China’s economy continues to be sluggish, with layoffs and pay cuts sweeping across various industries. Reports indicate that employees of China’s central bank, the China Banking and Insurance Regulatory Commission, and the Securities Regulatory Commission will collectively face salary reductions starting this month, with the cuts estimated to be around 50%.
According to a report by Reuters on January 14th, the Chinese authorities are set to reduce the salaries of employees at the three major financial regulatory institutions by approximately 50%. After the pay cuts, the compensation levels of the three regulatory bodies are expected to align with those of civil servants.
Four sources revealed that starting this month, employees of the People’s Bank of China, the China Banking and Insurance Regulatory Commission, and the Securities Regulatory Commission will see their total income halved.
Insiders indicated that the salary cuts within the regulatory agencies aim to narrow the wage gap between state-owned institutions. For instance, the annual income of department heads at the China Securities Regulatory Commission is roughly 300,000 to 400,000 yuan, nearly double the annual income of other civil servants.
Sources disclosed that the compensation of all department heads at the three major financial regulatory institutions will be cut by about 50%, while officials below this rank will face approximately 40% pay reductions. Some senior officers at the director level and above may face a pay cut of 60%.
The report highlighted that the significant salary reductions within the regulatory agencies come at a time when China’s economy is slowing down, with authorities seeking to stimulate consumption to revive the sluggish economy, contrasting with some recent government measures. Several sources affected by this change expressed that civil servants unexpectedly received a pay raise earlier this month, with an average monthly increase of around 500 yuan.
Previously, Bloomberg reported on December 31st, citing insider sources, that China’s decision-makers are attempting to boost morale and consumption by significantly increasing the salaries of national civil servants, marking the first large-scale raise in years.
However, solely raising civil servants’ wages may trigger strong discontent among private sector employees, potentially leading to social backlash. Many private sector workers are currently facing the dilemma of declining wages.
The Chinese authorities are attempting to boost the economy to counter the longest-lasting inflation contraction since 1999. So far, the Chinese leadership has mainly relied on rate cuts and support for industries such as real estate to encourage consumption, rather than distributing cash directly to the general public.