Beijing authorities announced on August 1 that starting from September 1, the voluntary abandonment of social security benefits would be completely banned. This decision has caused an uproar in the industry and workplaces, with almost no one pleased about it. Many are worried, and social media is filled with mockery, questioning, and lamentation. There have been reports circulating online about bosses shutting down their businesses early, employees suddenly losing their jobs overnight, and bosses strategizing or waiting to see how things unfold, while workers are filled with uncertainty about the future.
On August 14, the owner of a decoration company in western Sichuan, who goes by the pseudonym Tian Ning, told a reporter from Epoch Times, “I used to work as a carpenter. These days, I had to lay off the only three workers I had after this new policy was announced. From now on, I’ll handle the business myself. I do the designs, carpentry, and my father does the masonry work, my elder brother is the electrician, and my cousin does the painting. I’ll take on as much work as I can manage. If it’s too much, I won’t take it on. Right now, I mainly rely on loyal customers.”
He mentioned that even if he were to hire family members, social security contributions would still have to be made, but it would be for his own family members, and even if payments were delayed, his family wouldn’t report him. Nowadays, in business, the biggest fear is being reported by employees.
“Having family members contribute is not much of a burden. If the payment is not enough or in special circumstances, you can delay paying their salary. Can you do that with outsiders?” he said.
Tian Ning expressed that the new social security regulations do not align with the current national situation. Laying off workers is a necessary but tough decision. He believes there are no better alternatives and for the past few years, stability is the only viable option. He mentioned that layoffs are becoming more prevalent, and many are choosing to leave their jobs.
Regarding the compulsory social security contributions, different business owners have varying attitudes towards it. In a machinery company located in the Wuli Technology Industrial Park in Jinjiang City, Fujian Province, a worker named Xiao Feng told Epoch Times that their factory generates an annual profit of 30 million yuan. With four shareholders receiving bonuses of several million each, out of 32 workers, only ten are considered essential by the company and receive social security benefits. The remaining 22 workers are told by the factory management that they don’t have social security coverage and that they have to arrange it themselves. This practice is common in the area.
Xiao Feng mentioned that in the private sector, there have always been flexible operations concerning social security and taxes. “Who actually adheres to contributing based on the real salary? When it comes to personal income tax, in my case, I paid based on around 3,000 yuan a month, even if my actual monthly income, including overtime, was nearly 7,000 yuan.”
Having joined the company in October 2015, Xiao Feng has never paid social security. Despite the recent government mandate, their company still sticks to not contributing to social security, citing a wait-and-see approach to the policy’s implementation.
Many netizens on social media have expressed skepticism about the government’s push for universal social security contributions. While some prefer earning more cash upfront and are resistant to paying social security, Xiao Feng believes that contributing to social security is crucial. “It really is important. Nowadays, saving money is nearly impossible as you’ll end up spending it.”
He recalled a conversation with his boss in 2021, where he proposed paying all social security costs himself, but the boss disagreed, saying he couldn’t be affiliated with the company. “I had a realization that as long as the company covers the social security, I’m willing to pay my share.”
However, there’s a conflict as Xiao Feng and his colleagues work 10 hours a day, get only 4 days off a month, and earn around 4,500 yuan. After social security deductions, the take-home pay would be less than 4,000 yuan, not sufficient for someone supporting a family single-handedly.
In reality, Xiao Feng noted that their industrial park constantly faces a labor shortage. Higher wages are mostly attainable through overtime work, resulting in a vicious cycle where those with low wages feel overwhelmed after paying social security, while the employers think they are losing out. “Those on the losing end are always the grassroots. Skilled workers scare the employers, so they must contribute to social security. Those with education and legal knowledge adhere strictly to the regulations. Lower-level employees fear job loss and can’t afford to spend time understanding legal matters.”
As per the new social security regulations, any agreement, written or verbal, to voluntarily waive social security benefits is deemed invalid. Violators will not only have to retroactively pay the contributions but also face a daily late payment fee. Businesses will also have to compensate employees should they choose to leave. Under the Chinese Communist Party’s governance, people are familiar with the saying, “For every policy, there’s a countermeasure,” reflecting the search for alternative solutions within a rigid structure.
In response to the new regulations, various industries are brainstorming measures. Apart from the restaurant sector now hiring retired employees, an online trend called “substituting for one’s father” has emerged.
One blogger shared a humorous yet impractical idea of having elderly fathers sign labor contracts while their sons actually work, in an attempt to evade social security contributions. Tian Ning dismissed this practice as unfeasible, emphasizing that all unofficial agreements are invalid and would likely end in disputes.
Xiao Feng remarked that such an arrangement could only be feasible for those with connections, perhaps within state-owned enterprises. He recounted his own experience from 1998 when, at the age of 15, he landed a week-long job at a local tax office using a neighbor’s high school diploma. “If you have connections, you can secure high-paying positions with excellent benefits without the need to work regularly,” he noted.
On August 11, a blogger shared strategies for business owners to navigate the compulsory social security requirements. Apart from the “substituting for one’s father” concept, there were suggestions to break continuous employment periods in 25-day intervals, compelling workers to clock in at different outlets each month. This fragmentation of labor relationships is being labeled as the shared workforce 2.0 concept. Additionally, companies like Luckin Coffee and Starbucks have been requiring part-time employees to have social security coverage elsewhere, essentially transferring the responsibility. Delivery platforms are now encouraging riders to register as individual businesses, shifting the onus of social security contributions onto the workers themselves.
A popular meme circulating on Chinese social media proposes three unconventional solutions: “1. Let the elderly go to work since they wake up early and can commute for free without getting tired. 2. Send middle-aged individuals back to school since they regret not having pursued higher education in their youth. 3. Have young people stay in nursing homes as they lack skills, are idle, and can be given a phone to pass their time until they are old enough to enter the workforce directly.” This humorous take has resonated with many netizens.