Cutting salaries of CEOs not enough

Such a plan, if implemented, can ensure that the average salary of those executives be cut while the managerial morale of the State sector is not affected.

The proposed pay cuts, however, are not enough to solve all the problems.

So far, discussions have been mainly focused on how the salary of those senior executives should be capped. It has been ignored that they may also have access to various excessive bonuses and benefits, such as housing subsidies and low-cost housing. Those hidden benefits are also a source of public complaints and should be properly regulated.

Thanks to lack of a properly internal control mechanism, many State enterprises have failed to properly manage their top executives, sometimes allowing them to make favorable game rules to benefit themselves. If it continues, those senior managers could devise new corporate rules to increase their benefits and make up for their reduced salaries.

A top-down reform plan, therefore, will not necessarily ensure that such a reform will ultimately become successful. There must be a mechanism through which the public can have access to the incomes of the top State sector executives so that public supervision can prevent them from abusing their power to overpay themselves.

A more powerful union with teeth, in particular, should be part of such a mechanism. People from within the State enterprises could be more knowledgeable about the reasonability of the pay of their bosses and thus more capable of playing a supervisory role.

With the income distribution of top State sector executives made transparent, it will be easier for the pay cut plan to be carried out smoothly and prevent it from only paying a lip service.