When employing staff for our Buying Office in Shanghai one of the key items we need to look at is the Hukou of the applicant (ie. where they are registered). This blog explains why.
In China, the Hukou (户口) or Huji (户籍) dates back to ancient times. Hukou is a system that is required by law for households to apply a residency permit for the People’s Republic of China. The household registration officially records details of the whole family such as date of birth, names of members in the family, area of residency, etc…
However, the implementation of the Hukou system has been widely criticised recently with many calls to abolish this system. Authorities are pressured to remove this residency permit system to eradicate the civic inequality of rights and residence. For example, staff with a rural Hokou need to return to their home towns to receive proper medical aid as opposed to receive proper coverage in cities.
The Chinese government officially set up this register fo to control the movement of people between urban and rural areas. The labour population in China is individually categorized into “Rural” and “Urban” workers. Movements of the labour population in China are thus controlled tightly as an application of permits through relevant bureaucracies are required. Futhermore, people who worked outside their authorized domain or geographical area would not qualify for grain rations, employer-provided housing, or health care.
Taxation imposed on the population is different depending on which regions in China you are working and which location you come from. There is no standard minimum wage in China and each province sets its own standards (to an extent).
We have submitted an interesting list below is taken from our monthly salary & tax calculations for staff in our China Buying Office. Our HR service calculates staff salaries for us and we pay our staff through this external agency.
• Basis of Social Insurance / 社保基数
• Basis of Housing Fund / 公积金基数
• Gross Salary / 基本工资
• Adjustment (+/-) / 其它调整
• Pretax Salary / 应发工资
• Pension / 扣养保 / 8% *
• Medical Insurance 扣医保 / 2% *
• Unemployment Insurance 扣失保 / 1.0% *
• Housing Fund / 扣公积金 / 7% for Shanghai.
• Income Tax / 扣个调税 Progressive Tax.
• Others / 其他
• Net Salary / 实发工资
* The items in bold are additional taxes which are payable for staff with a City Hukou. Those with a Rural Hukou do not need these taxes. In this way you can see that it ODM ‘s Shanghai Rep office is encouraged via the tax system to employ non Shanghai Hokou staff.
- You: China ‘hukou’ system deemed outdated as way of controlling access to services
- China’s migrant workers want rights, not handshakes | Hsiao-Hung Pai (guardian.co.uk)
- Moving from country to city in China (theglobeandmail.com)