In China, monopoly industries often provide substantial non-salary 　　benefits to their employees, but critics argue that such
　　practices are unfair and should be abolished
　　Lin Bin works for a telecommunications company in a coastal city in north China. In the view of many people, he has quite a nice job, because the telecom industry is a monopoly industry in China.
　　Lin said he makes 3,000 yuan a month, which is fairly high compared with the income of other local people. He lives in the apartment the company provided him for free after graduation from university, and his telephone service is free because he works in the industry. In addition, the amount he receives in holiday bonuses is a considerable sum. Thus, Lin is the only one of his classmates who has bought a new apartment with cash after three years of work.
　　Dong Ying is a retired employee of a communications company but she still enjoys industry benefits. Her phone number is a special number provided by the communications company, which she has been using for 15 years gratis.
　　There are similar employee benefits among airlines in China. Each employee receives two or more free plane tickets every year to any destination served by the airline, which can also be used by close relatives. The estimated value of this benefit is about 4,000 yuan.
　　Such benefits provided by monopoly industries are dubbed “monopoly welfare.” Even in the banking industry, which is undergoing reform, such “welfare” still exists.省略, the biggest benefit in the industry is that banks sell apartments they have built to their employees at prices well below the market value. In some big cities, the sales price is even below the government-set minimum. So, employees can buy apartments during the construction period, and then sell them at market rates, contributing to the high cost of housing. In some places, employees, particularly managers, can obtain low-interest or interest-free loans to finance their purchase.
　　Because monopolies have not been broken completely, employees of those industries still enjoy special benefits. Family members of hospital employees do not need to register when they go to a hospital; railway employees do not need to buy tickets when they travel by train; employees of electric power systems can receive a certain amount of electricity for free. In the eyes of many people, “monopoly welfare” is a common industry practice.
　　Recently, however, it has come under attack. Some consider it a kind of corruption. Some state-owned monopoly enterprises use their advantage to provide industry resources to their employees and family members cheaply or for free. But those benefits are a part of public resources, and thus may infringe on the rights of the public.
　　During a panel discussion of the Chinese People’s Political Consultative Conference (CPPCC) in March, Wen Kegang, a member of the CPPCC National Committee, asked, “Who gives monopoly enterprises the right to enjoy ‘monopoly welfare’?”
　　
　　Common practice?
　　
　　In response to the criticism, some industries remain silent about such benefits, while others point to common international practices in these fields.
　　Some note that the practices of Chinese companies differ from the benefits provided by Western companies. First, they say that the benefits provided by Western companies tend to be small-scale and few. In contrast, benefits offered by Chinese companies are substantial. In some cases, the value of such benefits can even exceed the value of an employee’s salary and bonus.
　　Second, in order to evade taxes or financial regulations, many companies choose to provide non-cash benefits. In this way, employees can avoid paying income taxes, while the companies can use these expenses to reduce their income taxes. In contrast, Western companies generally have to pay taxes on these benefits.
　　David Smith, an economics columnist with London’s Sunday Times, tells a story at the beginning of his book Free Lunch. In the 19th century, some bars in the western part of the United States solicited customers by offering a free lunch if the patron bought a certain amount of alcohol. However, customers would realize that the cost of the lunch was included in the price of the drinks, which was much higher in these bars than in other places.
　　In China, the metaphorical high cost of alcohol contains not only the charge for the free lunches customers enjoy but also for the free lunches the bar employees enjoy, another example of “monopoly welfare.”
　　Wen of the CPPCC pointed out that the wide extent of “monopoly welfare” reveals that there are three major problems.
　　First, the cost of such benefits may be shifted to the public. For example, in recent years, the prices of water, electricity, gas and petroleum have been increasing continually, for the cited reasons that managing these enterprises is difficult and the costs are increasing. However, in fact, these industries have been synonymous with high salaries and good benefits. “If things continue like this in the future, it will bring on a credit crisis,” Wen said.
　　Second, the social unfairness of such practices may become more and more serious. “The monopoly industries make use of public resources granted by the country to provide convenience for their employees but finally shift the costs onto ordinary citizens, farmers and other disadvantaged groups. That has broken the social rule of fairness,” Wen said.
　　Third, the loss of state assets will become more serious. “Monopoly industries, especially public undertaking sectors, are managing state assets representing the public. Enjoying undeserved welfare is embezzling benefits from the nation and people, leading to a loss of state assets. The assets may not be held by a few people in cash, but are divided among the employees of the monopoly industries,” Wen said.
　　
　　Hangover of the planned economy
　　
　　
　　Critics say monopoly welfare is a social ill that is left over from the planned economy phase and has not been eliminated. While the country generally has moved to a market economy, some industries, such as civil aviation, railways, hospitals and electricity, maintain their monopoly status because of their special functions in the national economy.
　　Liu Zhibiao, Vice Dean of the Business School of Nanjing University, and Jiang Fuxiu, a doctoral student in the business school, gathered partial data from the insurance, telecommunications and transportation industries and estimated that the loss caused by monopoly welfare was 9.2 trillion yuan from 1997 to 2000, accounting for 11.5 percent of the country’s GNP.
　　Monopoly welfare reflects the fact that many problems still exist in monopoly industries, including a lack of competition and inadequate supervision and accounting systems, critics contend.
　　Recently, electricity producers have argued that price increases are necessary because of higher production costs, saying that they will incur losses if they are not permitted to increase their fees.
　　“There is an absurd fact: employees of ‘losing’ companies enjoy not only salaries far higher than the average, but also various benefits,” said Fang Tingyu, a member of the National Committee of the CPPCC. He pointed out that the number of employees in the electric power industry is at least 1 million, and if everyone paid the government an additional 100 yuan, that would add 100 million yuan to the state coffers.
　　How to control this situation and prevent monopoly industries from passing along the cost to customers through higher prices? Some experts say that accounting practices must be enhanced.
　　Song Shaohua, professor with the Economics Department of Shanxi University, said, “In fact, for a long time, monopoly industries haven’t been supervised effectively and have made their own cost calculations, leading to large benefits by virtue of their monopoly status. Monopoly welfare enjoyed by their employees has figured into the costs of the industries, and the rising costs have been shifted onto the customers in the form of rising prices. And then, the income gap between industries has widened sharply.”
　　Fang said, “The costs of a monopoly industry must be calculated accurately, and the prices of products should be decided according to the results of hearings attended by experts, customer representatives and relevant enterprises.
　　“The cost information disclosure system must be set up quickly, with the costs and service quality examined and evaluated by the third party intermediate agent and customers,” he added.
　　The “radical” method to eliminate “monopoly welfare” is to eradicate monopolies. In recent years, such monopoly industries as civil aviation, telecommunications, electric power, railways and insurance have seen changes to differing degrees, as a result of international competition. When monopolies disappear, critics contend that the “free lunch” of monopoly welfare will disappear naturally.

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