China’s new rules enforcing mandatory social security contributions are pushing firms to hire retirees exempt from payments, reflecting weak trust in the system. SMU Associate Professor of Finance Fu Fangjian said that mandatory social security contributions will inevitably trigger conflicts among various parties. He outlined several potential outcomes: employers and employees may need to renegotiate social security cost-sharing, some workers might change jobs, companies might opt to hire retirees (who are exempt from social insurance contributions), and rising cost pressures could even force some small businesses to close.
