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Rumors of excessive pay for staff in state-owned enterprises (SOEs), especially those in monopoly sectors, has prompted the Chinese government to take steps to claw back salaries.

The Ministry of Labor and Social Security and the Ministry of Finance have jointly issued an order to strengthen controls on the total remuneration paid to SOE employees.

Local governments are instructed to ensure SOE pay mechanisms are linked to economic performance.

SOEs at which average salaries are more than double last year's local urban average should be reviewed strictly.

Salaries at SOEs that experience a fall in profits should be reduced, according to the order.

Some SOEs are able to earn big profits because of their monopoly status. Instead of handing over the excessive profits to the government, they have been paying their staff -- managers and ordinary workers -- very high wages.

Sky-high pay at SOEs, especially those in monopoly sectors, has aroused public anger. Salaries in electricity, petroleum, finance and telecommunications enterprises are hotly debated on the internet.

The Beijing News reported last Friday that public pressure had led to a 20 to 50 percent drop in salaries in the electricity sector this year.

Non-state controlled enterprises should negotiate pay with employees according to company policy, says the circular.

(For more biz stories, please visit Industry Updates)