Recently, the Central Political and Legal Affairs Commission named “formaldehyde cabbage,” “dichlorvos disinfection,” and “liquid-soaked bayberries,” in very strong terms, saying these incidents “severely undermine the bottom line of food safety.” When I read this news, the first thought that popped into my head was not “where is the regulation,” but a question that seems completely unrelated: do these food industry players pay social insurance?
I know this association sounds strange. Food safety and social insurance—one is about what goes on the tip of your tongue, the other about retirement—how are they connected?
But if you pull out the business entities behind those food safety incidents in recent years and take a look, you will find an uncomfortable pattern: the links where incidents occur are often also the links with the weakest social insurance compliance.
A set of not-so-pretty data
I checked the data. Some media reports previously stated that, according to data from the China Cuisine Association, the social insurance participation rate in the catering industry is less than 30%. In last year’s Xibei incident, this company, which at the time was considered one of the top benchmark catering enterprises, was revealed to have fewer than 700 of its 18,000 employees actually covered by social insurance—a participation rate of less than 4%. Some people in the catering industry pointed out that even for large chain brands with over a thousand stores, full participation is often achieved only at the headquarters level, while a large number of frontline stores, especially franchise stores, still have not fully implemented social insurance for their employees.
Looking further upstream, the agricultural product procurement segment is even more loosely organized. Just like in the “dichlorvos disinfection” incident mentioned earlier, the Xiamen Lülin Sen Environmental Technology Co., Ltd., which provided pest control services to dozens of chain restaurants, had only 4 people covered by social insurance. A pest control service provider serving over a hundred restaurants, with only 4 people covered by social insurance, means that the vast majority of its frontline workers are engaged in “flexible employment,” “temporary labor,” or simply “no contract” arrangements.
Others, such as the entity involved in the “formaldehyde cabbage” case, are vegetable purchasers. The loaders and porters they hire are mostly paid daily or by the trip, and social insurance contributions are almost zero. The same goes for “liquid-soaked bayberries.” More than ten bayberry purchasing points in Longhai District, Zhangzhou, Fujian, which were exposed, mostly do not have corporate legal person status, and their employment relationships are mainly temporary and seasonal.
None of this is a coincidence.
Without social insurance, what gives companies the right to compete in the market?
When a business entity does not pay social insurance for its employees, it is essentially shifting the labor costs it should bear onto society. The money saved either becomes profit or becomes ammunition in a price war. In low-margin industries, this is enough to determine whether a company can survive.
Thus a vicious cycle emerges: companies that do not pay social insurance gain a cost advantage and undercut competitors with low prices; compliant companies spend real money and are at a disadvantage in price competition; in order to survive, compliant companies either follow suit and cut costs, or they are eliminated. The entire industry is dragged into a “race to the bottom.”
A company that cuts corners even on basic employee protections has a cost structure that no longer allows it to make real investments in ingredients, hygiene, and operating standards. Because those investments do not bring immediate returns, while the cost advantage from saving on social insurance is realized immediately.
The tightening net
Of course, recently everyone has also seen that at the national level, the attitude toward social insurance contributions is firm.
The first force comes from the tax system. Starting June 1 this year, State Taxation Administration Announcement No. 10 of 2026 officially took effect, and social insurance fee inspections fully adopt the procedures and standards of tax law enforcement. The Golden Tax Phase IV system has opened data channels across 11 departments, including taxation, human resources and social security, banks, and industry and commerce, enabling automatic, real-time, person-by-person mandatory comparison between corporate individual income tax filing bases and social insurance contribution bases. A discrepancy rate exceeding 10% can trigger a warning, and continuous excesses will be transferred to on-site audits. Many places have explicitly required that the social insurance consolidation rate be no less than 70%, and will gradually increase it to 80%, 90%, with a target of 100% by 2030.
More critically, the “National Tax Administrative Penalty Discretion Benchmark (2026 Edition),” which will take effect on November 1, formally incorporates social insurance fees into the unified national tax administrative penalty discretion system. If an employer fails to pay or underpays social insurance fees and still fails to pay after being ordered to do so within a time limit, a fine of 1 to 3 times the amount owed shall be imposed. Social insurance contributions have been included in the “Tax Payment Credit Management Measures,” and credit downgrades will affect corporate bidding, loans, and financing.
For labor-intensive industries such as catering and retail and outsourced positions, the pressure brought by data transparency is most direct. Once individual income tax, bank flow, and social insurance bases are cross-checked, the era of paying a salary of 10,000 while contributing social insurance at the minimum base is basically over. The old “industry tacit understanding” of controlling costs through low bases is being tightened bit by bit by big data.
The second force comes from the judicial system. The “Interpretation (II) of the Supreme People’s Court on Issues Concerning the Application of Law in the Trial of Labor Dispute Cases,” which took effect on September 1, 2025, clearly stipulates that agreements between employers and workers to waive social insurance contributions are invalid. An article on the WeChat public account of China’s legal popularization said it very clearly: “The essence of the social insurance system is ‘social mutual aid’… This public attribute determines that social insurance contributions are by no means a purely private matter between labor and capital, but a public affair related to the overall stability of society.”
The policies of the Ministry of Human Resources and Social Security are also tightening in step. Starting in 2026, the social insurance contribution base will be strictly determined according to the average monthly wage of urban employed persons in the previous year under the full-caliber system, eliminating differentiated local determination standards and unifying the national caliber. Contribution gaps can only be made up in the current year, and the channel for one-time cross-year retroactive contributions has been fully eliminated. Employers must complete social insurance registration for employees within 30 days of employment. At the same time, social insurance coverage for workers in new forms of employment is also being expanded. The Ministry of Human Resources and Social Security has made it clear that it will “promote high-quality participation” and improve the system for transferring and continuing social insurance relationships.
In short, it is one sentence: employers must pay the social insurance they are supposed to pay.
People without long-term expectations find it hard to take responsibility for quality
Let’s return to the people themselves.
I very much understand the difficulties of the catering industry, because many people around me work in this industry. They are either temporary workers in catering, self-employed individuals in the agricultural product circulation segment, or farmers who grow some vegetables and fruits themselves and sell them at the market. They have no social insurance, no labor contracts, and do not know where tomorrow’s living expenses will come from. If you ask someone who earns meager wages every day and lives from hand to mouth to voluntarily reject a batch of formaldehyde cabbage, or to insist on reporting after finding stones in tea leaves, what is his rational choice?
Silence. Obedience. Pretend not to see.
This is not to say that they have no conscience because they are low-income. Rather, this industry environment has not left sustainable space for conscience.
A person with social insurance, a formal contract, and stable career expectations faces a much higher cost of silence when confronted with an instruction like “use industrial dye to color children’s food.” The risk of reporting is backed by labor law, and basic security after leaving the job will not instantly drop to zero. But in an already temporary and unprotected employment environment, obedience is the more “rational” choice.
Professor Zhu Qing of Renmin University once put it very well. He said that non-compliant social insurance contributions not only infringe on workers’ social insurance rights, but also “leave hidden dangers for the long-term development of enterprises.” Some companies have reduced current labor costs by underreporting social insurance contribution bases. “In the long run, this practice easily plants hidden dangers,” and the hidden losses far exceed the amounts “saved” on the books at the time.
How was this debt incurred?
Why is social insurance compliance so weak in these food and catering segments?
Part of it is practical difficulty. Catering, agricultural product procurement, and pest control services are low-margin industries with volatile employment and obvious seasonality. Full social insurance contributions do bring cost shocks.
But the more fundamental reason is that this debt was never calculated clearly when the system was first established.
The social insurance system was gradually built during the reform and opening up process. In the early days, localities implemented prefecture-level or even county-level pooling. Contribution rates varied widely, and operational bases were largely local red-headed documents and meeting minutes. In order to expand coverage, localities tacitly allowed proportional discounted progress and “converted” historical years of service at low standards. What seemed flexible at the time actually buried an unclearly calculated debt for future collection and management order.
Some people also misinterpreted social insurance as “something to appease foreigners,” believing it was a supporting measure for attracting investment after joining the WTO. The result is that things were delayed whenever possible and discounted whenever possible, and the historical debt grew larger and larger.
But the corporate social responsibility of social insurance has never been just for outsiders to see. It is about setting rules for healthy competition in the domestic market. Without social insurance, companies shift the labor costs they should bear onto society, undercut competitors with low prices, and compliant companies are eliminated in reverse.
This logic is most directly reflected in the field of food safety. Companies that do not pay social insurance have an operating model that naturally tends toward short-termism—make a quick buck and leave, never mind what happens afterward. And food safety is precisely the industry that can least tolerate short-sightedness.
Only when the social insurance system is fully implemented can food safety have a prerequisite guarantee
Governing food safety, putting out fires at the end is of course necessary. But if we do not ask why these business entities have been able to “run naked” on social insurance compliance for so many years, and do not ask why those temporary, cash-based, contractless employment forms have been able to exist for so long, then we are only treating the symptoms.
The tax authorities’ classified and step-by-step progress, the Supreme People’s Court’s judicial interpretation, and the Ministry of Human Resources and Social Security’s expansion of participation—on the surface they are all about social insurance, but in reality they are doing the same thing: making sure companies that do not follow the rules no longer gain a competitive advantage.
Of course, social insurance compliance is not a panacea for food safety problems. Regulatory capacity, the cost of violations, supply chain transparency, and consumer rights protection channels are all independent variables. A company that compliantly pays social insurance can still have problems due to regulatory failure.
But conversely, for a business entity that does not even pay social insurance and relies entirely on temporary labor, I do not think anyone is truly willing to place their trust in them.
In the final analysis, social insurance is about laying the foundation for the order of market competition. If the foundation is not laid well, any building constructed on top of it will be crooked. With so many in the catering industry not paying social insurance, and almost all workers in the agricultural product procurement segment being temporary, talking about food safety in such an employment ecosystem is like talking about conscience in a market without fair competition—the outcome depends largely on luck.