Wage controls to narrow income gap

A move to impose wage controls on highly paid executives of State-owned enterprises (SOE) in the hope of narrowing the country's income gap are being reconsidered after a draft regulation first discussed the issue four years ago.

Qiu Xiaoping, vice minister of human resources and social security, said the country needs to change the way it manages incomes and enhance wage controls, reproted the Beijing Times.

The remark was made years after the Ministry of Human Resources and Social Security (MHRSS) started to draft a comprehensive regulation to control income levels in 2008.

However, the draft regulation has not had any public discussion since it was submitted to the State Council in 2010, reported the China Business Journal Sunday, suggesting that intervention from the State monopolies might have obstructed the passage of the regulation.

The Beijing Times reported Wednesday that the draft might create separate regulations to cover a series of issues relating to the income gap.

Chinese Premier Wen Jiabao said on October 17 that the government would develop a plan on income distribution before year's end. The National Development and Reform Commission first started to examine the uneven distribution of income in 2004.

Yin Chengji, a MHRSS spokesperson, said the central government is working on a general plan.

Chinese experts suggested that wage controls must target the highly-paid managers heading the SOEs.

Managers with an annual paycheck of more than 1 million yuan ($160,328) need to be dealt with first, Wang Yukai, a professor with the Chinese Academy of Governance, told the Global Times.

"Their abnormally high salaries actually push up the average level of wages," Wang said, adding that their pay should not be more than three times the same level position in the civil service.

The average annual payment of managers in 208 State-owned companies was 18 times greater than that of ordinary workers in 2010, said the All-China Federation of Trade Unions, the gap was only 1.18 times higher in 1979, the Tianfu Morning Post reported.

"A third party, like a payment assessment board, can help set the pay level," said Li Shi, a professor from Beijing Normal University, adding that new measures will mainly target monopolies.