China Extends Employment Support Policies to Stabilize Jobs
China’s Ministry of Human Resources and Social Security (MOHRSS), together with three other central government departments, has announced a policy package of “two extensions and one optimization” to support enterprises in maintaining and expanding employment. The measures, detailed in a joint notice issued on July 2, extend preferential unemployment insurance policies through the end of 2026 and optimize skills training subsidies, as reported by Xinhua News Agency.
Context
The new policy package arrives amid persistent headwinds in China’s labor market, including record numbers of college graduates entering the workforce, structural mismatches between available skills and employer demands, and broader economic slowdown pressures affecting business confidence. The unemployment insurance premium refund policy, first implemented in 2015, has been a key tool in the government’s employment stabilization toolkit, and this latest iteration expands both its scope and accessibility.
Key Developments
Extension of Premium Refunds
The first component extends the unemployment insurance premium refund policy, which allows enterprises that maintain or minimize layoffs to receive refunds on their contributions. Large enterprises qualify for refunds of up to 30% of the previous year’s actual unemployment insurance contributions, while small and medium-sized enterprises (SMEs) can receive up to 60%. The policy now also covers social organizations, law firms, accounting firms, and individually insured self-employed businesses. For enterprises with 30 or fewer employees, the layoff rate threshold has been relaxed to up to 20% of total employees, ensuring broader coverage.
According to a MOHRSS official quoted by Xinhua, beneficiary enterprises can use the refund funds for employee living subsidies, social insurance payments, job transfer training, and skills upgrade training, “lowering labor costs and easing operational pressure while stabilizing the workforce.”
One-Time Job Expansion Subsidy
The second component extends the one-time job expansion subsidy, offering up to 1,500 yuan (approximately $210) per person hired for enterprises and social organizations that recruit recent college graduates or unemployed youth aged 16-24. The subsidy specifically targets young job seekers, reflecting the government’s acute focus on youth unemployment. As China News Service reported, the policy is delivered through an optimized “application-free, immediate enjoyment” service model to streamline access.
Skills Upgrade Subsidy Optimization
The third component optimizes the skills upgrade subsidy by relaxing the contribution period requirement to one year and extending eligibility to unemployment benefit recipients. Workers can now receive subsidies for certificates in three categories: locally listed urgently needed occupations, occupations matching their enterprise’s industry, and digital or green occupations. Each worker may receive one subsidy per year, with up to three total for multiple urgently needed occupation certificates.
A MOHRSS official explained that this approach “guides workers to upgrade skills according to enterprise job needs, supports industrial transformation and upgrading, and serves the real economy and high-quality development.”
Analysis
The policy package represents a calibrated response to China’s employment challenges that addresses both immediate cyclical pressures and longer-term structural issues. The premium refunds and hiring subsidies provide direct financial relief to enterprises — particularly SMEs, which account for the vast majority of employment in China — while the skills training component acknowledges that many of the country’s employment difficulties stem from mismatches between worker qualifications and evolving industry demands.
The emphasis on digital and green occupations aligns with China’s broader industrial transformation goals, linking employment policy to the government’s strategic priorities in technology and sustainability. However, the effectiveness of these measures will depend on provincial implementation capacity, as funding mechanisms vary by region, with provinces having insufficient unemployment insurance reserves drawing from separate employment subsidy funds.
What’s Next
The policies are set to expire at the end of 2026, though further extensions remain possible depending on economic conditions. The measures build on the State Council’s broader “Stabilize Jobs, Expand Capacity, Improve Quality Action Plan” issued in May 2026, which introduced 18 specific measures addressing employment for college graduates, migrant workers, and other key groups. Observers will be watching for additional macroeconomic stimulus measures that address the root causes of economic slowdown, as well as further targeted interventions if youth unemployment remains elevated.