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Talk of the Day -- High bonuses at state-run firms panned

Talk of the Day -- High bonuses at state-run firms panned

Employees of five state-run enterprises administered by the Ministry of Economic Affairs (MOEA) will reportedly get large year-end bonuses for 2011, even though three of the companies lost money that year. Employees of state-run utility Taiwan Power Company, which ran a deficit of NT$43.3 billion in 2011, will get a bonus worth at least 2.65 months of their regular salaries. The staff of oil refiner CPC Corp., Taiwan, which lost NT$32.4 billion in 2011, will get a bonus as high as 4.6 months of their regular salaries. The year-end bonus consists of a performance bonus, assessed by the ministry itself, and a bonus based on the grade the company is given by the Cabinet. An "A" grade earns a two-month bonus, while a "B" earns employees a bonus amounting to between one month and 1.8 months of their regular salary. Of the five, Aerospace Industrial Development Corp.(AIDC), which earned NT$1.1 billion in 2011, was given an "A." The other four -- Taipower, CPC Corp., Taiwan Sugar Corp., and Taiwan Water Corp. -- originally were given "B's" because they lost money or fell short of profit targets, but they all, expect for Taipower, received "A's" after considering "policy factors" that limited their earnings. The "policy factors" refer to measures carried out in support of government policies that hurt state-run enterprises' bottom lines, such as keeping fuel prices fixed as crude oil prices rose or providing discounts to disadvantaged groups. Coming during an economic downturn, the generous year-end bonuses were considered as a slap in the face by many members of the public, already angered by the rising cost of living triggered by increases in fuel and electricity prices earlier this year. The following are excerpts of media coverage of the controversy: United Daily News: Legislators across party lines called Friday for the role of "policy impact factors" in the grading of each state-run company to be made transparent to ease public misgivings. Legislator Wong Chung-chun of the ruling Kuomintang (KMT) wondered how money-losing state-run firms could afford to pay such high year-end bonuses when the average family is trying to rein in spending amid the economic downturn. He accused the government of not having any feel for the pulse of society. His colleague, KMT Legislator Lai Shyh-bao, said the Economics Ministry claimed that after adjusting the state-run enterprises' financial records to account for "policy impact factors," the companies went from a loss to a profit. But he said the policies were set by the ministry itself, and urged it to subject these special subsidies and policies to public scrutiny. Legislator Lin Chia-lung of the opposition Democratic Progressive Party questioned how CPC Corp. could be said to have made money when privately run oil refiner Formosa Petrochemical Corp. lost money under the same conditions. He accused CPC Corp. of listing wasted expenditures and procurement spending as part of its operating costs to make its financial statement look better. Economics Minister Shih Yen-shiang said CPC Corp. and Taipower workers received year-end bonuses mainly because electricity and fuel prices were not set according to market mechanisms. "It was not the enterprises that have not worked hard enough. They (couldn't meet their target) because of policy factor restraints," he said. Looking back over the past year, Shih admitted that he did not do a good enough job and said the least satisfactory part was hiking both fuel and electricity prices. But he also said that Taiwan relies on imports for 99 percent of its energy needs, and there was no reason not to make fuel and electricity prices reasonable. "But the approach and timing to achieve the goal still has room for review," he said. Liu Ming-chung, executive director of the State-owned Enterprise Commission, said that out of the five state-run enterprises, only AIDC did not have to shoulder policy responsibilities. It ran a surplus of NT$1.1 billion. Liu said that carrying out government policies cost Taipower and CPC Corp. NT$68 billion and NT$73.9 billion, respectively, and the two would have run a surplus had they not followed those policy guidelines. Taiwan Water Corp, ran a deficit of NT$367 million, but it shouldered policy responsibilities worth NT$1.7 billion, Liu said. Taipower spokesman Roger Lee said his company felt it had been wronged for getting a B grade. Taipower Vice President Chen Ming-hui suggested that the government limit the power company's social responsibilities so that its true level of performance can become clearer. (Dec. 29, 2012) China Times: Legislators across party lines said it was incredible for CPC Corp. workers to get bonuses of up to 4.6 months of their regular monthly salary. DPP Legislator Chen Chi-mai said that based on CPC Corp.'s average salary of NT$60,000 per month, workers there will get year-end bonuses of NT$270,000, even higher than government heads. "Such state-run enterprises that only know how to take money from the people's pockets would be better off being closed," Chen said. KMT Legislator Wong Chung-chun called the bonuses were "unacceptable" and said they were perceived very negatively by the public. Another KMT lawmaker, Wu Yu-jen, said handing out fat year-end bonuses should not be a standard practice for state-run enterprises. Instead bonuses should be adjusted according to performance, he said. At a time when the Legislature's Economics Committee is proposing to freeze the year-end bonuses for the heads of economics and finance agencies until economic growth rebounds to a certain level, the year-end bonuses of state-run enterprises have become a magnet for debate. Shih said the ministry had hoped in 2009 to link the assessment of state-run enterprises with GDP growth, but the proposal was not accepted by the Executive Yuan. Taisugar was another state-run firm that reported a profit, but it would have run a loss of NT$1.5 billion on its core business if the money it made from selling property was not included in its accounts. A project to improve efficiency proposed by CPC Corp. also includes the possibility of selling its property in Taipei between January and June 2013, showing that it may also resort to selling land to improve its bottom line. (Dec. 29, 2012) (By Lilian Wu)


Updated : 2021-07-25 02:44 GMT+08:00