Big Chinese firms squeeze payroll of top executives to cope with crisis
More Chinese firms are slashing executive pay and practicing tighter budgets to get through the economic crisis, the State-owned Assets Supervision and Administration Commission of Shanghai said Saturday.
Nine state-owned enterprises in Shanghai, including Shanghai Automotive Industry Corporation (SAIC), have pledged to cut the payrolls of top executives. Some enterprises plan to cut executive pay by 15 to 20 percent, or by 40 percent at most, according to the commission.
Shanghai Electric planned to cut down administration expenditure by 10 percent this year. Shanghai Bailian Group said it would cancel more business trips abroad and ask employees to switch from air travel to trains on domestic travels whenever possible.
Such announcements are frequent among big Chinese firms as a result of the economic downturn, Xinhua reported.
Aluminum Corp. of China, the country's largest aluminum producer, said early last month it would slash payrolls of senior managers by up to 50 percent. To avoid cutting staff, it planned to scale workers' wages down by 15 percent.
Lenovo Group, China's leading computer maker, said last month it would chop the payrolls of top executive by 30 to 50 percent. Wuhan Iron and Steel Group followed suit to cut salaries of senior managers by 50 percent.
Top executives of China Eastern Airlines, one of three major carriers in the nation, will receive 10 to 30 percent less monthly income starting Sunday.
These moves are welcomed by the public as they are considered better alternatives to layoffs and would narrow the income gap between top executives and the general staff.
Yuan Gangming, a researcher with the Center for China in the World Economy at Tsinghua University, said slashing executive pay is a common practice for Western firms in difficult times.
"Such a practice can reduce costs, and is also important to keep valuable human resources for the future development of companies," he said.
Yuan also urged Chinese enterprises to improve pay scales and employee motivation mechanisms.