- Joined
- Aug 8, 2008
- Messages
- 28,849
- Points
- 113
Pay cuts first step for Xi
SCMP Editorial
PUBLISHED : Tuesday, 26 August, 2014, 4:35am
Xi Jinping's campaign against corruption and extravagance has so far targeted thousands of individuals, including more than 30 very senior officials. In his own reported words this has resulted in confrontation and stalemate between the "armies" of corruption and anti-corruption. Undeterred, he has now made a bold move towards opening up a second front in clearing the way for deepening much-needed reforms - the state-owned enterprises that dominate the mainland economy.
Under a plan approved by Xi, the officials in charge of these monopolies and near-monopolies face pay cuts of up to 50 per cent and redefined roles. Xi told a meeting last week pay reforms needed speeding up and also approved a seven-year overhaul of their management structures. Executives in finance and banking may face the biggest salary cuts. Former premier Wen Jiabao was unable to carry out a pledge to introduce similar reform, which attests to the formidable opposition Xi can expect.
There has always been ambiguity about the role of the top SOE executives because they are both government officials and managers. They enjoy ministerial or vice-ministerial ranking that comes with perks and privileges on top of internationally competitive salaries, and earn many times more than fellow officials including top civil servants. Moreover they are essentially unaccountable. Since many SOEs have cosy monopolies, public discontent is understandable.
Under the new model, government-appointed officials will probably join the board of directors to oversee policy direction, while managers appointed from outside on competitive packages will run day-to-day operations. If they do not perform they can be sacked, unlike the present situation. Once the party's organisation department appoints top executives, boards of directors cannot sack them.
The nation's new leaders want to use salary restructuring as a starting point for addressing the huge challenge of trying to reform state-owned enterprises. It is a move in the right direction of separating the Communist Party from business. But more fundamental issues have still to be addressed.
An even bigger challenge will be to break up the monopolies of the state-owned enterprises to produce greater competition and economic efficiency. Cutting salaries appears to be drastic, but it is only a first step.
SCMP Editorial
PUBLISHED : Tuesday, 26 August, 2014, 4:35am
Xi Jinping's campaign against corruption and extravagance has so far targeted thousands of individuals, including more than 30 very senior officials. In his own reported words this has resulted in confrontation and stalemate between the "armies" of corruption and anti-corruption. Undeterred, he has now made a bold move towards opening up a second front in clearing the way for deepening much-needed reforms - the state-owned enterprises that dominate the mainland economy.
Under a plan approved by Xi, the officials in charge of these monopolies and near-monopolies face pay cuts of up to 50 per cent and redefined roles. Xi told a meeting last week pay reforms needed speeding up and also approved a seven-year overhaul of their management structures. Executives in finance and banking may face the biggest salary cuts. Former premier Wen Jiabao was unable to carry out a pledge to introduce similar reform, which attests to the formidable opposition Xi can expect.
There has always been ambiguity about the role of the top SOE executives because they are both government officials and managers. They enjoy ministerial or vice-ministerial ranking that comes with perks and privileges on top of internationally competitive salaries, and earn many times more than fellow officials including top civil servants. Moreover they are essentially unaccountable. Since many SOEs have cosy monopolies, public discontent is understandable.
Under the new model, government-appointed officials will probably join the board of directors to oversee policy direction, while managers appointed from outside on competitive packages will run day-to-day operations. If they do not perform they can be sacked, unlike the present situation. Once the party's organisation department appoints top executives, boards of directors cannot sack them.
The nation's new leaders want to use salary restructuring as a starting point for addressing the huge challenge of trying to reform state-owned enterprises. It is a move in the right direction of separating the Communist Party from business. But more fundamental issues have still to be addressed.
An even bigger challenge will be to break up the monopolies of the state-owned enterprises to produce greater competition and economic efficiency. Cutting salaries appears to be drastic, but it is only a first step.
