Low GDP may curb gov't bonuses: minister

Controversy emerged recently following news that state-owned firms, including those not achieving a profit, are set to provide what some consider to be generous performance bonuses to their employees.

Employees at state-owned enterprise such as CPC Corp., Taiwan (台灣中油), Taiwan Power Co. (台電), Taiwan Water Corp. (台水), Taiwan Sugar Corp. (台糖) and Aerospace Industrial Development Corp. (AIDC, 漢翔) may receive up to 4.6 months' salary in year-end bonuses. This includes performance bonuses, review bonuses and year-end bonuses.

Responding to public criticism, Shih said the government is considering applying different standards to decide whether the performance bonuses should be provided. Shih said the government has considered taking GDP growth, unemployment and changes in employee income ratios into the consideration when assessing performance bonuses.

Liu Ming-chung (劉明忠), chief executive officer of the State-owned Enterprise Commission, yesterday said employee work performance bonuses have been in effect for decades. Liu said they were created as a means of boosting work performance and thereby lifting profits.

Shih said the Ministry of Economic Affairs suggested to the Executive Yuan that they consider taking GDP growth into account when assessing performance bonuses. Shih said due to bureaucratic difficulties the Executive Yuan did not adopt the suggestion.

Shih said that in light of forecasts of weak GDP growth in the near future, the ministry is likely to adopt the three aforementioned standards when assessing whether to provide performance bonuses. Shih added that if unemployment sits at more than 6 percent, state-owned enterprises may not provide performance bonuses.

Liu said the highest performance bonus provided by a state-owned enterprise is 2.6 months' salary. Liu added that this may be revised in the future.

The minister said growth in monthly salaries for the bottom 20 percent of the nation's employees is a factor to be considered. He said the ministry will be handing the amendment proposal in March to the Executive Yuan.

Shih said changes to the standards may affect 2012 bonuses.

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