ecently several provinces, from less developed to prosperous ones, have placed the provision of paid annual leave at the forefront of their policies, aimed at boosting consumption.
In the Special Action Plan to Boost Consumption, released in March 2025, the central government called for stricter implementation of the paid annual leave system and encouraged flexible and staggered vacations.
The 2026 Government work Report, released in March this year, explicitly called to implement a system of staggered paid leave for employees for the first time. More recently, the State Council approved the 15th Five-Year Plan for Expanding Consumption, which pledges to revise the regulations governing paid annual leave, and more effectively enforce the system.
China established a statutory paid annual leave system in 2008. Employees who have worked continuously for at least one year are entitled to five to 15 days of paid annual leave, depending on their cumulative years of service. Annual leave can be taken in one block or in stages, while unused leave due to work requirements must be compensated at 300 percent of the employee’s daily wage.
But for many Chinese workers, paid leave remains a right largely on paper. Government agencies, public institutions, large State-owned enterprises and foreign-invested companies generally have more established leave systems.
However, private employers, particularly small- and medium-sized enterprises (SMEs), worry about replacement costs and compensation for unused leave, prompting some to circumvent the rules by counting team-building or personal leave as annual leave or disregarding previous employment.
Employees may hesitate to take leave because of workplace pressure and economic concerns. As the private sector employs the bulk of China’s workforce, it means that millions of workers still find it difficult to exercise their legal entitlement to paid leave.
A survey by the Ministry of Human Resources and Social Security in 2024 found that Chinese workers were entitled to about 10 days of paid annual leave on average but took only 6.29 days. Nearly half did not use their full entitlement. Among private-sector workers, the average was less than four days, and more than 72 percent had never taken their full entitlement.
To tackle the problem, the government needs to strengthen the enforcement of labor laws, with meaningful penalties for employers that repeatedly violate workers’ rights. But it remains unclear how effective the enforcement will be, especially as many private companies are facing economic headwinds.
So far, the government appears to be approaching paid leave partly as a tool to boost domestic consumption, as staggered leave could spread demand for tourism, accommodation and other services beyond peak periods. But the problem of this approach is that it could prompt local governments to resort to administrative efforts, rather than a more systematic way.
The government should be aware that paid leave is primarily a labor rights issue. The role of government is not to tell people when or how much to consume, but to effectively enforce the law. Once that right is effectively protected, the resulting increase in travel, leisure and other spending will be a natural consequence that will last long.
Therefore, the real test is not how many policy documents are issued, but whether a healthy workplace culture can be nurtured so that workers feel they can take leave without jeopardizing their income or careers.
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