Economic downturn forces state firms to cut executive wages
Senior executives bear brunt as mainland enterprises step up efforts to sustain growth
State-owned enterprises are set to cut salaries of senior executives to sustain growth amid rising operating costs and an unfavourable economic environment.
The State-owned Assets Supervision and Administration Commission said in a statement on Thursday state firms were required to step up efforts to reduce costs and improve efficiency.
"In 2013, the Sasac will strictly regulate salaries of SOE leaders and senior management," said Wang Yong, the chairman of Sasac. "Salaries will be more closely linked to company performance."
State-owned enterprises in some industries that were hit hard by the economic downturn last year have already seen salary cuts in the past year. China State Shipbuilding cut pay after the company reported first-half losses last year, the statement said. "Executives of many SOEs also took the lead in pay cuts in the second half of last year," it said.
Thomas Chan Man-hung, the head of Polytechnic University's China Business Centre, expects executives of other state enterprises to do the same.
"The voluntary salary cuts were not standardised [under the government's regulations], but it responded to the public's dissatisfaction," Chan said.
He expects the long-awaited income distribution reform to be unveiled this year. The reform would help regulate the salary levels of monopoly industries dominated by state enterprises. It was postponed several times last year.
