford it. In a situation where the cost of living is rising and income is unstable, it’s better to address immediate needs rather than commit money to the future.”
Many small and medium-sized business owners also express their inability to cope. Xutai, a sofa factory owner in Yuhang, Zhejiang province, told a journalist that mandatory social security will significantly increase the burden on businesses. “For an ordinary employee with a monthly salary of 3000 yuan, the company has to pay nearly 1000 yuan for their social security, making the total cost 4000 yuan. With rising labor costs and decreasing orders, we can only reduce salaries or hire fewer people, leading to even more unemployment.”
Xutai further questioned, “I can’t figure out if this is for increasing taxes or for undermining private enterprises. We estimate that in the second half of the year, thirty percent of private enterprises in Zhejiang may not survive. In the future, there may only be state-owned enterprises left, leaving no room for private enterprises to survive.”
Wang Xiaoping, who runs a western restaurant in Hangzhou, also told the journalist, “In the past, employees preferred higher salaries without paying social security. Now that the policy doesn’t allow it, it’s essentially increasing labor costs. Many restaurant owners are considering reducing basic salaries by twenty to thirty percent. Employees are naturally unhappy, but I also need to survive.”
Many workers also express a sense of resignation between “ideal abundance and harsh reality.” Liu Yun, working in a clothing wholesale store in Guangzhou, said he would rather take a higher salary without paying social security. “Of course, I know social security is good for us, but the company says once we pay social security, our salary won’t increase. Living costs are rising every year; even toilet paper sees a 15% price increase. If the company reduces my salary to pay social security, who will compensate for the part of my loss?”
He helplessly remarked, “With the economy so unstable now, those of us at the bottom already feel like the good days are over.”
According to the latest data from the National Bureau of Statistics of China, in the first half of 2025, the national per capita disposable income was 21,030 yuan, with a year-on-year growth of only 1.2%, the lowest increase in nearly five years. At the same time, consumer spending has remained sluggish. The China Banking Research Institute stated in the “2025 Second Quarter Macro Financial Outlook” that “the weak consumer confidence is directly related to the sluggish growth of disposable income and the shrinking real wages.”
Ms. Liu, working in a warehouse in Zhengzhou, told reporters, “My company used to pay me 4800 yuan, now they say they have to deduct social security, so they can only pay 4000 yuan. I still have a mortgage to pay, and I dare not switch jobs for fear that the new company would do the same. Our manager is also figuring out how to deal with the new regulations effective on September 1st.”
In the real estate sector, the Chain Home Research Institute released a report on “2025 Mortgage Default Observation,” which noted that in the first half of this year, the default rate in first-tier cities increased by 22.6%, with Shenzhen and Guangzhou seeing a continuous rise in the number of defaulted homes listed for sale. The research pointed out, “The rising pressure of repayment is closely related to the decline in income.”
Mr. Qi, an independent sociologist based in Beijing, warned, “In the current situation of continued economic downturn and frequent closures of private enterprises, related departments cannot just talk about ‘compliance’ without considering the actual consequences of policy implementation. Forcing businesses to bear social security obligations may lead to more serious social unrest, even triggering a nationwide backlash.”