Key facts
- Employees are being compelled to pay backdated social security contributions, including employer portions.
- Failure to comply can lead to salary reductions or internal transfers.
- The initiative is driven by China's efforts to strengthen its social security funds.
China's drive to strengthen its social security funds has resulted in employees facing demands for backdated contributions, including amounts that should have been covered by their employers. He Miao, an employee at a large IT outsourcing company in Shandong province, received an ultimatum in July: pay thousands of yuan in backdated social security contributions or transfer to another subsidiary. Refusal meant being placed on a reduced basic monthly salary of 4,000 yuan ($593).
This policy shift appears to be part of a broader effort by the Chinese government to ensure the solvency and adequacy of its social security system, which may be facing increased strain due to demographic changes and economic pressures. The requirement for employees to cover employer contributions represents a significant financial burden and a potential shock to household incomes.