New policy to curb incomes in monopolized sectors

A forthcoming income distribution scheme will regulate inappropriately high earnings in monopolized sectors in a bid to address income disparities, experts have said. Aside from improving incomes for low-income groups, capping high wages in state-run sectors will become a focus in the reforms, Su Hainan, a former researcher with the Ministry of Human Resources and Social Security (MOHRSS), said in an interview. A State Council meeting presided over by Premier Wen Jiabao last week said the government will formulate a general income distribution reform scheme in the fourth quarter of year. The plan has been in the works since 2004. Su said the scheme will break monopolies by opening state-run sectors to private investors and regulate the sectors by levying higher tax rates on state-owned enterprises (SOEs) for using public resources. SOEs should give more of their profits to the state and the high salaries of senior managers in some SOEs should be controlled, he said. Li Shi, an expert with the National Development and Reform Commission, the body responsible for drafting the scheme, said it is important for the government to set up an assessment system to decide income levels in SOEs since their monopoly status can't be easily changed. Unfair income distribution has also been seen by many economists as a major obstacle in deepening the country's economic reform and growth mode transformation. Su said the scheme will help to drive the country's growth in the mid- and long-term, adding that domestic consumption will be expanded if the status of low-income earners is improved. State-run sectors have become a major target of public complaints in recent years. A MOHRSS report showed that some SOE managers earned thousands of times more than migrant workers last year, signifying a widening income gap.