The Beijing Bureau of Labor and Social Security said December 4 that local companies will be allowed to cut their contributions to employee social insurance funds next year, and defer minimum-wage adjustments, as part of a series of measures to alleviate the financial squeeze caused by the worldwide crisis.

Guo Keli, vice director of the bureau, told the Beijing News that the capital is feeling the effects of the economic downturn, citing the challenges facing labor-intensive enterprises, especially export-driven ones.

A survey indicated that growth at the Yizhuang Development Zone, one of the engines of the Beijing economy, fell to one percent in October, and Zhongguancun, Beijing's Silicon Valley, is also showing signs of a slowdown.

"It will be some time before the financial crisis damages the real economy in Beijing," said Guo Keli. "But the situation is going to get worse in the first half of next year."

As more and more companies feel the pinch, the labor department is working on measures to help them weather the storm.

Based on the current capacity of the social security fund, the bureau has decided to cut employer contributions to unemployment insurance, medical insurance and workplace injury insurance.

Beijing is not the first place in China to do so. To ease pressure on companies, the government of Zhejiang Province allowed them to trim the portion of insurance they pay for their workers this month.

In addition, the Ministry of Human Resources and Social Security has ruled that Beijing should suspend minimum wage adjustments from early next year to avoid putting extra pressure on struggling companies.

Statistics show that increasing numbers of companies are signing formal labor contracts with workers who have more than three years' service, as required by the revised Labor Law which took effect in 2008.

But the bureau issued a circular December 4 saying that, in a review of Labor Law infringements, up to half the offences detected were of companies that had failed to sign written contracts with their workers as obliged to under the law.

The circular also said that some employers were demanding a cash deposit from workers on signing a contract, or enforcing illegal probation periods.

(China.org.cn by He Shan, December 5, 2008)