Commentary

China Watch

Forum Digests

Columnists

Letters

Reasonable paychecks

(China Daily)
Updated: 2009-02-02 07:47

The pledge by top executives of nine State-owned enterprises (SOE) in Shanghai to cut their salaries and spending this year is a reassuring move. It will not only help unite employees and boost their confidence in fighting the current economic woes, but will also encourage writing reasonable paychecks for company chiefs.

The pay slash, by 15 to 40 percent, for top executives from SOEs such as Shanghai Automotive Industrial Corp, Shanghai Jinjiang International and Shanghai Brilliance, shows the determination of these CEOs in joining ordinary workers to bear the brunt of the economic hardship. It is a big contrast to the mid-1990s when millions of SOE workers were laid off during the city's industrial restructuring, while most bosses not only did not suffer, but instead were settled to higher paying jobs.

In announcing a cut in pay and other spending on the expense account, the company chiefs have set a role model for the nation's tens of thousands of SOE heads. The message is that they should not take their privileges - fat salaries, bonus programs and other benefits - for granted when the country, their companies and workers are facing tough challenges.

While the world calls for joint efforts from all governments to battle the global economic crisis, SOEs require resolute actions by all their employees in order to survive and finally withstand the economic adversity.

This said, chiefs of SOEs should beware that their pay and spending cut does not mean less work in any sense. On the contrary, they would be required to double their work to meet those colossal challenges.

At the same time, the salary cut is also the very first step in putting the long-controversial paychecks for SOE top executives at realistic levels .

In most SOEs, top executives still design and decide their own pays, bonus programs and other compensation packages as well as the assessment rules, leaving their employees, the general public who are the actual shareholders of SOEs and even relevant government authorities, in the dark.

It is true that company chiefs should be rewarded for turning their enterprises into great successes. But the fact that many SOE chiefs whose businesses are losing money also receive fat checks raises serious questions about the pay system. Many SOE senior executives are paid ten or even a hundred times more than an ordinary worker.

Unlike chiefs of giant multinational or small private companies, most SOE top executives are still appointed by government authorities. They have no or little risk in their career. Some companies are the monopoly in their industries due to government policy protection. For many chiefs, failure in one company would often mean a transfer to the senior position of another SOE.

The fat paychecks of SOE chiefs have already lured many government officials to seek such a position later in their career.

So while applauding the Shanghai SOE leaders for setting up a good role model in these dire economic times, it is necessary to stress the importance of making the salaries and bonus programs of SOE chiefs reasonable and transparent.

(China Daily 02/02/2009 page4)