‘Retain workers and gain incentives’
BEIJING: China’s state council, the cabinet, said yesterday the government will offer financial help to struggling companies that keep staff on payrolls in a time of increasing economic headwinds.
For firms that chose not to cut staff or reduced the number of job cuts they were planning next year, the government would return half of their unemployment insurance fees, said the state council on its website.
The government also urged the country to pay “high attention” to the impact on employment from increasing economic downward pressure.
Beijing would also provide subsidies to out-of-job workers who were undergoing job training, the state council added.
Early last month, China flagged that it would take “targeted” steps to promote employment, but it did not specify measures would be tied to job retention.
Facing cooling economic growth, Chinese officials have pledged in recent months to reduce companies’ tax burdens in various ways, including cuts in social security contributions, to support business growth, profitability and employment.
Both official and private factory surveys have pointed to a prolonged period of job cutting in manufacturing, and Beijing is keen to keep employment stable as the trade war with the United States has meant uncertainty for factory workers’ job prospects.
A newly-created national guarantee fund will offer guarantee for small businesses when it comes to securing bank loans, said the government, in a bid to guide more financial resources to support job creation.
Analysts said Chinese companies faced some of heaviest tax burdens in the world when social insurance contributions were included.
The World Bank estimates China’s effective corporate rate is 67.3 per cent, the world’s 12th highest. China’s surveyed jobless rate in June was unchanged from May at 4.8 per cent, official data showed.
China’s economic growth “could well fall towards six per cent, if not lower, in first quarter of 2019,” said DBS economists in a note to clients this week.