The central authority is trying to advance a salary scheme in 1.26 million government-sponsored institutions across China, a key part of a broader push to reform the income distribution mechanism.

However, the change, which was first adopted on a trial basis in 2009, has many hurdles to overcome, observers say.

The Ministry of Human Resources and Social Security (MHRSS) and other related departments are engineering a performance-based salary plan, the Beijing-based Economic Observer reported Sunday.

Government-sponsored institutions, run by government agencies, provide professional services to the public by utilizing State assets. More than 30 million people serve in these institutions that include education, science and technology, culture, healthcare and welfare.

However, the "iron-bowl" approach to wages at most institutions where salaries are linked solely to job titles, has constrained creativity among workers. This situation has made a performance-based appraisal system necessary.

By order of the State Council, trials were introduced at institutions such as education and grassroots healthcare sectors in 2009. A nationwide effort was implemented this year in other sectors.

However, the change has proven to be a Herculean task. In fact, some institutions such as the Chinese Academy of Social Sciences, which have piloted the effort since 2008, are now walking away from it.

In addition, many institutions have not carried out the change as expected, Peng Zhenhuai, a government management expert at Peking University, told the Global Times.

A major problem with the reform effort rests with the fact that there is no agreement on just how to evaluate the performance of the workers in the public service sectors.

"Most workers are intellectuals and their performance cannot be simply calculated by workload," like employees at enterprises, Wen Yueran, a labor scholar at Renmin University, told reporters earlier.

In addition, the change is likely to strengthen the management of profit-making institutions and stop the arbitrary fees by schools and hospitals. It will also stop arbitrary allowances to workers who face public criticism, said Su Hainan, director of the Labor and Wage Institute under MHRSS.

Hu Xiaoyi, vice-minister for human resources and social security, said last year that salary reform is part of a comprehensive change at government-sponsored institutions, which also includes an appointment system, changing the public finance system and implementing a social endowment insurance system.