In 2012, the income distribution reform program came closer to success than ever before. However, as the year drew to a close, the reform plan led by the National Development and Reform Commission (NDRC) ultimately faced significant delays and was declared "dystocia"—a term used to describe an unproductive or failed process. At the end of 2012, Xinhua News Agency officially confirmed that the long-anticipated income distribution reform plan had been postponed for unspecified reasons.
The core issue at the heart of the reform remains the problem of monopolistic industries. According to an official from the Ministry of Human Resources and Social Security, high incomes in these sectors are not solely due to labor but are largely derived from state-owned resources. This has sparked widespread concern over the unfair distribution of income between different sectors.
Wang Baoan, the former vice minister of finance, has become a key figure in discussions on income distribution reform. He emphasized the need to ensure fairness through the establishment of a more transparent system within state-owned enterprises, including the implementation of subsidy policies. He also pointed out that behind the income disparities lies a deeper issue of systemic unfairness, which requires further reforms in the market economy to address.
Before the Ministry of Finance publicly announced changes to the tax system for state-owned enterprises, a source involved in the planning process revealed that the reform would cover areas such as wage structures, taxation, and the revenue of central enterprises. Among these, the issue of central enterprise income surrender attracted particular attention.
A survey conducted by the Ministry of Human Resources and Social Security, in collaboration with the NDRC, focused on income gaps in monopoly industries. The findings were alarming: in some state-owned enterprises, the income gap reached nearly five times, with the oil industry showing the largest disparity—up to 100 times between the highest and lowest earners. These figures were based on wage data from a small group of workers in the northeast and western regions.
Monopoly industries such as oil, telecommunications, aviation, and power were all under investigation. However, the survey only included formal wages and excluded informal or "gray" income.
An official from the Ministry of Human Resources and Social Security noted that while the reform aims to improve fairness, it faces significant challenges. Many legacy issues in state-owned enterprises remain unresolved, making the implementation of new distribution systems extremely difficult. One major conflict is balancing performance-based pay with the protection of older workers' rights. Additionally, differences in employment systems have created large income gaps among new employees.
During the 18th National Congress of the Communist Party of China, Zhu Zhixin, deputy director of the NDRC, stated that the reform was being actively pursued under the central government's guidance. The goal was to adjust the income distribution structure to promote stable and healthy economic development.
Despite the high-level support, the reform has faced delays. Since 2004, the NDRC’s Employment and Income Distribution Reform Division has been working on an overall plan, consulting with scholars and officials. However, many participants reported that the discussions were general and lacked concrete details. The final document was expected to be released in late 2012 but was delayed again.
Some experts believe the delay is due to the sensitive nature of the issues involved. Multiple government departments must cooperate for real implementation, and the NDRC struggles with coordination. While the reform has been discussed extensively, actual progress has been slow.
Looking ahead, the "Overall Plan for Income Distribution Reform" will serve as a framework. Specific measures related to wages, taxes, and profits will be handled by relevant authorities. Local governments will also need to develop their own implementation strategies.
The Ministry of Human Resources and Social Security is leading efforts on wage reforms. Despite delays, the proposed "Wage Regulations" aim to introduce the principle of equal pay for equal work, though the process has been stalled due to resistance from various sectors.
In summary, while the income distribution reform has made progress in terms of discussion and planning, its implementation remains challenging. The focus continues to be on addressing inequality, especially in monopolistic industries, and ensuring a fairer system for all citizens.
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