Wages, Insurance and Welfare of Employees


1) The foreign-invested enterprises can at their discretion determine what departments to be set up and structure of the employees according to the operation of the enterprises, but employment of candidates from other provinces and cities, Taiwan , Hong Kong , Macao and other countries/regions shall be submitted to Shanghai Labor & Social Protection Bureau for approval.
2) The wages scales, forms of payment, and allowance for employees working in foreign invested enterprises are to be determined by the enterprises.

Salary: The foreign invested enterprises shall carry out the regulations and rules on the minimum salary pf employees promulgated by the State and Shanghai Municipal Government. Beginning form December 2000, the minimum salary for employees working in the enterprises in Shanghai is RMB 445 per month and the minimum hourly wage is RMB 2.66 per hour, In 1999, the average annual wage for the employees in Shanghai is RMB 14147.

For the convenience of foreign investor to do feasibility study, a form of labor cost and the percentage of each item consisting of the labor cost in Shanghai 's foreign invested enterprises in 1999 is provided hereunder:

3) Social Insurance:

Chinese employees working in foreign invested enterprises shall have social insurance so that when they are old, sick, injured, unemployed, or giving birth to children, they can get help and compensation. Following insurances are compulsory:

Basic Pension: 22.5% of a company's payroll of the Chinese employees and 6% of an employee's monthly average wages of the previous year are paid by the company and the employee respectively to a local social insurance administration center.

Unemployment Insurance: 2% of the payroll of the Chinese employees is paid by the company and 1% of the employee's average monthly income of the previous year is paid by the employee to a local employment agency;

Medical insurance:

12% of a company's payroll of Chinese employees shall be paid to the local insurance administration center:

The payments mentioned above shall be handed over to local Social Insurance Administration Agencies.

4) Welfare: Employees working in foreign invested enterprises are entitled to the welfare stipulated by the State.

Housing fund: 15-20% of a company's payroll of the Chinese employees once a month. Allowances and subsidies: traffic allowance, single child subsidy, and leaves provided for by the Chinese government.

5) Working Hours: Foreign invested enterprises shall carry out the current law of PRC on working hours: no more than 8 working hours a day, and no more than 40 working hours a week on average. When a company can not implement the normal working hour system, due to special production requirements, it can carry out non-standard working hour system, i.e. non-fixed working hour system and comprehensively calculated working hour system.

6) For more information on labor laws and regulations, please consult Shanghai Labor Affairs Consulting Service Co. (Addr: 45 An Yuan Road. Tel: +86-21-32270289 Fax: +86-21-62767238)