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The widening income gap among different sectors and regions has prompted China's State assets watchdog to order a probe into the salary growth of employees of State-owned enterprises (SOEs).

According to a notice posted on the website of the Assets Supervision and Administration Commission yesterday, the investigation will mainly cover the average income level and salary increases of employees with SOEs at the central, provincial and municipal levels between 2004 and 2006.

A report on income comparisons between SOE employees and local residents has also been ordered.

The notice also requires an analysis on the low salary increases of some SOE employees and suggestions on building a "normal salary increase mechanism" for all SOE employees.

The notice comes at a time when the widening income gap between industries and regions has drawn strong criticism in China, where the gini coefficient, the leading measure of inequality, now stands at 0.46, exceeding the internationally-recognized level of 0.45.

The gap between SOE employees, especially those with monopoly industries, and employees with non-State sectors has also sparked criticism.

The salaries of SOE employees surpassed those in other sectors for a number of years between 1990 and 2005.

In 2003, SOE employees were the highest salary earners, according to a report published by the National Development and Reform Commission (NDRC) in February.

Meanwhile, the real incomes of people working in the electricity, telecommunications, finance, insurance, water and tobacco sectors are five to 10 times higher than those in other industries.

According to Su Hainan, an expert on salary trends with the China Association for Labor Studies, the reason behind the rocketing salary increases of SOE employees is that they are in a position of advantage in the distribution of resources.

To address the issue, the NDRC, the country's top planning body, has in collaboration with other central government departments, worked out a plan to push forward the reform of income distribution, but there is no timetable for its release.

The government has adopted a series of measures to tackle this problem, like putting more money into the countryside and launching its "go west" strategy to support the country's western provinces, which lag far behind the coastal areas.

(China Daily 05/15/2007 page3)

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