China / Hot Issues

Pay cuts approved for SOEs

By Wei Tian (China Daily) Updated: 2014-08-30 07:35

Excessive salaries will be reduced to reasonable levels, leadership says

The top leadership of the Communist Party of China decided on Friday to cut salaries for executives at State-owned enterprises.

During a meeting presided over by President Xi Jinping, the Political Bureau of the CPC Central Committee approved plans to reform the system that determines centrally administered SOE executives' salaries, the size of their expense accounts and other privileges.

The plans call for ceilings to be set on SOE executives' expense accounts and for restrictions to be placed on their official vehicles, offices, training, business receptions, domestic and overseas business trips and communications.

The plans strictly prohibit any spending of public funds for personal purposes and pledge to stop misuse of such funds for club memberships, healthcare and entertainment.

Luo Zhongwei, a senior researcher at the Chinese Academy of Social Sciences, said the salary cut is in response to public concerns over excessively high pay for SOE executives.

The size of the cut was not announced at Friday's meeting, but earlier media reports said it might be as high as 70 percent and that a cap of 600,000 yuan ($97,600) a year could be placed on executives' annual salaries.

Luo said the cut is likely to follow a "one-size-fits-all" approach.

But for SOEs subject to market competition, their executives' pay should depend on the market and performance, while bosses at State-run public welfare companies should follow the pay model for civil servants, Luo said.

China Business News in Shanghai said on Thursday that the country's major banks are likely to be the first targets of the salary reduction.

Xinhua contributed to this story.


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