Many Chinese Firms Are Hiking Wages Despite Shrinking Profits, Report Says(Yicai Global) May 6 -- Average salaries for senior executives are on the rise and in many cases are disproportionate to the companies’ business performance, raising market concerns, the Economic Information Daily reported today.
Some 868 listed firms out of 4,000 surveyed posted less profit last year but a big hike in top management remuneration, the report said. The market is very concerned about the unjustified rise in salaries, which is an important index of operational excellence, it added.
Compensation to senior executives must be linked with the firm’s business performance, insiders said. Should the company do well, they deserve to be paid more. But investors will not be impressed if the company registers less profit yet hikes wages.
Construction and real estate investment firm Rightway Holdings, for example, saw profit plunge nearly 37 times last year from 2019, but it almost tripled salaries to top management to CNY7.2 million (USD1.1 million).
Hubei Three Gorges New Building Materials lost a staggering CNY2.1 billion (USD324.1 million) in 2020 yet it also tripled wages to senior staff to CNY5.8 million (USD895,000).
The Shanghai Stock Exchange has launched an enquiry into Harbin Pharmaceutical Group which has increased salaries to senior executives two-and-a-half times since 2018 despite reporting losses for the past two years.
Sixty-eight of the companies polled paid an average salary of CNY500,000 (USD77,150) last year, the report said. Over half of the firms are paying top staff between CNY100,000 (USD15,431) and CNY200,000 a year each. While only 26 pay less than CNY50,000 per employee.
The average salary in the agricultural sector jumped 35 percent last year from the year before, while wages in the electrical equipment, medical biology, non-banking finance and non-ferrous metals fields soared 19 percent, 17.9 percent, 17.8 percent and 17.7 percent respectively, the report said.
However, remuneration in the steel, real estate and banking sectors dropped 22.34 percent, 4.69 percent, and 0.53 percent.
Editor: Kim Taylor
