China bosses told to cut salaries

The Chinese government fears the growing gap between rich and poor

Executives of state-owned banks and insurers in China have been told to cut their salaries to ease the disparity between themselves and Chinese workers.

A government directive said that individual financial enterprises paid top executives too much.

The ruling came amid growing concern about the economic downturn, which has put some 20 million people out of work.

Executive pay in China is modest by Western standards, but is many times that of ordinary workers.

The average employee in one of China's top financial institutions earns $58,500 (£40,000) - with those at the very top of these firms earning considerably more.

In Chinese cities the average employee earns about $2,200 (£1,500) a year. Those in rural areas far less, according to a survey by a Shanghai business magazine.

'Too much'

Executive pay packages for 2008 still being calculated, should be no more than 90% of the level the year before, the Finance Ministry said.

Those firms whose income fell last year should cut their executives' pay still further, it said.

These cuts appear to be a response to growing public disquiet at the salaries paid to senior executives Chris Hogg BBC correspondent in Shanghai

"Individual financial enterprises pay top executives too much. The gap between them and average workers and internal staff is clearly expanding," the ministry said.

It said pay cuts were needed to "further equalise distribution of income".

Most of China's major banks, insurers, stock brokerages and other financial institutions are government-owned.

The people who run these institutions will have their pre-tax income reduced by 10% - that means cuts to salary, bonus and social insurance credits.

The BBC's Chris Hogg in Shanghai says these cuts and further 10% reductions for those companies which are losing money, appear to be a response to growing public disquiet at the salaries paid to senior executives.

Executive pay is set by each company's board of directors. A directive like this will be hard to ignore but for some perhaps quite hard to implement, our correspondent says.

Many have listed Hong Kong subsidiaries and it was unclear how executives linked to those entities might be affected.