By Ouyang Xiaohong & Zhao Hongmei
Published: 2007-11-06

From News, page 4, issue no. 338, October 22nd 2007
Translated by Zuo Maohong
Original article: [Chinese]

Employees in state-owned enterprises are going to feel pressure when the State-owned Assets Supervision and Administration Commission of the State Council introduces tighter controls on their salary increases. As required by the Commission, enterprises where average salary doubles that of the whole nation are going to adopt a merit pay scheme.

Other policies to restrain salary bumps include maintaining statistics of average salaries in state-owned enterprises (SOE's) and comparisons to other firms in their industries, and clamping down on enterprises with low efficiency but high salary levels.

An official at the Commission who works with income distribution and wishes to remain anonymous said that it is also planning to publicize SOE financial records in two or three years.

Tweaking Compensation

On October 16th, principals of the 145 SOE's attended a training seminar organized by SASAC, where they were exposed to a market-oriented compensation reform model.

The public has long grumbled that salaries in such firms, especially in monopolized industries such as power, telecommunications, and oil, are exceedingly high and salary bumps too frequent. The power industry was even labeled as having arbitrarily allowing "excessively rapid salary raises" by the National Audit Office in 2005.

Statistics show that yearly salaries of SOE's employees grew at an average rate of 16.84% each year between 2003 and 2005. Between 2001 and 2003, average salary per person per year rose by 19.94%.

A participant says that the Commission is enforcing harsher measures on those monopolied industries according to income distribution management regulations that have been mandated by the State Council.

The Commission had already begun taking action early this past March, impelling SOE's in batches to adopt the new Accounting Standards for Business Enterprises, which took effect on January 1st 2007 among listed companies.

But more is in the pipeline. "SOE's financial statements will become open to the public within two or three years." says the unnamed official.