The pay cuts among the top 10 brokerages ranged from 1.2 per cent to 27 per cent, with Shanghai-based Shenwan Hongyuan Group slashing salaries the most, the data shows. The average salary at Citic Securities, the biggest of the firms by revenue, dropped by 5.3 per cent to 792,000 yuan (US$109,492) last year, while wages at its next-largest rival, Guotai Junan Securities, fell by 10 per cent to 668,000 yuan.

CICC’s employees earned an average of 700,000 yuan, a 15 per cent decline from the previous year.

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The predicament reflects both regulatory pressure and the fallout from a three-year market slump in an industry once hailed as one of the highest-paid in China.

The most extreme government-mandated pay cuts “seem to have been in the financial services sector because that was an area that was singled out” for its hedonism, said Jason Bedford, a former China analyst with Bridgewater and UBS Group.

The pay cuts applied to even the most senior executives. The salary paid to Zhang Youjun, chairman of Citic Securities, fell to 5.05 million yuan in 2023 from 5.6 million yuan the year before, according to the brokerage’s annual reports.

CICC’s president, Wu Bo, earned 1.7 million yuan last year when there was no chief executive officer at the helm. That was roughly half the 3.48 million yuan paid to then-CEO Huang Zhaohui in 2022, when the company had no president and Huang occupied the top management role.

In 2022, regulators intervened to ask the whole industry to implement pay cuts after the wife of a junior CICC trader drew the ire of the public by flaunting her husband’s monthly wage of 80,000 yuan on social media. As a result, the average compensation for the sector dropped to 543,000 yuan that year from 659,000 yuan in 2021, according to Wind data.

A notice issued by the finance ministry that year required state-owned financial entities to cap wage increases for senior staff at the company average and strengthen their budget management by limiting expenses in areas like business travel and office decorations.

The financial industry became a key focal point for President Xi Jinping’s anti-corruption campaign after he mooted the concept of “common prosperity,” which is interpreted as a means to narrow a wealth gap that has grown exponentially in China over the last few decades.

The pay cut “is understandable and I am in favour of it,” said an employee in the fixed-income department of a top-ranked brokerage, who spoke on condition of anonymity. “Even after the cut, the financial industry is still a high-paid one. It does have some impact on me as I have become more conservative in my spending now.”

A slumping stock market has also made brokerages more cautious about splurging on wages. The 26 publicly traded brokerages that have released their annual results posted an average 4 per cent decline in profit year-on-year, according to Haitong Securities. Net income for Citic Securities fell 7.5 per cent last year and that for CCIC plunged 19 per cent, their annual results showed.

While China’s stock market is showing some signs of bottoming out thanks to a flurry of regulator intervention, some of the rescue measures may put further pressure on the brokerage industry, dimming the outlook for 2024.

“Against the regulatory backdrop of mandated pay cuts, brokerages’ salaries are not looking hopeful this year,” said Dai Ming, a fund manager at Huichen Asset Management in Shanghai.

“While the salary level may hinge on the market performance, I don’t think there will be a pay increase even if the market ends the year higher.”