Big Chinese firms squeeze payroll of top executives to cope with crisis

Special Report:Global Financial Crisis

BEIJING, Feb. 1 (Chinese media) -- More Chinese firms are

slashing executive pay and practicing tighter budgets to get through the

economic crisis, the State-owned Assets Supervision and Administration

Commission of Shanghai said Saturday.

Nine state-owned enterprises in Shanghai, including

Shanghai Automotive Industry Corporation (SAIC), have pledged to cut the

payrolls of top executives. Some enterprises plan to cut executive pay by 15 to

20 percent, or by 40 percent at most, according to the commission.

Shanghai Electric planned to cut down administration

expenditure by 10 percent this year. Shanghai Bailian Group said it would cancel

more business trips abroad and ask employees to switch from air travel to trains

on domestic travels whenever possible.

Such announcements are frequent among big Chinese

firms as a result of the economic downturn.

Aluminum Corp. of China, the country's largest

aluminum producer, said early last month it would slash payrolls of senior

managers by up to 50 percent. To avoid cutting staff, it planned to scale

workers' wages down by 15 percent.

Lenovo Group, China's leading computer maker, said

last month it would chop the payrolls of top executive by 30 to 50 percent.

Wuhan Iron and Steel Group followed suit to cut salaries of senior managers by

50 percent.

Top executives of China Eastern Airlines, one of

three major carriers in the nation, will receive 10 to 30 percent less monthly

income starting Sunday.

These moves are welcomed by the public as they are

considered better alternatives to layoffs and would narrow the income gap

between top executives and the general staff.

Yuan Gangming, a researcher with the Center for China

in the World Economy at Tsinghua University, said slashing executive pay is a

common practice for Western firms in difficult times.

"Such a practice can reduce costs, and is also

important to keep valuable human resources for the future development of

companies," he said.

Yuan also urged Chinese enterprises to improve pay

scales and employee motivation mechanisms.