Wage increases part of approved income distribution plan

The State Council on Tuesday approved long-delayed guidelines to reform the mainland's income distribution system, under which wages will be raised and state-owned enterprises will be required to hand over a greater share of their profits.

With China's social inequality reaching alarming proportions, Premier Wen Jiabao in March pledged that rolling out the guidelines would be a top priority before he stepped down.

The planned reform had been delayed by about eight years, after being amended half a dozen times amid strong objections from interest groups related to state-owned companies and some government bodies.

"The guidelines are about the goals, direction, and major principles of the reform," said Li Shi, a professor at Beijing Normal University. "The broad ideas are correct. However, the key is how to implement them. That will be something left to the new generation of leaders to worry about."

The cabinet urged government agencies to prepare detailed action plans but didn't offer a time-frame.

By 2015, enterprises owned by the central government will be required to surrender a greater share of profits - five percentage points over current levels - to the government, with part of the funds slated for "improving people's livelihoods".