China has imposed wage limits on state-owned financial firms, sources told Reuters.

BEIJING/HONG KONG (Reuters) – China is to impose a 1 million yuan ($137,309) cap on the annual earnings of employees at central state-owned financial institutions, three sources said, as it expands a crackdown on excessive protection against a backdrop of an economic slowdown. .

Middle and senior managers whose incomes exceed 1 million yuan will see their pay cut in half as part of a reform of the compensation structure of 27 major financial banks. Four main bad debt managers.

The biggest cuts will come from reducing bonuses, said two of the three people, who had direct knowledge of the plan but declined to be identified because of the sensitivity of the matter.

The largest pay cut exercise in the $67 trillion financial sector will begin early next month, although workers have not been told why, the people said.

In the year It is in line with the government’s “Shared Prosperity” initiative to tackle social and income inequality by 2021, a development in the world’s second-largest economy.

Financial firms, both public and private, have actively cut salaries and bonuses and discouraged the display of wealth by requiring employees not to wear expensive clothes and watches.

Revenue reforms for state-owned financial institutions, however, make it difficult to retain top talent when private-sector rivals offer competitive compensation packages.

The salary cap for central government-owned financial firms was initially reported by news outlet Caixin, citing unidentified regulatory and banking sources.

Executive income in subsidiaries of the target companies, including investment banks and asset managers, is expected to be 3 million yuan, he said.

Some senior executives in subsidiaries earn as much as 5 million yuan, stock exchange filings show.

The Finance Ministry – the target companies’ largest shareholder – and the Ministry of Human Resources and Social Security did not respond to Reuters requests for comment.

Pay the difference.

In the year China is to halve pay at the central bank and two financial regulators as part of reforms to bring it closer to other government workers’ incomes by 2023, people familiar with the matter told Reuters earlier.

The period clashes with government efforts to boost consumption to stimulate economic growth. Just this month, millions of government workers were given a surprise monthly raise of around 500 yuan on average, users told Reuters.

At financial firms, those most affected by the new cap will be high-paid department heads tasked with managing and developing front-office operations, two of the people said.

Some department heads earn more than chairs and presidents and are already subject to 700,000 yuan to 900,000 yuan in compensation, the two people said.

To address this problem, a new law would prohibit subordinates from paying more than superiors at targeted firms, the people said.

($1 = 7.2828 renminbi)