China’s tax authority said it will study the feasibility of offering preferential rebates to companies with a significant female workforce in a bid to stamp out discriminatory hiring practices that often overlook married women or new mothers.
The response from the State Taxation Administration on July 27 came after delegates from the National People’s Congress proposed the initiative as early as 2019 — and again earlier this year — to support women professionally and encourage companies to hire more female employees. Under the initiative, companies will be offered tax exemptions or subsidies, though details of the measures and its timeline are scant.
Chinese companies have often harbored prejudiced attitudes toward women, either by disqualifying prospective new mothers from the application process or firing pregnant women to save expenses. As a result, many women often have to delay childbirth or set aside their careers — both growing concerns for the Chinese government amid declining marriage and birth rates and an increasingly elderly population.
Responding to the 2019 proposal, China’s Ministry of Human Resources and Social Security then said the proportion of female workers in different industries varies greatly, which would make it difficult to allocate tax rebates fairly.
According to a 2020 survey involving over 65,000 people by recruiting agency Zhilian Zhaopin, about half of female respondents said they occupied low-level positions, compared with 31% of male workers. Only a smaller percentage of women secured roles in junior, middle, or senior management levels.
Wu Youshui, a lawyer specializing in China’s family-planning policies, told Sixth Tone that the idea of preferential tax policies is mainly aimed to encourage childbearing. However, questions remain over whether the tax cuts can cover the companies’ costs related to employees giving birth. He added there would also be issues with estimating the “large number of” female employees, which may lead to companies inflating their number of female employees.
According to current tax policies, companies can deduct costs related to childbearing, such as salaries paid during maternity leave, maternity allowance, and alternative employment expenses for maternity leave, before calculating the taxable income for corporate income tax.
In July, Chinese authorities also announced various financial incentives to lower the cost of birth and education and offer couples more support, including deducting fees spent on childcare for kids younger than three years old from individual income tax.
However, preferential tax treatment wouldn’t automatically increase birth rates, as,ultimately, giving birth remains the female employees’ choice, Wu said.
While such initiatives may endorse women’s interest, some online users have also expressed concerns that it may lead to tax evasion, with companies purposefully hiring many female workers but paying them the bare minimum.
Similarly, Hu Xiaoxuan, a 22-year-old graduate, said it’s important to consider the type of jobs and salaries of female workers when implementing tax cuts or subsidies. She added that if the number of female employees is the only indicator, companies may hire more women to just fill up low-level positions, while continuing to hire men for senior roles.
“The tax policies sound friendly (to women) … just some details need to be ironed out,” she told Sixth Tone.
Editor: Bibek Bhandari.
(Header image: Employees at an office in Hangzhou, Zhejiang province, Aug. 29, 2018. People Visual)