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State firm bonuses hit with 1.2 months' cap

TAIPEI, Taiwan -- Lawmakers from both sides of the aisle reached a consensus yesterday to cap individually rated performance bonuses for state-owned enterprise employees at 1.2 months, more than halving the current maximum of 2.6 months.

Under the consensus, state-owned enterprises (including public banks) can only hand out performance bonuses during profitable years starting in fiscal 2012.

The consensus covers only individually rated performance bonuses, leaving across-the-board bonuses based on the Ministry of Economic Affairs' (MOEA) grading of state-owned businesses untouched, said Kuomintang legislature caucus whip Wu Yu-sheng (吳育昇).

A state firm worker can receive a bonus worth 2 months' salary if his or her employer earns the top grade from the MOEA. Under the new deal, the upper limit of an employee's combined bonuses will be 3.2 months — 1.2 months for individually rated bonuses and 2 months for MOEA-graded bonuses.

If enacted, the proposal will affect performance bonuses in fiscal 2012 for most state-owned businesses. Four utilities companies — Taiwan Power Company, CPC Corp., Taiwan Sugar Corp. and Taiwan Water Corp. — will, however, see their 2011 and 2012 performance bonuses capped under the new limit.

Lawmakers brokered the deal yesterday during a negotiation session between party legislature caucuses for the 2013 central government budget. Opposition Taiwan Solidarity Union whip Hsu Chun-hsin (許忠信) began by demanding a rethink of the current performance bonus standards, arguing for a suspension of bonuses for enterprises deep in the red.

Lawmakers finally decided to cap, but not to cancel, performance bonuses because well-run enterprises should be rewarded, KMT whip Wu said.

Lawmakers, however, have yet to reach agreement on whether to take into consideration government policy-induced deficits when evaluating the performances of state-owned business employees, Wu said. Legislators will also consider loosening the standards for bonuses after fiscal 2012 if the economy turns for the better.

In response to the proposal, Minister of Economic Affairs Shih Yen-hsiang suggested late yesterday that state firm employees may feel unfairly treated by the planned cuts.

He earlier told lawmakers at a separate meeting at the economic committee that the MOEA will finalize its improvement plan regarding state-owned enterprise bonus evaluations by the end of February.

The improved system will include Taiwan's economic growth, unemployment rate and income levels at the time as factors for consideration. It will also better differentiate the individually rated performance bonus from the one based on MOEA grading so as to avoid public misunderstanding, Shih said.

Senior Official Allowance Cuts

The ruling and opposition parties agreed to cut allowances for chiefs of central government bodies by one-fourth for 2013.

The decision was made in response to the people's expectation and due to the fact that President Ma Ying-jeou and Premier Sean Chen both expressed willingness to see their special allowances cut, Wu explained.

Legislators also gave their nod to the Executive Yuan's proposal to limit year-end bonuses for retired civil servants, teachers and servicemen so such bonuses only apply to those with monthly pensions of less than NT$20,000 and the families of those injured or killed on duty. The new standard will affect 2012 bonuses, which are to be handed out this year.

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