State-owned en­ter­prises pay re­form

China Daily (Canada) - - COMMENT -

Ad­dress­ing the fourth meet­ing of the Cen­tral Lead­ing Group for Com­pre­hen­sively Deep­en­ing Re­forms on Aug 18, Pres­i­dent Xi Jin­ping said the in­come dis­tri­bu­tion sys­tem in State-owned en­ter­prises will be grad­u­ally reg­u­lated to re­duce the gap in the salaries of top- and bot­tom-level em­ploy­ees.

For long, it has been de­bated that the un­rea­son­able salary struc­ture and in­ad­e­quate su­per­vi­sion sys­tem in SOEs have held back their devel­op­ment. SOEs have made great con­tri­bu­tions to China’s economic devel­op­ment, yet many crit­ics say their pay struc­ture is grossly un­fair on two counts.

First, front-line SOE work­ers do most of the work but are paid the least, while ex­ec­u­tives en­joy not only spe­cial treat­ment but also un­rea­son­ably high salaries and perks. And sec­ond, some SOEs have taken ad­van­tage of their mo­nop­oly po­si­tions to earn huge prof­its but still seek sub­si­dies from the gov­ern­ment and shirk their so­cial re­spon­si­bil­i­ties.

A dis­cus­sion on how to re­form top-level SOE em­ploy­ees’ salary struc­ture is the first and most cru­cial step in reg­u­lat­ing the in­come dis­tri­bu­tion in SOEs. Moves to pro­mote so­cial fair­ness, ease so­cial anx­i­ety and carry for­ward over­all re­form can fol­low the salary re­form.

Dis­cus­sions are also needed on how to fix the ap­pro­pri­ate range of salaries in SOEs and de­sign the new pay struc­ture. But the salary re­form in SOEs should con­sider mar­ket fac­tors and avoid sim­ple cuts in ex­ec­u­tives’ pay. In ad­di­tion, the salary of ex­ec­u­tives must be linked to their SOE’s per­for­mance and con­tri­bu­tion to so­ci­ety.

Since SOEs are the back­bone of the coun­try’s econ­omy, the ex­ec­u­tives’ salary lev­els — along with their po­si­tion-re­lated perks — should be strictly reg­u­lated. No mat­ter how tough a re­form is it will suc­ceed if the au­thor­i­ties have the de­ter­mi­na­tion to break through the bar­ri­ers of in­ter­ests.

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