The Chinese government will reform the wage system in State-owned enterprises (SOEs) with a goal of improving market competitiveness and arousing employee enthusiasm, according to a document released May 25 by the State Council.

The yearly gross wages for SOEs will be connected with operational performance in a closer and more reasonable way. If the economic benefit grows, the gross wages that year can rise within range of how much the benefit grows.

If the economic benefit falls, or the enterprise cannot maintain or increase its value of State property, its gross wages should be leveled or cut.

The indicators that measure the SOE’s performance will be diversified based on the industry it belongs to. For those whose businesses are in sufficiently competitive industries, the indicators should be chosen to reflect their market competitiveness, such as net profits or return on net assets. For those mainly providing public products, indicators should reflect cost control, product quality and operation efficiency.

The gross wage budget will be made by SOEs and approved by their investors or filed on record.

Distribution of wages within an enterprise will be optimized based on employee positions and performance, while taking wage levels of the labor market and the enterprise’s economic benefits into account.

Wages for employees in key positions as well as front-line and skill-oriented positions should be raised. The gap should be wider in wage distribution. Unreasonably high incomes should be decreased.

The government will enhance guidance and supervision on wage distribution in SOEs. The gross and average wages should be made available to the public.