New regulation on the salaries of Chinese social organizations released

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China’s Ministry of Civil Affairs recently released the “advice on strengthening and improving the salary management of social organizations in China” (hereinafter referred to as the advice). The newly released legislation designs a salary management system for China’s social organizations and clarifies the salary standards.

Most of China’s social organizations have until now adopted a single salary system, differentiating their staff’s levels of retribution mainly according to their ranking. This has led to a certain level of irrationality in income distribution.

The advice stipulates that social organizations should establish a salary management system and incorporate it into the policy making of the meeting of members (representatives) or of the board of directors. Once determined, the system should be made public and supervised in a democratic form.

As stated in the advice, social organizations should also negotiate with staff on an equal basis regarding their income level and the adjustment range of their salary before an agreement is signed, so their salaries are coordinated with economic development and labor productivity.

Social organizations should deposit social insurance and housing funds for staff according to the law. Organizations that are rich enough can also establish a pension system and other supplementary insurance.

The new regulations also state that social organizations should act independently in distributing their staff’s payroll and implement a job-based and performance-based pay system. The staff’s payroll will be composed of a base pay, performance pay, bonuses and allowances. Social organizations should have an incentive system in place for core personnel in key positions and those who have made major contributions. The two parties (the social organizations and the staff) should agree on a salary level for outstanding managers and valuable talents.