SOE salary reform sets an example

Central State-owned enterprises launched a pilot pay reform at the beginning of this year. The pilot reform of the salary system for the executives of State-owned enterprises directly under the central government's supervision introduced at the beginning of this year will serve as an example for reform of the salary system for SOEs nationwide.

The salary system for SOE executives has long been criticized for its lack of transparency and its failure to reflect the performance of executives, with some executives receiving high salaries even though they don't show any capability to help a company prosper and the profits are mostly generated by the company's monopoly status. Some have gone away with their pockets full while laid-off workers struggle for their livelihoods after a SOE has gone bankrupt.

The new regulation issued by the State Council, or the Cabinet, signals the central government's determination to fix the problematic salary system. The top managers' salaries in those SOEs covered by the reform will be determined by the board under a uniform standard in order to be more market-oriented instead of being overseen by different governmental departments.