Shenzhen Wage Fund Payouts Hit Record High as Corporate Insolvencies Rise
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In the first quarter of 2025 alone, the fund advanced more than 20.55 million yuan to cover unpaid wages for 130 employers, 60 of which had filed for bankruptcy, according to quarterly data released by the Shenzhen Human Resources and Social Security Bureau. Photo: VCG
A government notice promising to cover the unpaid wages of a bankrupt electronics maker went viral on Chinese social media recently, shining a light on a little-known safety net in this southern tech hub that is straining under the weight of rising corporate insolvencies.
The notice from the Bao'an District Human Resources Bureau stated that the government would advance approximately 293,000 yuan ($42,538) to 15 employees of Shenzhen Yemaokang Electronic Technology Co. Public records show the company has entered bankruptcy liquidation.
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- Shenzhen’s wage guarantee fund advanced a record 73.19 million yuan to 4,044 employees in 2024, but recovered only 9.86 million yuan from employers.
- The fund, established in 1996, is financed by employer levies and government subsidies, but fee collection has been suspended since 2018.
- Only Shenzhen and Shanghai have similar models, and concerns persist about long-term sustainability and reliance on public funds for private wage debts.
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Who’s Who
- Shenzhen Yemaokang Electronic Technology Co.
- Shenzhen Yemaokang Electronic Technology Co. is a bankrupt electronics maker in Shenzhen, China. Approximately 293,000 yuan ($42,538) was advanced to its 15 employees by the Bao'an District Human Resources Bureau to cover unpaid wages through a local wage guarantee fund.
- Shenzhen Putianda Intelligent Equipment Co.
- Shenzhen Putianda Intelligent Equipment Co. (深圳市普天达智能装备有限公司) owed over 4.6 million yuan in back pay to its employees. After its bankruptcy petition was accepted by a court, a Shenzhen guarantee fund advanced more than 2.06 million yuan to its 60 employees. This highlights the region's wage safety net for workers of bankrupt companies.
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What Happened When
- 1996：
- The Shenzhen Special Economic Zone Wage Payment Ordinance was established, creating a wage guarantee fund.
- 2008：
- The employer levy for the wage guarantee fund was adjusted to a flat fee of 400 yuan per company annually.
- By the end of 2017：
- The wage guarantee fund had accumulated a surplus of 938 million yuan.
- 2018：
- Hu Jiannong commented on the surplus and sustainability of the wage guarantee fund.
- 2018：
- The annual levy on employers was suspended, starting from this year.
- Between 2018 and 2022：
- Collection of the wage guarantee fee was suspended.
- 2020：
- The State Council issued a regulation on migrant worker wages which did not mandate city-level guarantee funds.
- By the end of 2022：
- Fund modeling predicted a surplus of 733 million yuan would remain even after suspension of fee collection.
- 2022：
- Annual payouts from the Shenzhen fund peaked previously at nearly 58.5 million yuan.
- 2023：
- Annual payouts dipped from the previous peak.
- 2023 to 2025：
- Collection of the employer wage guarantee fee was again suspended.
- 2024：
- The fund advanced 73.19 million yuan to 4,044 employees, the highest payout on record, with only 9.86 million yuan recovered.
- 2024：
- There was a year-over-year increase of more than 76% in payouts compared to 2023.
- Between 2018 and 2024：
- The fund paid out a total of 326 million yuan and recovered nearly 58 million yuan.
- First quarter of 2025：
- The fund advanced more than 20.5 million yuan to employees from 130 companies, with 60 companies having filed for bankruptcy.
- July 2025：
- The Department of Human Resources and Social Security of Qinghai province responded to a legislative proposal, noting only Shanghai and Shenzhen have piloted such guarantee funds.
- December 2025：
- Zhengding County in Hebei province issued regulations capping emergency payouts.
- As of 2026：
- Collection of employer wage guarantee fees had not yet resumed.
- As of 2026：
- Current data suggests the fund is performing within previously predicted parameters.
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