China’s economy is facing a decline, with various industries experiencing a downturn, including even state-owned enterprises under the Chinese Communist Party. News of “top-tier state-owned enterprises in full collapse, performance cut in half” and “management personnel in the engineering bureau unable to pay salaries” has been widely circulated on social media. Internal documents leaked reveal that performance-based pay cuts have been in effect since August this year. The situation of being unable to pay salaries is even more common in small and medium-sized enterprises across mainland China.
On the evening of November 26, news spread on the Chinese internet about a “top-tier state-owned enterprise in full collapse, leadership performance halved,” drawing attention.
An internal document titled “Notice from China Railway Construction Investment Group Co., Ltd. on Adjusting Salary Payments for Headquarters and Affiliated Unit Employees” leaked, bearing the company’s official seal.
The document mentions the temporary suspension of certification subsidy payments within the entire company, and that a portion of monthly pre-paid performance-based salaries will be cut by 50%. These adjustments have been in effect since August this year.
China Railway Construction Investment Group Co., Ltd. is a super-large state-owned holding company under the central enterprise, established with the exclusive injection of 3 billion yuan in cash by China Railway Construction Corporation Limited. Its business includes domestic and international transportation, energy, municipal, urban comprehensive development, and other fields. According to the 2024 Fortune Global 500 ranking, China Railway Construction ranks 43rd among the most powerful and largest super-large integrated construction groups globally.
An article by blogger “Ang Quan” from Henan mentioned that this well-known construction state-owned enterprise had already implemented salary reductions, primarily targeting the leadership at that time, with a 50% cut in monthly performance for principal-level, vice-principal-level, and mid-ranking members. For ordinary employees, certification subsidy payments were canceled.
Recently, on top of the salary reductions in September, there were more salary cuts. “If there are further reductions, it is very likely that the sickle has reached the lower-level management.” “Even state-owned enterprises are no longer stable.”
The article stated that when it comes to salary reductions, state-owned enterprises generally don’t make drastic cuts like private enterprises but rather gradually decrease: starting with canceling some subsidy bonuses such as certification subsidies, construction allowances, rank allowances, high-temperature allowances, overtime allowances, corporate pensions, etc.; then they raise performance assessment standards, lower performance-based pay; followed by reducing basic wages until they reach the local minimum wage standards; finally, with no more room for reductions, they either keep the employee in place or delay salary payments.
“In terms of layoffs, state-owned enterprises never directly compensate before letting people go, but rather push you to leave on your own—starting with persuasion, holding employee meetings, where cost-cutting measures are often mentioned. Some slightly more considerate state-owned enterprises may provide severance, but they prioritize laying off young people without connections, irrelevant backgrounds, and shorter tenure. However, the majority of state-owned enterprises do not offer severance.”
The article mentioned that after the persuasion phase comes job reassignment, internal competitive promotion for all employees, and last-place elimination during performance evaluations. This stage of operations is particularly tormenting for workers because performance evaluations are so subjective that even being the top achiever doesn’t guarantee job security; the same goes for competitive promotions, where you gradually get marginalized, shifting from research and development to technical and logistics roles. In short, the strategies of state-owned enterprises are endless.
In the comments section, numerous netizens have left comments and opinions. Some say that given the current circumstances, if you have the courage and capital, resign and find another job; if not, endure it.
A few days ago, screenshots circulating on social media showed a message from a chief of an engineering bureau in a work group, stating: “This month, management personnel will not receive salaries. Please cherish the opportunity to work in your position, as last-place elimination will become inevitable.”
One netizen mentioned that in the engineering industry, technical personnel are the first to experience salary deductions and delays, followed by auxiliary staff like human resources and accounting, and only then do management personnel face the same predicament. When even management personnel cannot receive their salaries, the situation becomes truly dire.
Many netizens responded, saying that it’s not just the engineering bureau; hospitals, schools, and other sectors are also unable to pay salaries. With salary reductions and delays becoming the norm, various industries are collapsing.
On social media, many users are venting their frustrations, noting that numerous entities are already struggling to pay salaries.
Blogger Zhao Zheng recently noted that in today’s highly stressful society, salaries are the foundation of survival, yet this cornerstone is now shaking. Salaries are the result of a combination of factors such as the economic environment, industry trends, and business conditions. In recent years, China’s economic situation has become complex and unstable, exacerbated by the ongoing impact of the COVID-19 pandemic, leading to unprecedented challenges for many industries and businesses.
Amidst the overall economic downturn, difficulties in paying salaries have become a harsh reality that many entities must face, with small and micro-enterprises being one of the most vulnerable groups. Many small and micro-enterprises are struggling to make ends meet.
Ms. Li runs a small garment factory, where she has built a good reputation in the industry over the past decade through diligence and integrity. However, the pandemic caused her business to plummet, with a sharp decline in orders. Rising raw material costs, a broken supply chain, and a series of problems followed.
She is distressed by having to repeatedly postpone her employees’ salary payments or sometimes only being able to pay a portion of their wages. She stated, “I have no other choice…”
According to data released by the State Administration for Market Regulation of the People’s Republic of China, small and micro-enterprises account for the vast majority of market entities. Due to the continued impact of the pandemic, the survival status of small and micro-enterprises is worrisome. Countless entrepreneurs like Ms. Li are experiencing sleepless nights filled with anxiety and struggle.
In comparison to small and micro-enterprises, even some seemingly glamorous white-collar professionals are facing salary challenges.
Mr. Zhang, a product manager at a well-known internet company, used to earn a monthly salary exceeding ten thousand yuan and was once an object of envy among his friends. However, as industry competition intensified and the company business was restructured, his department started laying off employees and cutting salaries. While Mr. Zhang managed to keep his job, his salary saw a significant reduction. Now, with monthly payments for mortgages, car loans, and children’s education fees weighing down on him, the uncertainty of his salary only exacerbates his workplace anxiety, even affecting his mental and physical health as well as his family relationships.