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The publication of the profits of 169 key central state enterprises has unexpectedly aroused a new round of public anger about the high salaries enjoyed by staff in monopoly sectors. According to the state-owned Assets Supervision and Administration Commission, the 169 enterprises registered a profit of 627.65 billion yuan (US$78.46 billion), up 27.9 percent year-on-year and more than double the 2003 level. This strong growth momentum is, at first glance, good news as it signals the profitability of those firms. The increased revenues are value added to state assets. But things are not quite what they seem. Most of the 169 enterprises belong to the oil, transportation, power, telecommunications and mining sectors. They are largely monopoly or semi-monopoly enterprises. Profits made as a result of monopoly advantages are no cause for pride. They are often accompanied by low efficiency and checks on competition, ultimately damaging the overall economy. The high salaries enjoyed by staff in these sectors are a direct result of the monopolies these enterprises enjoy. In May, the Ministry of Labor and Social Security revealed that these wage levels are two to three times that of the average national level. Experts even put that gap at five to 10 times. Such high salaries result from monopolies. They do not come from greater investment or expertise. Therefore, the situation is quite unfair. In fact, given the poor efficiency of monopoly enterprises, their staff, while enjoying much higher salaries, may not work as hard as their counterparts in other sectors. The central leadership has become aware of the problem. In May, the Party called a central meeting to study the issue of income distribution. And last week, the Party consulted non-Communist parties on the issue. There are two ways to tackle the monopoly problem. One is to introduce more competition into monopoly sectors, while the other is to strengthen regulation. The country has introduced competition in several monopoly sectors, such as telecommunications. But even this competition remains quite limited and consumers can do little about high charges but grumble and accept them. Therefore, the country urgently needs to further open up those monopoly sectors where competition can be introduced. For those natural monopolies, such as utilities, where it would be very costly to introduce competition due to the huge new investment, more effective government regulation is vital to rein in runaway staff salaries. The current scenario, at least, shows that the nation's regulators are not competent enough in implementing their supervisory power regarding salary control in State monopoly sectors. (China Daily July 12, 2006) |
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