Kunming, capital city of southwest China's Yunnan Province, has shelved a controversial policy to give payouts to civil servants who quit their jobs to start businesses, on the grounds that the policy had not been approved by the city government or Party committee.

Under the plans, city employees could be seconded to private companies or allowed to run their own businesses for up to three years while still receiving wages, and with the option to return to their jobs. Those who chose not to return would receive a redundancy package worth five years' pay, with additional payments of up to 200,000 yuan (US$29,300) for those with long service records.

The policy sparked considerable controversy when it was published in late September, and an October 11 announcement on the city website stated that it had been shelved.

But should civil servants receive such handsome payouts to quit their jobs and set up on their own?

Unsurprisingly, some civil servants think so. One said the move would boost the local economy and create jobs by turning ambitious government employees into entrepreneurs. He said that the money the government would save in future wages far outweighs the compensation packages.

But there have been many loud objections to the policy. Law Professor Jiang Ming'an from Peking University said there are better ways of encouraging civil servants to start businesses than simply paying them off. "The government should consult the public before making such payouts. And the payments should be ratified by the local People's Congress. This money comes from the taxpayers not the government," he said.

Zhang Shangren, former deputy director of the Guangdong Institute of Public Administration, said that civil servants have better pay and fringe benefits than they had in the 1980s or 1990s, and that the move would cause dissatisfaction among the public. "The government is supposed to maintain justice but its privileges are the embodiment of injustice," he added.

A businessman said that civil servants have huge networks of connections that, combined with payouts, would give them an unfair advantage over others starting up in business.

But some say this kind of buyout policy is not necessarily unreasonable or unfair.

Similar policies date back to the launch of reform and opening in China and the first steps away from a planned to a market economy, said Professor Jiang Ming'an. At the time, governmental departments were overstaffed but the private economy lacked management and other skills. So government departments devised preferential policies to encourage staff to set up in business. In retrospect, the move contributed to China's development, said Professor Jiang.

In recent years many local governments have adopted similar buyout policies because there is no other way of getting civil servants to quit their secure, well-paid jobs. Some believe some form of buyout policy is inevitable.

"But the payouts should be capped," said Ling Zhimin, a current affairs commentator, "and they should be determined by law not decided on by the government.

Zhang Shangren added that Chinese governments should shift their focus to public governance and let companies take care of wealth creation.

(China.org.cn by Pang Li, October 21, 2008)