(China Daily)
Updated: 2007-11-17 09:31

Transparency is needed to curb high incomes in monopoly industries, says a signed article in Oriental Morning Post. An excerpt follows:

According to Xinhua News Agency, an official from the Ministry of Labor and Social Security said the department is studying whether to place a ceiling on the average wage in monopoly industries. The official also said that they would tighten the approval of achievements-related wage distribution plans of State-owned enterprises whose average wage is already twice as much as the societal average.

Monopoly industries' high wage and welfare levels have long been criticized by the public. But under the existing national conditions, the prospect of such a move is not optimistic.

First, wages are only part of the income earned by employees of monopoly industries. When a ceiling is set, the companies can always increase welfare to make it up. Second, some SOEs are directly competing with transnational corporations, if the wage level is simply restricted, there would possibly be a brain drain.

International experiences show that the average wage levels of monopoly industries are normally higher than others. But such an arrangement is based on high transparency. These companies should report their operational conditions to the legislatures. But a large proportion of employees' incomes are non-wage welfare in various names. When their financial situation is in the dark, it will not work to restrict their wage standard alone.

China has launched a State capital management budget to address the issues of SOEs' ambiguous production and management costs by requiring them to report to the National People's Congress.

The law on State asset management currently under drafting should consider changing the traditional corporate governance structure and set up supervisory committees of experts, employees and officials. The compensation committee should be established under the supervisory committee to decide the employees' income standard according to the company's operational conditions.