JD.com Inc. is cutting executive salaries by 10% to 20% in a bid to improve employee benefits amid China’s increasing emphasis on wealth equality.
The company
JD,
9618,
one of China’s largest e-commerce giants, said the decision will affect the salaries of around 2,000 managers, with steeper cuts for higher-level executives. The cuts, expected to take affect from 2023, would “improve ground-level employees’ benefits” and “alleviate pressure on the company,” JD said in an internal letter. The memo first circulated on Chinese social media on Tuesday. A JD spokesperson has confirmed the authenticity of the document to The Wall Street Journal.
“The employee benefits improvement plan is currently being promoted, with a focus on front-line staff,” the spokesperson said in a statement.
JD said executive salaries could recover to their current levels if the company’s earnings resume high growth in two years.
In the same letter, the company said it will set aside 10 billion yuan (US$1.40 billion) to set up a housing security fund for employees, and JD’s billionaire founder Richard Liu will donate 100 million yuan of his own money toward staff welfare. JD will also expand social security coverage to more workers and contractors, it said.
JD’s decision came a few days after Xi Jinping at the APEC CEO Summit reiterated a strategic focus on “common prosperity,” the Chinese President’s signature economic policy aimed at redistributing more of China’s wealth to the poor. The campaign has underpinned many of Mr. Xi’s policy drives, including a clampdown on the country’s technology giants.
Write to Yifan Wang at yifan.wang@wsj.com
This post was originally published on Market Watch
