WeChat post about 70 per cent pay cut by employee of Shanghai Pudong Development Bank unit sparks protest over salaries against lender’s IT vendor
- Protests made headlines because millions of Chinese employees are worried about wage incomes and job prospects, consultant says
- SPDB says employees and the outsourced IT firm are in talks to find common ground
The incident took place after an employee with the bank’s wealth-management subsidiary complained about a nearly 70 per cent pay cut. A screenshot of a post by the employee on WeChat was widely circulated on the Chinese social-media platform and touched a nerve with the IT vendor’s staff, who took up their own grievances.
“A strike and heavy salary cuts by a bank easily made headlines, because millions of Chinese employees are now unnerved by worries about wage incomes and job prospects,” said Ding Haifeng, a consultant at Shanghai-based financial advisory firm Integrity. “The protest, though on a small scale, will also sound an alarm among the country’s public security authorities, because they treat it as a threat to social stability.”
SPDB said in a statement that the strike outside an office building in the Lujiazui finance and trade zone in Shanghai was an internal dispute at the outsourced IT firm, whose management and staff were in talks to find common ground.
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The bank also confirmed the pay cut mentioned in the WeChat post, adding that the sharp cut in salary was implemented because the employee in question had failed to pass a performance review. The employee had accepted the adjusted pay after communication by the bank’s wealth-management subsidiary.
A senior manager with the Shanghai-based bank told the Post that SPDB Wealth Management, a fully-owned unit set up two years ago to help clients manage their personal fortunes, uses a performance-based salary mechanism. It was not unusual that certain underachieving employees faced a 70 per cent reduction in their pay, he added. Other SPDB employees also faced some small pay cuts, with basic salaries remaining unchanged but performance-linked pay subject to some decline, he said.
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The employee said in his viral post that his monthly salary had slumped to about 6,000 yuan (US$865) from 20,000 yuan.
SPDB, a lender controlled by the Shanghai government, is among the few banks that posted a profit drop last year. Its net earnings slid 3.5 per cent from a year earlier to 51.2 billion yuan in 2022 for a third consecutive year of profit decline. SPDB’s revenue slipped 1.2 per cent to 188.6 billion yuan. It is the only mainland China-listed bank to report a slump in both profit and revenue for last year.
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Pay in the sector was still much higher than other industries, the watchdog said, and finance professionals must abandon their self-identification as elites. Employees with top securities brokerages have already borne the brunt – they saw their salaries cut by 20 to 50 per cent last year, according to data compiled by the Post.
Some mutual fund management firms have also been told since late last year to reduce unnecessary benefits given to employees.
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Staff cannot take business-class flights and hotel stays have to be capped at 600 to 800 yuan, depending on the city, a salesperson with a Shanghai-headquartered Chinese money manager told the Post on condition of anonymity.
“The scrutiny is pretty serious, as we cannot even pay extra at our own expense to get a better hotel or a business-class seat,” the salesperson said. “Only economy-class tickets are passed by the system and reimbursed.
“I wouldn’t be surprised to see a pay cut this year.”
