The State Council has adopted a slew of policies to reduce corporate burdens and stabilize the job market amid the novel coronavirus pneumonia outbreak, with businesses nationwide expected to see their social insurance contributions cut by 500 billion yuan ($71.2 billion) this year.

At its executive meeting on Feb 18, the Cabinet passed a decision to temporarily lower or waive social insurance contributions for businesses and defer their payments to the housing provident fund to offer them a cushion against the impact of the outbreak.

All businesses in Hubei province, which has been hit hardest by the outbreak, will see their social insurance contributions waived from February to June. The waiver will also cover small and medium-sized enterprises outside the province, a statement released after the meeting said.

Large companies in other provincial-level areas will see their contributions halved from February to April, the statement said.

Premier Li Keqiang said at the meeting that a large number of businesses have suspended operations due to the outbreak, which had directly affected the job market and the incomes of many individuals.

He said the situation was especially severe for SMEs, which were more susceptible to risks, and helping them survive was crucial to stabilizing employment.

"We need to make all-out efforts to help businesses sustain themselves through this difficult period and avoid massive layoffs," he said.

You Jun, vice-minister of human resources and social security, told a news briefing on Feb 20 that the State Council's move will cut businesses' social security contributions by more than 500 billion yuan.

The ministry had taken the balance of the social insurance fund into account and would make sure pension funds were issued in full, and on time, he said.

The meeting also adopted a measure allowing businesses to apply for deferral of their payments to the housing provident fund, a government funding scheme that helps people save for homes. Failures by employees to repay their loans from the fund due to the epidemic will not be viewed as defaults.

To stabilize the job market, the meeting called for the cancellation of unwarranted restrictions that make it difficult for employees to return to work.

The meeting also highlighted the need for stronger steps to help migrant workers and college graduates find jobs, with measures to support businesses to increase the number of jobs offered on flexible pay arrangements.

A survey conducted by the China Association of Small and Medium Enterprises, which polled 6,422 SMEs nationwide, found that over 85 percent face relatively large impacts from the outbreak, with funding shortages and weakening demand the biggest challenges.

Shen Gaohua, vice-president of the association, said SMEs must lower their costs across the board in order to survive the outbreak.

"It would be like hibernation. Only by surviving this difficult period can we start all over again in the near future," he said.

It was also important for SMEs to take full advantage of the favorable policies rolled out by authorities, such as credit support, and tax and fee cuts, he added.

A report by researchers from Tsinghua University's School of Economics and Management said over 30 percent of businesses expected their turnover to halve this year, with another 27.8 percent expecting a drop of 20 to 50 percent.

The report, which surveyed 1,435 SMEs, found that staff salary and social insurance contributions accounted for close to 60 percent of corporate costs, with rents taking up 16.6 percent.

To make it through the difficult times, 22.8 percent of businesses were planning layoffs or pay cuts for employees, while another 15.7 percent were suspending business operations, the report said.

The researchers warned that if the outbreak lasts for more than half a year, 90 percent of SMEs will not be able to sustain their operations and may even go broke.

"In that scenario, it would be necessary for the government to further scale up the financial aid packages," they said. "We may consider the establishment of a special fund aiding SMEs launched at both the national and local levels with fiscal funds or national debt."