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GUANGZHOU -- South China's Guangzhou city will reduce the unemployment insurance premium for enterprises next year, aiming to partly offset the impact of the global financial crisis.

Cui Renquan, head of the city's bureau of labor and social security, said "unemployment insurance premium will be reduced by a big margin starting from January to alleviate burden of enterprises, especially those labor-intensive ones."

However, he did not specify what the margin would be.

Currently, Guangzhou enterprises pay an unemployment insurance premium for an employee at an amount equivalent to 2 percent of to the employee's salary, according to Guangzhou Daily on Sunday.

Unemployment rate had been at about 3.5 percent in Guangzhou in recent years. The unemployment insurance fund, now with 8.5 billion yuan ($1.24 billion) in balance, paid only 300-500 million yuan to insurants annually.

"The fund is enough to pay our insurants for a few years," said Cui.

In Guangzhou, capital of the country's economic powerhouse Guangdong Province, one could receive 688 yuan per month from the unemployment insurance fund within the first 24 months since he or she gets unemployed.

Amid the global financial crisis, China's small and medium-sized enterprises, largely labor-intensive and vulnerable to fluctuations in domestic and external demand, are affected most.

In the first half of 2008, 67,000 such companies, each with a business volume exceeding 5 million yuan, closed and laid off more than 20 million employees, said the National Development and Reform Commission.

That figure doesn't include service industry firms or small companies with sales of less than 5 million yuan, as there are no authoritative figures available on those categories.