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Distribution Reforms Help Increase Income Levels

The average income of Chinese employees has gained an annual increase of 14.8 percent during the past 10 years, thanks to deeper reforms of the country's income distribution system.


Labor and Social Security Vice Minister Wang Dongjin said the rapid growth has resulted from market-oriented reforms and gradually abandoning of Daguofan policies (the egalitarian practice of everyone sharing from the same pool of resources).


"But we need more efforts to make the income distribution system more fair, efficient and comprehensive," said Wang at yesterday's international symposium on improving the compensation system in enterprises organized by his ministry.


He said international input is welcomed to make China's income distribution more market-oriented and compatible with international practices.


China used to see its incomes distributed in an equal-share-for-all manner. This method of distribution dampened people's enthusiasm for better performance, and held back the progress of productive forces.


Since the early 1980s, the system has been under gradual and steady restructuring, together with the country's reform and opening-up drive.


Now, an income distribution framework mainly based on performance and positions has been established, said Wang.


"We have achieved breakthroughs in this regard over the last year," said Wang.


At the 16th National Congress of the Communist Party of China late last year, it was announced that production factors such as labor, capital, land, technology and managerial know-how will be considered in income distribution, in accordance with their respective contributions to production overall.


At the two-day symposium held in Beijing, researchers with the ministry have expressed their concerns over inequalities in distribution.


"Despite much progress, income distribution in state-owned enterprises (SOEs) remains a thorny problem," a senior researcher surnamed Liu told China Daily.


Salary income distribution in SOEs needs the introduction of more market elements.


For example, despite the consensus that labor, capital or managerial know-how should be considered in income distribution, people disagree as to how to introduce those elements. It will take a while to hammer out a feasible framework in that respect.


Liu said the newly-devised methods of income distribution for state enterprise managers in recent years, such as the annual pay system and bonus grants, lack the support of a comprehensive framework.


(China Daily November 4, 2003)

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