Incomes of employees in profitable monopoly sectors who earn up
to 10 times the national average should be capped to reduce the
widening wealth gap, researchers at a leading think-tank urged
yesterday.
The central government should do away with the right to profit
redistribution at state-owned enterprises (SOEs), a team of experts
affiliated to the Ministry of Labor and Social Security
suggested.
"Capping their income, annulling profit redistribution rights
and transparent auditing and supervision are a package of measures
we have come up with," Liu Junsheng, a researcher with the
ministry's Labor-Wage Institute, told China Daily.
"These measures could reduce the income gap between workers in
monopoly sectors and average employees to a reasonable level."
He suggested that the gap should not be more than fivefold, but
statistics show that the real income of people working in
profitable sectors is 7-10 times higher than in other
industries.
Bu Zhengfa, vice-labor minister, recently lashed out at the high
salaries in the electricity, telecommunication, finance, insurance,
tobacco and other monopoly industries.
The 169 major state-owned enterprises made a profit of 627.65
billion yuan (US$78.45 billion) last year, with the top 40 firms
contributing 95 percent and the top 12 accounting for 79
percent.
At the 12 most profitable SOEs, the average cost per head was
about 70,000 yuan (US$8,700) in 2005; and the figure was about
123,000 yuan (US$15,400) at China Mobile, which had 112,000
employees in 2004.
The People's Bank of China (PBOC), the central bank, said last
month that urban workers earned an average of 18,400 yuan
(US$2,300) last year an annualized increase of 14.8 percent.
But it found that the income rise was mainly limited to SOEs and
foreign-funded companies, at nearly 20 percent.
In the manufacturing sector, wage increases lagged GDP growth by
5 percentage points every year between 1998 and 2003; and some
factories have not given a pay rise for up to five years.
Considering income from corruption and monopolistic businesses,
Wu Zhongmin, a researcher with Central Party School of the
Communist Party of China, has concluded that the Gini coefficient
in China has risen above 0.5.
The official level of the coefficient an international
measurement of income disparity was 0.45 last year, compared with
0.389 in 1995 and 0.417 in 2000.
A zero coefficient represents perfect equality and 1 indicates a
complete monopoly of wealth by the privileged; and 0.4 is
considered a danger level.
The disparity and its potential social implications have
attracted the attention of China's highest leadership. Speaking
during a recent discussion on income distribution, President Hu
Jintao said salaries should be market-oriented but the nation must
focus on fairness, make favourable policies for poorer regions and
crack down on illegal earnings.
In addition to capping income in monopoly sectors, Wu Jinglian,
economist with the Development Research Centre of the State
Council, has also called for establishing a comprehensive social
security system, which he said is "well within the country's
financial capacity."
(China Daily July 12, 2006)