One of the biggest failings in Western economics is the prevalence for across the board percentage pay rises. People getting paid £40k get double those on £20k when both get an equal amount in pay percentage increase. This has been part of the reason why top bands in large companies have gained such huge pay scales. Percentage rises are nothing like an equal pay rise. It is way past time unions recognised this.
Kind of Kudos to the Chinese for this. I hope they see fit to roll it out among some of the more powerful families in China also, and not just use it to claw back some money from the middle class.
Can’t argue with this if it’s actually executed the way its being suggested. Good move, CCP.
This is the best summary I could come up with:
BEIJING, Aug 14 (Reuters) - Bank of China Ltd (601988.SS), China’s fourth-largest lender by assets, has launched a countrywide exercise to reduce the salary gaps among its employees and mid- and high-level managers in response to Beijing’s “common prosperity” drive, three sources with knowledge of the matter said.
President Xi Jinping launched the common prosperity drive in 2021 as an effort to reduce income inequality, which could threaten long-term economic growth and even the legitimacy of Communist Party rule.
The move follows pay cuts being made at investment banks such as China International Capital Corp (CICC) (3908.HK).
Commercial banks have suffered record low profit margins due to disruptions from the embattled property sector and local government debt risks in a faltering economy.
The sources said Bank of China has launched an internal “salary management system reform plan”, after an inspection team under the Central Commission for Discipline Inspection found the bank’s pay system has issues of “wealth inequality” in several rounds of investigations since late last year.
The move also comes as a surprise to state bankers, who generally earn less than peers at investment banks and other local financial institutions and who were spared from pay cuts last year after Beijing called for the promotion of common prosperity.
I’m a bot and I’m open source!
Why do pay cuts for managers instead of pay raises for other employees? How is a cut helping anyone?
They will argue. Pay rise for everyone. Will nject huge amounts of money into the econ. Raising inflation. While this means the low earners gain or lose little. Amd the rich lose much.
It will totally destroy those that cannot work or earn at all. IE retired poor or unemployed.
Should be fine tbh, China actually had a bit of shrinking of consumer spending recently so this is well timed.
Issue is 2 fold.
One. Lets face it. No econ can handle such a huge raise in income. Without it seriously effecting the internal market.
And that huge increase will slowly if at all move to those not currently earning. IE retired or disabled etc.
But even if the econ could manage it. By for example borrowing to raise unemployed incomes while things settle.
Those making the decisions will worry more about the effect on their econ and currency compared to other nations. Not doing the same thing.
In genral governments tend to ( to some extent rightly) value their currencies buying power with other nations. More then the internal markets.
At this time in history. No nation is truly 100% self sufficient. Mainly most nations over the last 50 years have not tried to be. So it can be seen as governments own choice.
But huge changes in the value of a currency has a huge negative effect on the ability for any nations citizen’s to thrive.
This not only effects the poor drematically. But often more to the worry of governments. The rich and government spending power overall.
The later is a death blow for democratic nations. But even more so for a nation that has been using its buying power to position itself in the world for decades. Such as China.
Credit where credit is due: great initiative, let’s see how it’s executed and maybe learn a thing or two from it
