China may cut salaries of executives at state-owned enterprises and financial institutions by as much as 70 percent, the most drastic proposal yet in a planned overhaul of SOE management, according to Caijing magazine.
The upper limit for the annual salary of bosses at central SOEs and banks would be set at 600,000 yuan ($97,532) under the change, Caijing magazine reports, citing unidentified people with knowledge of a draft plan by the Ministry of Human Resources and Social Security, the Ministry of Finance and other related agencies. The South China Morning Post cited unidentified officials last week as saying SOE executives would face pay cuts of as much as 50 percent under the draft plan.
President Xi Jinping issued a formal warning about pay cuts on SOE executives on Aug. 18 during a meeting of China’s Central Leading Group for Overall Reform, a top reform committee he personally heads. Xi called for central SOEs and banks to have “proper” and “reasonable” salary structures and said “unreasonably high and excessive incomes,” which have increasingly become a source of public discontent, must be regulated. The salary reform is part of a broader reorganization of management at the SOEs, which may include hiring top executives from outside government.
The executives at state-owned banks and financial institutions will be the most affected if the proposal is approved, the Caijing report said. Top executives at the four state-owned banks earned more than 1 million yuan in 2013.
China may soon start a trial of stock incentives to executives and employees at financial SOEs, according to the Caijing report.
The draft plan has just been completed and the ministries are seeking comments on the proposal, Caijing said.