Shanghai has introduced a groundbreaking social insurance subsidy that halves employer social insurance contributions during female employees’ maternity leave. For foreign firms, the policy offers more than just cost savings — it helps retain female talent, lowers compliance risk, and enhances ESG performance in China’s evolving labor market.
China is undergoing one of the most profound demographic shifts seen anywhere in the world. In 2024, the country’s total fertility rate fell to around 1.01, far below the replacement level, while Shanghai — as one of China’s largest metropolitan areas — recorded an even lower rate of 0.72. For many women in the city, workplace pressures and the high cost of raising children remain key barriers to starting or expanding families.
Against this backdrop, in August 2025, the Shanghai Municipal Human Resources and Social Security Bureau issued the Notice on Implementing Social Insurance Subsidies for Employers During Female Employees’ Maternity and Childbirth Leave (hereinafter the “Notice”). By offering direct subsidies on social insurance contributions, the policy introduces a cost-sharing mechanism among the government, enterprises, and families. For employers — particularly foreign-invested enterprises (FIEs) in Shanghai — it addresses the pressing challenge of retaining and supporting female talent, while for policymakers it represents a concrete step toward building a more family-friendly society in China.
This article will break down the policy’s key provisions, provide a cost impact assessment for employers, highlight illustrative case studies, and situate the measure within the broader demographic context to help foreign businesses in Shanghai understand the practical value of this policy.
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Key aspects: What is subsidized, who qualifies, and how does it work?
The central aim of the Notice is straightforward: reduce the labor costs that employers incur when female staff take maternity leave, while ensuring women’s social insurance rights remain fully protected. This is achieved through a “half the contributions, paid by government” mechanism, whereby employers’ social insurance contributions are cut by 50 percent, with the government covering the remainder. For foreign companies in Shanghai, three aspects of the policy are most relevant:
1. Who is eligible? — Full coverage for all registered employers, including FIEs
From January 1, 2025, all employers registered in Shanghai — including companies, social organizations, law firms, accounting firms, and individually owned businesses that participate in social insurance — are eligible to apply. The requirement is simple: employers must grant female employees the statutory 98 days of maternity leave plus an additional 60 days locally awarded childbirth leave, and continue paying social insurance contributions during this period.
Points of particular interest for foreign firms:
- No child-order limit: Subsidies apply regardless of whether the birth is the employee’s first, second, or subsequent child.
- Dispatched employees: Subsidies for dispatched workers are applied for by the dispatching agency, which must then transfer the full amount to the host company that actually pays wages and contributions. (Employees dispatched to government or public institutions are excluded.)
2. How much is subsidized? — 50 percent of employer contributions, for six months
Employers can claim 50 percent of the actual employer-paid portion of the following social insurance contributions for the female employee:
- Pension insurance (16%)
- Medical insurance, including maternity (10%)
- Unemployment insurance (0.5%)
- Work-related injury insurance (0.2%–1.9%, depending on industry risk)
On average, employers contribute about 27.2 percent of the employee’s salary to these programs (assuming one percent for injury insurance). The subsidy applies for six consecutive months, starting from the month of childbirth.
3. How to apply? — “Pay first, claim later,” with a digital-first process
Applications follow a streamlined three-step process:
- Application: Within one year after maternity/childbirth leave ends, the employer submits the application materials, such as the subsidy application form and the child’s birth certificate, to the local Human Resources and Social Security Bureau (the child’s birth certificate can usually be verified via data sharing, eliminating paperwork).
- Review: Within 20 working days, the district bureau cross-checks social insurance records and birth data, then confirms the subsidy amount.
- Payment: Funds are jointly financed by the municipal and district governments (50:50) and transferred directly into the employer’s bank account.
The process is designed to be convenient, with authorities emphasizing reduced paperwork, shorter processing times, and online-first applications. The entire process is expected to be handled digitally through the “One-Stop Online Government Service Platform”, removing the need for in-person visits across departments.
Employers may start submitting online subsidy applications from late August 2025.
Frequently asked questions
Q1: If a female employee gave birth in December 2024, can the employer still apply for the subsidy?
Answer: No. The subsidy only applies if the child is born on or after January 1, 2025. Employers must also (1) grant maternity and childbirth leave in line with Shanghai policy, and (2) continue paying social insurance contributions during the leave period.
Case in point: At Company A, one employee gave birth in December 2024 (not eligible), while another gave birth in January 2025 (eligible).
Q2: Does the subsidy cover the employee’s contributions or only the employer’s?
Answer: The subsidy applies only to 50 percent of the employer’s contributions, not the employee’s share.
Case in point: At Company B, an employee gave birth in January 2025. The employer paid full contributions for January through June, then applied for the subsidy. The company was reimbursed for half of its own contribution share across those six months.
Q3: Is there a time limit for applying?
Answer: Yes. Employers must apply within one year after the employee’s maternity/childbirth leave ends. The subsidy is a “pay first, claim later” mechanism and is disbursed in a single lump sum once six months of contributions have been made.
Case in point: At Company C, HR noted that one employee who gave birth in March 2025 returned to work in late summer, while another expected to deliver in September 2025. HR can apply separately for each case, but each application must be filed within one year after the end of the respective employee’s leave.
Q4: Can the maternity subsidy be combined with other social insurance subsidies?
Answer: No. Employers already receiving other government social insurance subsidies for the same employee — such as subsidies for hiring registered disadvantaged workers, recent graduates, or early-stage entrepreneurs — cannot simultaneously claim the maternity subsidy.
Case in point: At Company D, HR wanted to claim the maternity subsidy for an employee who already qualified the firm for a “disadvantaged worker employment subsidy.” The application was denied: companies must choose one subsidy stream per employee.
Practical tip for foreign firms: The most common pitfalls are expected to be missing the application window and confusion over overlapping with other subsidies. HR teams should track expected due dates and leave periods proactively and confirm whether the company is already benefiting from another subsidy for the same employee before applying.
How much can a foreign company in Shanghai save?
One of the most tangible benefits of the Notice is the direct reduction in employers’ social insurance costs during female employees’ maternity and childbirth leave. The following case studies illustrate the financial impact:
Single employee case
Consider a German-invested manufacturing firm in Shanghai. Employee Ms. Zhang earns RMB 20,000 per month and gives birth in March 2025, taking 158 days of maternity leave plus childbirth leave. Under the policy, the company is eligible for six months of subsidy:
Employer’s original contribution:
- Monthly contribution = 20,000 × 27.2% = RMB 5,440
- Six months = 5,440 × 6 = RMB 32,640
Subsidy received:
- 50% × 32,640 = RMB 16,320
Actual employer cost:
- 32,640 – 16,320 = RMB 16,320
The company’s social insurance expense is cut in half, saving approximately RMB 16,300 for one employee.
Multiple employees case
The savings are even more significant in companies with larger female workforces. For example, a US-invested pharmaceutical company with 100 female employees (average salary: RMB 25,000/month) expects 20 employees to take maternity/childbirth leave in 2025.
Per employee:
- Monthly contribution = 25,000 × 27.2% = RMB 6,800
- Six months = 6,800 × 6 = RMB 40,800
- Subsidy = 50% × 40,800 = RMB 20,400
For 20 employees:
- 20 × 20,400 = RMB 408,000
The company saves over RMB 400,000 in one year — roughly equivalent to the annual salary of a mid-level manager.
While the policy is positioned as part of Shanghai’s demographic strategy, for companies it represents a real, measurable reduction in HR costs. Firms with larger female employee bases will see particularly strong “scale effects,” making the subsidy a significant factor in workforce cost planning.
Also Read: Reducing Labor Costs in China with a Sustainable Workforce Structure
Beyond cost savings: The “hidden returns” for foreign firms
For FIEs in Shanghai, the value of the policy goes far beyond reducing payroll costs. The policy can strengthen talent management, improve compliance predictability, and enhance corporate ESG positioning.
Reducing “maternity anxiety” and improving female employee retention
In many multinational companies in Shanghai, women account for over 40 percent of the workforce — especially in sectors like healthcare, consulting, and technology. Yet maternity leave often carries the risk of stalled careers or even job loss. By lowering the financial burden on employers, the Notice indirectly encourages female employees to feel more confident about taking maternity leave and returning to work, helping companies retain critical talent.
Lower compliance costs and improved investment outlook
Shanghai hosts over 80,000 FIEs (2024 data), making it one of the most important hubs for global companies in China. The introduction of the Notice marks a policy shift from symbolic advocacy to tangible financial relief, signaling to foreign investors that Shanghai is committed to sharing the social responsibility of supporting families. This reduces uncertainty for HR cost planning and sends a positive message about the long-term sustainability of investing in China.
ESG alignment and enhanced corporate reputation
Globally, gender equality and employee welfare are increasingly important metrics in ESG ratings. By ensuring that maternity protection is supported by public subsidies, the Notice allows foreign companies to highlight family-friendly practices in their ESG disclosures. This can be particularly valuable in attracting international investors who prioritize responsible investment, such as European pension funds and US socially responsible investment alliances.
Key takeaway
The notice represents Shanghai’s latest step in providing “targeted support” to balance demographic challenges with employer needs. For foreign firms, the policy is not only a direct financial relief but also an opportunity to reinforce people-centered management. As the policy takes root, companies that integrate family-friendly measures into corporate culture will be better positioned to grow alongside the Chinese market. After all, supporting women’s full participation in the workforce is not just a policy goal — it is one of society’s most valuable forms of “human capital.”
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