Salary reform should include worker pay

The central government recently rolled out a blueprint on reforming executive pay at State-owned enterprises (SOEs).

It should be noted that the salary guidelines not only cover managers at companies controlled by the State-owned Assets Supervision and Administration Commission, but also executives at financial institutions.

Obviously, it's not a clear-cut issue. Executive pay can and should depend on many factors such as the company's industry and the manner in which the executive was recruited. The government should put strict restrictions on salaries of executives appointed through administrative procedures. Managers who win their jobs through competition should have their salaries regulated with market-oriented measures.

According to salary guidelines issued in 2009, SOE executives are not supposed to earn salaries more than 30 times the salary of the average company employee. This suggests the more the average worker earns, the more the top executives get paid.

Based on a survey of 287 State-owned companies, employees earned as much as 110,000 yuan a year in 2012, according to local media reports. Consequently, top executives could earn as much as 3.3 million yuan under the 2009 guidelines.

So, while policymakers are keeping an eye on the salaries of top managers, they should also pay close attention to the wages of average SOE employees. Further salary reform cannot take place until employee compensation is as closely watched as that of management.