Income in monopoly sectors 3 times national average
(Xinhua)
Updated: 2006-06-06 14:04

Average wage income of workers in China's monopoly sectors, such as telecom, finance and tobacco industries, has reached three times the national average, while non-wage income of workers in these sectors enlarged the gap with the national average up to 10 fold as much.

"Income is now deviating from the contributions of staffers in the monopoly sectors," said Bu Zhengfa, vice minister of Labor and Social Security, at a recent forum on salary management.

Bu cited an example of a worker in a civic electric power company. His monthly salary approaches approximately 6,000 yuan (about US$750), but his annual income could amount to 150,000 yuan (some US$18,750) with his bonuses, allowances and housing accumulation fund, which could reaches about ten times the national average.

Relatively exorbitant salary of monopoly firms, mostly state-owned ones, has become the most eminent problem of China's income distribution system, Bu acknowledged.

An interview by People's Daily at two leading universities in Shanghai showed that many of their graduates are eager to work in the sectors of tobacco, telecom and petroleum, no matter what positions they might be offered.

"With a guaranteed high salary and job security, I feel secured in monopoly sectors," A university graduate surnamed Wang, who just signed his job contract with a telecom firm, was quoted as saying.

Wang is expecting to earn 4,000 yuan (about US$500) a month upon his entry of the firm, while the monthly salary for his peers is predicted to attain an average of 2,000 yuan (US$250) in these two years.

"Lack of strict regulations constitutes the major cause for monopoly firms to enjoy excess profits," said Prof. Wang Zeke, with elite Zhongshan (Dr. Sun Yates-sen) University in Guangzhou. He suggests the government step up its pace to do away with monopoly and take prompt measures to restrict the profits of monopoly sectors.

In China, the government has stopped levying profits from state-owned firms since 1992 to encourage their development. With relevant preferential policies and their right to use state-owned assets, most state-owned firms enhanced their monopoly status in their respective sectors and enjoyed higher profits over recent years.

The central government has begun taking measures to control the salary scope in monopoly firms. Some telecom and financial companies have even been urged to restrain the salaries for their employees.

Su Hainan, director of the salary research department with Labor and Social Security Ministry, said relevant ministries are considering of collecting more taxes from state-owned firms which have a large proportion of state-owned assets.

This is a very old article but it's still quite relevant so (if you're interested.. you can read on =O)

Evaluation:

Generally people view monopoly as a threat to consumer welfare, as consumers usually have to pay higher prices for a lower output/quantity of products.

China, the big country which has unfortunately just experienced a hugeeee earthquake, has a few monopolistic sectors, which include the telecommunications sector, finance sector etc. It is not surprising to hear that employees who work for firms in monopolistic industries are actually getting higher pays than those who work in other industries (non-monopolistic ones, as we know things like oligopolies do exist). This is due to the fact that monopolies actually have a huge market share, which can be as high as 80-90% (as in Microsoft in the world's desktop market).

As we have learnt from our monopoly lectures and tutorials, in order to become a monopoly, or near one, the firm/firms has/have to have a huge market share (various companies can do so by colluding!) and there shouldn't be close substitutes in the industry so that consumers have no other alternatives to turn to. In this case, there are indeed few alternatives to turn to in the monopolistic industries (e.g. finance, telco etc.). As such, firms in such industries can rejoice because they can earn a lot of money without having to worry much about consumers not choosing to buy their products!

Hence we know now where their money comes from, and how these workers actually earn more than their fellow workers who don't work in monopolistic firms, reaching as high as 3 times the national average!! That's precisely why everyone's rushing to work in such industries.

The same situation probably applies to Singapore as well, but not really evident here (i think!). But for those who really need $$ to pay class fund, can consider working for Singtel or something, maybe they'll give you more smses per month.

Hahahahahahaha i am so sorry for making you all go through my analysis (if anyone's reading! :>)

Happy happy last day of school!!!!!

-Yiling :D