COMPANIES in Shanghai may save 13.5 billion yuan (US$2.1 billion) in operational costs this year after being allowed to pay less to a social security fund for their employees.

Shanghai has decided to cut the proportion that companies pay to the social security fund by 2.5 percentage points to ease their operational costs as part of supply-side reforms, the city government said yesterday.

Companies need to pay the equivalent of 20 percent of their employees' income to a pension fund account, down from 21 percent, and 10 percent to a medicare fund, down from 11 percent. The rate of payment to the unemployment fund was reduced to 1 percent from 1.5 percent.