An article was circulating among Chinese websites regarding the Shanghai government’s increasing its mandatory social security contribution. The author said that the Shanghai government announced the average wage of urban employees in Shanghai in 2022 was 12,183 yuan (US$1,681) per month, and therefore it increased the mandatory minimum social security contribution to 7,310 yuan per month.
The author discussed two points. First, Shanghai’s average salary was 9,339 yuan in 2019. The newly announced 2022 figure was an increase of over 30 percent from 2019. This 30 percent salary increase was unheard of to many people in Shanghai, especially during this period in which China suffered a 3-year lockdown and economy stalk due to COVID. The authorities might just hike up the salary number in order to impose a higher minimum social security contribution, which is based at 60 percent of the salary.
Second, this increased social security contribution put self-employed people in the position of further struggling to make ends meet. The newly increased social security contribution requires self-employed people to pay at least 2,595 yuan from their own pockets (24 percent of the minimum contribution for the retirement fund and 11.5 percent for healthcare insurance). That is nearly 300 yuan more from a year ago. The author then argued that 47.5 percent of these self-employed people have a monthly income less than 8,000 yuan, out of which, they have to pay the 2,595 yuan for their social security contribution and probably 2,000 yuan for rent, leaving only 3,400 yuan (a very low amount) for daily expenses, not to mention that the government might take income taxes from them as well.
Source: Creaders.net, June 30, 2023