Average Wages in China – Determining Minimum and Maximum Social Insurance Contributions
Average wages for 48 cities across China – from Guangzhou to Qingdao, Beijing to Luoyang
Nov. 19 – When determining social insurance contributions, there is a base figure for calculating the minimum and maximum contribution amounts for individuals whose salaries fall below or above certain thresholds. This base figure is derived from the average monthly wage of staff of the relevant city/province in the previous year, which is released around May to August each year.
As an example, in 2012, Beijing’s annual average salary was RMB62,677, with a monthly average salary of RMB5,223. In 2013, the cap for the social insurance base is three times the monthly average salary of 2012, i.e., RMB15,669. This gives a maximum contribution amount of RMB7,333 for the employer and RMB3,481.5 for the employee. For pension and unemployment insurances, the base figure for calculating the contributions is 40 percent of the 2012 monthly average salary (i.e., RMB2,089).
For medical, work-related injury and maternity insurances, the base figure for calculating contributions is 60 percent of the 2012 monthly average salary (i.e., RMB3,134). With these figures and the contribution rates, we are able to determine that, for an individual who has a Beijing urban hukou, the minimum contribution of the employer and employee per month is RMB783.5 and RMB237, respectively.
Some cities that release their own average wages nonetheless adopt the data at the provincial level in calculating social insurance payments. Also, for some cities such as Dongguan, the city’s average wages of the previous year are used to determine the pension ceiling, but provincial average wages are used to calculate the unemployment ceiling. In some other cities, two different average wage figures are released, with one applying to the five insurances, and the other applying to the housing fund. In the chart below, we focus on figures that apply to the five insurances.
Portions of this article came from the November 2013 issue of China Briefing Magazine, titled “Social Insurance in China.” In this issue of China Briefing Magazine, we introduce China’s current social insurance system and provide an update on the status of foreigners’ participation in the system. We also include a comprehensive chart of updated average wages across China, which is used to calculate social insurance contribution floors and ceilings.
Dezan Shira & Associates is a specialist foreign direct investment practice, providing corporate establishment, business advisory, tax advisory and compliance, accounting, payroll, due diligence and financial review services to multinationals investing in emerging Asia. Since its establishment in 1992, the firm has grown into one of Asia’s most versatile full-service consultancies with operational offices across China, Hong Kong, India, Singapore and Vietnam as well as liaison offices in Italy and the United States.
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