JD.com—one of China’s largest retailers—will cut the salaries of senior executives by 10% to 20% in 2023, with the funds diverted to employee benefits for front line staff.
The decision comes on the heels of Alibaba’s announcement in September 2021 of a $15.5 billion “common prosperity” fund. After the company was called to task by government regulators over labor rights and safety standards in its delivery network, improving the employment conditions of thousands of gig workers will be a major focus for the Alibaba group.
At the 20th party congress in October, President Xi Jinping announced measures to narrow the wealth gap. He has called on high income companies and individuals to do more to contribute to financial equality in society, with the technology sector in particular under continued scrutiny with respect to wages and perks for senior executives.
Outlook for employers: Implementation of the common prosperity strategy is a key component of President Xi Jinping’s civil and economic goals. Employers should anticipate increased pressure to seek mechanisms for equitable distribution of salaries and benefits across the employee population.