The Guangzhou Social Security Fund Management Centre recently issued a reminder circular on participation in medical insurance, reminding all enterprises (including Hong Kong-funded enterprises) except individually-owned businesses to provide medical insurance for current and retired workers, including migrant workers. Those that have not taken any action will be subject to mandatory measures in accordance with law after 26 April.

Under the Trial Measures of Guangzhou on Medical Insurance for Non-Permanent Employees, migrant workers are entitled to hospitalisation insurance. With the exception of public servants and employees of state organs and public institutions, basically all current employees in Guangzhou now have medical insurance coverage, with a total number of 2.1 million.

According to the circular issued by the Guangzhou Social Security Fund Management Centre, the Interim Regulations on the Collection and Payment of Social Insurance Premiums and other regulations stipulate that all current employees (including non-resident personnel) and retired employees of enterprises (except individually-owned businesses), public institutions, state organs, social organisations and private non-enterprise institutions within the administrative area of Guangzhou (excluding district- and county-level cities not yet included in overall city-level planning, i.e. Panyu, Huadu, Zengcheng and Conghua), as well as current and retired employees of individually-owned economic entities with local residence registration, must join the city's medical insurance plan. Units that have not yet joined the scheme must complete insurance registration formalities with their local social insurance agent before 26 April. Those that have not done so after the due day will be subject to mandatory measures in accordance with law.

Technicians, salesmen, clerical staff and professional and technical personnel in such fields as logistics are much sought after in the job market, but many companies are only willing to offer contracts but not insurance benefits to employees. Many job-seekers are unwilling to apply for these jobs. A decoration and design engineering company in Guangzhou said it is offering good pay but not insurance benefits to technical staff like electricians, welders and painters. Many units recruiting salesmen also said they do not provide insurance coverage.

The reason why so many enterprises are not willing to offer insurance coverage to employees is that they are concerned about cost increases. For example, an enterprise has to spend at least Rmb400 on each employee to provide five types of social insurance coverage, which is no small burden for any enterprise. Moreover, some migrant workers would choose to withdraw from the insurance scheme when they quit their jobs, which means that the insurance premiums already paid will end up going into the social insurance pool.

Although social insurance premiums will increase the manpower cost of enterprises, they are required by law and enterprises violating the regulations will be punished by labour supervision departments.