The public welfare fund is extracted from after-tax profits and used for public welfare facilities such as employee welfare. It is part of the retained earnings of the enterprise. Such as the purchase and construction of staff quarters, nurseries, barbershops and other expenses. The latest company law no longer stipulates the proportion of public welfare fund extraction, and the proportion of public welfare fund extraction is decided by the company's board of directors.

The statutory public welfare fund is drawn from the net profit of the enterprise. Even if the purpose of its extraction is to purchase and build collective welfare facilities for enterprise employees and strive for more sources of funds for the sustainable operation of enterprises, its ownership ultimately belongs to enterprise investors, and this part of the sources of funds, like other self-owned sources of funds, bear the business risks of enterprises.

How to use the public welfare fund:

1, supplement the enterprise annuity, partially compensate for the retirement benefits of employees who have served the enterprise for a long time, and return the old debts owed by the state and the company to employees. Social endowment insurance fund is the only source of livelihood for most working-class people after retirement.

At present, there is a huge gap between the retirement benefits of enterprise employees and civil servants. The main reason is that the income of civil servants is relatively low in history and lacks flexibility in policy. Before retirement, the government takes measures to improve retirement benefits to balance the income gap between enterprises and government employees.

2. Increase housing subsidies. Due to the short commercialization time and lack of experience of housing in China, there have been many unexpected financial problems in the management and maintenance of housing after the housing reform, and the housing quality of employees has been greatly reduced after the housing reform.

Although housing subsidies are considered in the composition of employees' wages, the absolute amount is too small, which is far from the rising speed of real estate and its maintenance and management prices. Therefore, it is also a practical channel to use the public welfare fund to supplement housing and improve demand.

3. Double-prize enterprises can use the public welfare fund as the source of funds for incentive options, so that employees can directly participate in and enjoy the operating results of the enterprise, rather than indirectly and temporarily participate in the distribution of the operating results of the enterprise, so as to meet the requirements of human capital for the surplus value of the enterprise.