End excessive pay for SOE executives

Some say that in their roles as SOE executives, they should make wealth for the country and people instead of themselves. However, their success in the economic field is always closely related with their own obsession with making money. Moreover, sometimes the boundary between making money for the country and for oneself is quite ambiguous. It is a pity that some former SOE executives who were very successful in business and made great contributions to their SOEs failed to make money for themselves. Therefore, any salary cuts should be moderate.

On the other hand, there are indeed some SOE executives who are always comparing themselves with their counterparts in private enterprises and foreign companies, even claiming that they are severely underpaid. Such an attitude will of course incur complaints and public wrath. For one thing, the SOE executives have titles as centrally administered officials, which guarantees they have convenient channels to communicate with officials at all levels. Besides, most SOEs flourish as monopolies or because of administrative monopoly and their earnings are almost all guaranteed, regardless of how the enterprises perform in the market. However, in comparison, executives of private or foreign enterprises will have their performance evaluated and be paid bonuses according to how well they run their companies.

So how should reasonable salaries and expenses and other privileges of centrally administered SOE executives be determined and how will they be regulated?

First of all, the basic salaries should be equal to those of government officials of the same level.

Second, performance-based pay or bonuses should be introduced. Apart from judging whether the SOEs are making profits or suffering losses, there are two more factors that should be taken into consideration when evaluating an executive's performance: one is whether the people they are serving are satisfied or not, and the other is whether their employees (migrant workers included) are satisfied with their leadership. An indirect approach could be adopted by introducing a baseline and seeing how much improvement is made every year.

Next, thorough research into the existing salaries, expenses and other privileges should be carried out in order to eradicate any payments that are unreasonable. An upper limit should be set and the excess distributed among employees.

All information regarding the salaries, reimbursements and perks must also be made public every year, since the SOE executives are public figures with official identities. Apart from public scrutiny, a specific conference should be organized at the annual sessions of the National People's Congress, the top legislature, and the Chinese People's Political Consultative Conference National Committee, the country's top political advisory body, to guarantee effective and practical supervision over the salaries, expenses and perks of SOE executives.

The author is social policy researcher at the Chinese Academy of Social Sciences.