Policy missions and the competitive environment should be considered when determining state-owned firms' year-end bonuses, said Premier Sean Chen yesterday.
Chen's remark came after legislators across party lines decided to slash 2011 company performance bonuses to no more than 1.2 months' salary for Taiwan Sugar Corp., CPC Corp., Taiwan Power Co. and Taiwan Water Corp. Lawmakers also agreed that from 2012 onward, a bonus cap of 1.2 month's salary would be imposed on all state-owned firms, and that such bonuses should be distributed only if the company finished the year with a surplus.
The premier noted that these firms vary in the type and nature of business they are in, not to mention some must compete with private companies. A state firm's ability to make profits also depends on whether it is properly equipped to compete with its counterparts. Moreover, slashing bonuses would drive away top talent given that salaries and bonuses at some state firms are already lower than in the private sector.
To disregard the different obligations and performances of state-run firms and set a blanket cap on year-end bonuses for all firms would only serve as a disincentive for employees, Chen said. More specific factors should also be weighed when determining the bonuses.
Last Friday, the premier gave instructions that the state-firm bonus system be reviewed thoroughly, with improvement proposals due by the end of February. The review is being led by the Research, Development and Evaluation Commission (RDEC) and the Directorate-General of Personnel Administration (DGPA) in cooperation with the relevant competent authorities.
The year-end bonuses are currently composed of two parts: one based on the company's overall performance, and the other on the employee's personal performance. Chen suggested examining whether similarities or overlaps exist among factors driving the two bonuses; the nature and definition of the two bonuses; disparities in evaluation ratings of employees in the same company; and how company performance may in some cases be limited or affected by government policies.
Chen said he hoped the RDEC and DGPA's review would clear up this debate once and for all. Creating a fairer evaluation method that accounts for the different natures of state firms would safeguard the rights of their employees and meet public expectations.