What Is Income Distribution?

Income distribution is the division of the total revenue by the provider of corporate capital. It mainly divides the profit before taxation (that is, interest, income tax, and net profit) among various stakeholders. The composition of income distribution is, in a broad sense, the distribution of corporate income; in the narrow sense, the distribution of profit after taxes.

Income Distribution

Distribution according to work is a distribution method implemented within the scope of China's socialist public ownership. The public ownership economy includes state-owned and collective components in state-owned, collective, and mixed-ownership economies.

Distribution according to work can only be implemented within the scope of public ownership. There is no distribution according to work in other non-public ownership economies. We must pay special attention to this point, otherwise it is easy to confuse the distribution according to work with the distribution according to labor factors. In our country, the distribution according to labor factors is a distribution method within the non-public ownership such as the private economy and foreign capital economy.

In the distribution according to work, the labor provided by the workers is a kind of social labor, so the degree of realization of distribution according to work is closely related to the economic benefits of the enterprise. Due to the difference in economic efficiency of enterprises, there are differences in the number of distributable consumer goods. Therefore, the equal amount of labor of employees in different public ownership enterprises may not be able to obtain the same amount of remuneration.

The implementation of distribution according to work at this stage is determined by objective economic conditions.

First, public ownership of the means of production is a prerequisite for distribution according to work. Under the conditions of socialist public ownership, workers share the means of production, work together, and share labor products. The public ownership of the means of production determines that the distribution of labor products must reflect the will and interests of workers, providing the possibility of implementing distribution according to work.

Second, the level of productive forces development under the socialist system is the material basis for implementing distribution according to work. Under socialist conditions, the productive forces have not yet been highly developed, and labor products have not yet reached a very rich level, and they cannot fully meet the needs of members of society in all aspects, so they do not have the material conditions to implement on-demand distribution.

Finally, the nature and characteristics of labor under the socialist system are the direct reason for implementing distribution according to labor. In a socialist society, workers have not yet achieved comprehensive development, and labor has not become the first need of people's lives, but only a means of earning a living. Therefore, the distribution of personal consumer goods must reflect the difference in people's labor. It cannot be evenly distributed. It can only be distributed according to work. Only in this way will it stimulate the enthusiasm of laborers, promote laborers to study science and technology, improve labor skills, and be powerful To promote the development of socialist social productive forces.

Implementing distribution according to work is conducive to fully mobilizing the enthusiasm and creativity of workers, motivating workers to work hard to learn technology, improve skills, and promote the development of social production. At the same time, this distribution method reflects the social status of workers in the socialist system, where they work together and distribute equally.

Participation in the distribution of production factors is an inherent requirement of the market economy. Only in this way can the enthusiasm of production in all aspects be fully mobilized. Under the conditions of a socialist market economy, there are multiple owners of production factors such as capital, labor, technology, and management, and these production factors play an irreplaceable role in production. Only when the owner obtains his own income from the contribution of production factors can he encourage people to use the production factors more effectively and improve the utilization efficiency of the production factors. Only by allocating production factors so that each element has its place, can we better resolve the sources of power for labor, capital, technology, and management, so as to achieve a rational and effective allocation of resources and promote the development of productive forces. Therefore, to develop a market economy, it is necessary to recognize distribution according to factors of production.

Differences: First, they are different in nature. Distribution according to work refers to the distribution of personal consumer goods according to the quantity and quality of labor provided to the society under the conditions of socialist public ownership; and distribution according to the elements of labor is a form of distribution in which labor is exchanged as a commodity. Second, the premise and foundation are different. Distribution according to work is the product of socialist public ownership. It is the objective requirement for workers to share the means of production for distribution. It is realized in the public ownership. Distribution according to labor factors is a product of the market economy. It is produced on the basis of individual ownership of production factors. The above is the realization of market economy in the field of distribution. Third, the distribution scale is different. The scale of distribution according to work is labor, that is, the individual consumer goods are allocated according to the amount of labor provided by the individual to the society; and the scale of distribution according to labor factors is essentially the value or price of labor.

(I) The distribution method in the primary stage of socialism is not equal to the socialist distribution method

What kind of distribution method a society adopts is not determined by people's subjective wishes, but by the form of ownership of the means of production of society. Public ownership is the economic foundation of socialism, and the corresponding socialist distribution method is distribution according to work. China is still in the initial stage of socialism. The overall level of productivity is relatively backward, and its development is unbalanced and multi-layered. This determines that it is impossible for China to achieve a pure and pure form of socialist distribution at this stage. A system with distribution according to work as the main body and multiple distribution methods co-exist, combining distribution according to work and distribution according to production factors. Therefore, the current distribution method in China is not equal to the socialist distribution method.

(2) Distribution according to work does not mean that every worker can get equal pay through equal work

Distribution according to work means that in the public ownership economy, corresponding labor remuneration is obtained according to the quantity and quality of labor provided by workers. However, at the current stage, the level of development of China's productive forces is generally relatively low, with multiple economic components coexisting, commodity production and commodity exchange exist, and the law of value still plays a role. In this way, the realization of distribution according to work has the following characteristics at this stage:

First, personal labor is not direct social labor. It must be converted into social labor through market exchanges. Only personal labor that is converted into social labor can receive labor compensation. At present, many enterprises have a backlog of products and workers have been laid off. It is not that the workers in these enterprises have not provided labor, but that personal labor cannot be converted into social labor, thus becoming an invalid labor. Invalid labor cannot be remunerated.

Second, obtaining equal pay for equal work is achieved through tortuous roads. To transform individual labor into social labor, it must pass through the market and be governed by the law of value. Under the action of the law of value, personal labor is exactly equal to social labor, so that equal amount of labor can be equivalently paid; individual labor cannot be all or even converted into social labor, so that equal amount of labor cannot be equalized; Labor is greater than personal labor, and at this time the worker can get an excessive remuneration.

Third, distribution according to work is obvious in the same enterprise, but it appears vague in the whole society. Under the conditions of a commodity economy, each enterprise has independent material benefits. Employees do not provide labor directly to the society, but provide labor to the enterprise, and receive labor compensation from the enterprise, which is directly linked to the economic benefits of the enterprise. Because the economic benefits of different enterprises are different, the distribution according to work appears ambiguous from the perspective of the whole society.

(3) Labor income is not equal to income according to work

At this stage in China, the labor income of workers is diverse. It mainly includes the income distributed by the staff of state organs and employees of public-owned economic enterprises and institutions according to work, the labor income of individual workers, and the operating income earned by operators through complex labor. Since the premise of distribution according to labor is socialist public ownership, labor income obtained on the basis of non-public ownership does not belong to income according to labor distribution.

(4) Non-labor income is not equal to exploitation income

Exploitation income refers to the residual value obtained by private business owners and foreign investors through capital ownership. This income from exploitation is undoubtedly a non-labor income. At this stage, the non-labor income of Chinese residents is mainly income allocated by funds. This part of the funds is the accumulation of the past labor income of the residents, which cannot be regarded as the income of exploitation. At the same time, under the conditions of the commodity economy, there are huge risks in stock transactions, etc. This part of the income is actually paid to operators to seize opportunities and make decisive decisions Great intellectual cost. ^[1]

Equity in social income distribution

The so-called fair distribution refers to the rationalization of the distribution of interests and rights among people. In the distribution of laborers and input factors of production factors, the principles of equal opportunity and fair rules are allowed to allow a reasonable income gap to be opened, but polarization must be prevented. Therefore, fairness can only be the fairness of some rules, not the average of results.

(1) To achieve fair income distribution, we must oppose egalitarianism

The fairness of income distribution is mainly reflected in the relative equality of income distribution, that is, the income gap between members of society must not be too wide, and the basic living needs of people are guaranteed. It recognizes the moderate gap, can mobilize the enthusiasm of workers, and helps coordinate economic interests among people, and achieve economic development and social harmony. Equalitarianism, however, obliterates all labor gaps and distribution gaps and requires absolute equality, which actually violates the principle of fairness and restricts the enthusiasm of workers. Therefore, fairness and averageness are fundamentally opposite, and the egalitarian distribution method is the most unfair.

(2) To implement fair income distribution, we must prevent disparity in income

Reasonably widening the income gap is inevitable at this stage. Under the conditions of a market economy, due to the different levels of productivity development in each region, the actual income of workers in each region and enterprise will inevitably be different. At the present stage in our country, the principle of combining distribution according to work and distribution according to production factors is implemented in a distribution system with distribution according to work as the main body and multiple distribution methods coexisting. At the same time, due to the difference in labor capacity of each worker, it will inevitably cause a gap in income. This income gap is reasonable and meets the requirements of a market economy. However, the disparity in income gap will also hurt the enthusiasm of workers and social stability.

The need to improve efficiency

First, efficiency is the basic goal pursued by human economic activities, and improving efficiency is the fundamental way to increase social wealth. The market economy objectively requires people to effectively use and reasonably allocate various social resources, to meet human needs more, to make the best use of human resources and materials, and to obtain the maximum benefits with minimal resource consumption. This is the economy Academic efficiency. Efficiency is an inevitable requirement of the market economy and one of the basic goals pursued by human economic activities. Stressing efficiency will inevitably promote the use of advanced technology in production, continuously improve labor productivity, implement scientific management, save various resources, and promote economic and social development.

Secondly, improving efficiency is the objective need to achieve affluence. In order to get more income and achieve wealth, first of all, we must produce more wealth. If the distribution method is conducive to mobilizing people's enthusiasm for production, institutionally guiding and ensuring the reasonable flow of social resources, putting various production factors into production, and giving full play to the utilization efficiency of various resources, it will promote the development of productivity and create more A large amount of social wealth meets the needs of people in all aspects; on the contrary, it will hinder the development of production and is not conducive to the increase of the total social wealth.

Finally, the pursuit of efficiency is in line with China's national conditions. China is a large country with a large population and relatively poor per capita natural resources. With the rapid development of China's economy, the demand for natural resources is increasing, and the contradiction between economic development and the relative lack of natural resources is becoming increasingly prominent. Therefore, we must adhere to the principle of giving priority to efficiency in the distribution of personal income, implement more work, more contributions, and more contributions, and encourage people to put various production factors into production, save various resources, and make full use of their benefits to achieve the realization of resources. Optimization.

Correctly handle the relationship between efficiency and fairness

Efficiency is the basic goal pursued by human economic activities. Improving efficiency is the fundamental way to increase social wealth and is an inevitable requirement of a market economy. However, in a market economy, because members of different societies have different factors of production, and their labor capabilities are also different, coupled with the influence of other factors, it will inevitably cause differences in income distribution, resulting in an income gap between members of society. And rich and poor. If such differences and gaps are further widened, it will lead to polarization due to excessive disparity in income, resulting in unfair income distribution, which will frustrate the enthusiasm of workers and hinder the improvement of economic efficiency. How to deal with the relationship between efficiency and fairness is a major issue that cannot be avoided in the development of modern society.

To develop a socialist market economy, we must adhere to the combination of efficiency and fairness during the initial and redistribution, and achieve the unity of efficiency and fairness goals.

Improving efficiency is an objective requirement of a market economy. In the market, the law of value governs people's economic activities through the changes and effects of prices, supply and demand, and competition, so as to optimize the allocation of social resources and make full and reasonable use of limited social resources. If the distribution system does not reflect the priority of efficiency, it violates objective economic laws. The essence of socialism is to achieve common prosperity in the end. To achieve common prosperity cannot be simultaneous prosperity, and average development is impossible. Therefore, to develop the economy without paying attention to efficiency, in fact, it can only be common backwardness and common poverty. Our lessons in this regard are profound. To achieve common prosperity, only some people and regions can get rich first, in order to drive and help those who become rich later, and finally achieve common prosperity. To achieve this goal, we must promote efficiency first, let all the vitality of labor, knowledge, technology, management and capital rush out, let all the sources of creating social wealth fully emerge, so as to stimulate people's enthusiasm and creativity, and achieve efficiency aims.

Achieving fairness is a guarantee of seeking efficiency goals. Only by providing workers with sufficient benefits and fair distribution of rights can they stimulate their enthusiasm for developing productivity and improving economic efficiency. At the same time, the essence of socialism is to achieve common prosperity. To achieve common prosperity, objectively requires to prevent excessive disparity in income, and to limit excessive income disparities among various members of society. We must pay more attention to social equity in the distribution of personal income, focus on expanding the proportion of middle-income earners, increase the income level of low-income earners, regulate the income of high-income groups, and integrate market efficiency with social equity.

The Gini coefficient is an important analysis index used to comprehensively examine the differences in income distribution among residents in the world. It was proposed by Italian economists in 1922. Its economic meaning is: Of the total income of residents, the portion of income used for uneven distribution is the percentage of total income. The maximum Gini coefficient is "1" and the minimum is equal to "0". The former means that the income distribution between residents is absolutely unequal, that is, 100% of the income is completely occupied by a unit of people; the latter means that the income distribution between residents is absolutely even, that is, the income between people is completely equal. Any difference. However, these two situations are only theoretical absolute forms, and generally do not occur in real life. Therefore, the actual value of the Gini coefficient can only be between 0 and 1.

According to international practice, a Gini coefficient below 0.2 indicates a "high average" of income distribution among residents, a "relative average" between 0.2 and 0.3, and a "reasonable" between 0.3 and 0.4. Internationally, 0.4 is usually used as the "warning line" for the gap between the rich and the poor in income distribution, and 0.4 to 0.6 is considered to be a "large gap", and above 0.6 is "highly uneven". According to the income grouping data of the urban household survey in China, the calculated Gini coefficient was 0.18 in 1978 and 0.424 in 1996, which exceeded the warning line and was 0.496 in 2004. The data show that the gap between the personal income of urban residents in China in 1978 was small and too average; after 1978, the gap between the personal income of urban residents began to widen; by 1996, the gap between the personal income of urban residents gradually widened.

Using the Gini coefficient to analyze the difference in residents' income is a relatively common method. Its characteristics: First, the method itself is scientific. The calculation of the Gini coefficient is a mathematical method of socio-economic phenomena, which can reflect the degree of difference in income distribution within the collective of residents as a whole. Second, the Gini coefficient reflects the degree of difference in income distribution accurately and sensitively, and it can reflect subtle and continuous changes in the degree of difference. Third, the Gini coefficient can be used as a comprehensive economic parameter in economic work and incorporated into the country's plan management and macro-control. Fourth, the Gini coefficient is widely used internationally, which is convenient for strengthening horizontal comparison in practical work, and learning from other countries and regions.

Initial distribution refers to the distribution of gross national income (gross national product) directly linked to factors of production. Any production activity cannot be separated from labor, capital, land, and technology. Under market economic conditions, certain factors must be paid to obtain these factors. For example, wages and salaries are rewards for labor, rents and lease payments are returns on the provision of real estate or the transfer of other physical capital over a period of time. Interest can be obtained by providing currency. This kind of remuneration forms the initial distribution income of each factor provider.

Redistribution, also known as social transfer, is a process of redistributing cash or physical transfers between various income subjects through various channels based on the results of the initial distribution. It is also a process by which the government readjusts the income of factors of production. It mainly includes income tax, property tax, social contributions, social welfare, and other transfer income and expenditure. ^[2]

I. China's recent income distribution policies

In view of the large income gap between urban and rural areas, regions, and industries in China and its adverse impact on economic and social development, the Communist Party of China and the Chinese government attach great importance to the issue of income distribution and have issued a series of policies to regulate income distribution. In 2006, the Politburo Meeting specially studied the issue of reforming the income distribution system and regulating the income distribution order, and put forward the reform goals of building a scientific, reasonable, fair, and fair social income distribution system. In 2009, the Chinese government successively introduced a series of policies to regulate income distribution, such as the "Opinions on Deepening the Reform of the Economic System in 2009", which comprehensively summarized them. From the specific measures, it can be summarized as follows:

(1) Gradually adjust the primary income distribution policy and continue to narrow the income gap between regions and industries. First, further standardize the salary management system for the leaders of state-owned enterprises. In 2009, the Ministry of Human Resources and Social Security and other ministries and commissions jointly issued the "Guiding Opinions on Further Regulating the Remuneration Management of Central Enterprise Leaders", which clearly stipulated the compensation system for central enterprise leaders. The remuneration structure of the principals of central enterprises mainly includes three parts: basic annual salary, performance annual salary and mid- and long-term incentive income. The basic annual salary is related to the average salary of employees in the previous year. At the same time, principled provisions have also been made for the consumption of duties by responsible persons of important enterprises. Central enterprises should strictly control job consumption, and establish and improve a job consumption management system in accordance with relevant regulations. Secondly, actively promote the reform of the salary system of government agencies and public institutions. In 2009, the Ministry of Human Resources and Social Security studied the introduction of specific methods for properly linking levels with wages and other benefits, and giving priority to the implementation of wage policies to county and township leaders. At the same time, in the reform of the pay system of public institutions, we actively promoted compulsory education schools to implement the performance pay system, and speeded up the formulation of implementation opinions for other institutions to implement the performance pay system. Third, promote the implementation of the collective contract system. Guide enterprises to establish a mechanism for the adjustment of employee wages in consultation with economic benefits; actively implement the minimum wage system.

(2) Continuously improve the policy of income redistribution and promote the harmonious development of society. First, the basic endowment insurance system for migrant workers is ready to be established and implemented. In 2009, the Ministry of Human Resources and Social Security formulated the Measures for Migrant Workers to Participate in Basic Pension Insurance in accordance with the policy requirements of low rates, wide coverage, transferability, and connection with the existing pension system and publicly soliciting opinions from the public. . Second, we will gradually carry out a pilot program for the rural endowment insurance system, so that the majority of farmers will be supported by the elderly. In 2009, the State Council issued the "Guiding Opinions on Piloting New-type Rural Social Endowment Insurance Pilots", which proposes to implement a pilot rural endowment insurance system in 10% of counties across the country. Contributions to the rural basic endowment insurance system shall be borne by individuals, collectives and the state. The central government grants a full subsidy to the central and western regions in accordance with the basic pension standard determined by the central government, and a 50% subsidy to the eastern region; the local government should subsidize the contributions of the insured persons, and the subsidy standard shall not be less than 30 yuan per person per year. Third, adjust the pension level of retirees and improve the quality of life of the elderly. Since January 1, 2009, the pensions of corporate retirees have been increased by about 10% of the monthly basic pensions of corporate retirees in 2008. Fourth, establish a normal adjustment mechanism for the minimum living standards in urban and rural areas so that the majority of low-income people can share the fruits of economic development.

Second, the main problems existing in the field of income distribution

Since the 16th National Congress of the Communist Party of China, the party and the government have attached great importance to people's livelihood issues, especially the issue of income distribution. To this end, a series of new measures have been proposed to reform the distribution system and standardize the income distribution order. The implementation of the above measures has played a positive role in curbing the trend of widening income gap and promoted the harmonious development of economy and society. Nevertheless, there are still many problems in the field of income distribution, which are the main reasons leading to the large income gap in China.

(1) In the process of factor distribution, the proportion of labor income is too low. Due to the imperfect socialist market economy system and the irregular distribution order, the proportion of labor income has been declining since reform and opening up. Too low a proportion of labor income leads to an excessively large income gap in China. An important reason is that the labor income is too low because the labor income ratio is too low, which will widen the income gap. At the same time, due to the lower income received by workers, workers' insufficient consumption has affected economic growth. Especially under the impact of the international financial crisis, domestic consumption has become an important source of power for China's economic growth. If the proportion of labor income is too low, it will directly affect the rate of economic growth and trigger a series of chain reactions.

(2) The income gap between urban and rural areas is still too large. At present, China's urban-rural income gap is still too large. If we take into account the huge gap between urban and rural residents in social security, the income gap between urban and rural residents is even more serious. The excessive income gap between urban and rural areas will further exacerbate the existing dual economic structure between urban and rural areas, which will cause the split between urban and rural areas, which is not conducive to the overall development of urban and rural areas. On the other hand, it will seriously restrict the development of rural economy And the living standards of farmers. At the same time, the large income gap between urban and rural areas hinders agricultural development and seriously threatens the country's food security.

(3) The trend of excessive income disparities between rural areas and the widening of income disparities between urban areas has not fundamentally changed. The problem of inter-regional income gap reflects the huge differences in the level of economic development among regions, which has an important impact on China's economic and social development. First of all, the vast central and western regions account for most of China's territorial area and also accommodate most of our population. If the economic development level of the vast central and western regions lags far behind other regions, the people's income growth will be greatly restricted, and the people's living standards will not be effectively improved. Secondly, if the economic development of the vast central and western regions is lagging behind, their consumption levels will be relatively low, which will limit the expansion of domestic demand and be detrimental to China's economic development.

(4) The situation of excessive industry income gap has not been fundamentally improved. Part of the industry income gap in China is a reasonable income gap caused by industry differences. For example, the income gap between information transmission, computer services, and software industries and other industries is determined by the technical characteristics of this industry, which is a reasonable income gap. However, a large part of China's industry income gap is caused by monopoly, this part is an unreasonable income gap between industries. The large income gap between industries has caused huge negative effects. It concentrated excessive human resources into monopoly industries and stifled the vitality of economic development.

3. Suggestions on Deepening the Reform of the Income Distribution System

(1) Improve the initial distribution system and increase the proportion of labor income. The low proportion of labor income is caused by a variety of factors, one of which is that China's labor supply is greater than demand, but the most fundamental reason is the incomplete primary distribution system. It is necessary to establish and improve the collective wage system of the enterprise and ensure the equal status of workers in the wage formation system, so as to form a fair and equitable corporate wage formation mechanism. Vigorously promote the implementation of the minimum wage system to ensure the legitimate rights and interests of workers. Actively promote the implementation of the Labor Law and the Labor Contract Law, and provide legal basis and legal support for protecting the legitimate rights and interests of workers.

(2) Actively promote the increase of farmers' income and gradually reduce the serious urban-rural income gap. First, we must do everything possible to ensure the speed of economic growth and provide guarantees for farmers' employment. There is a long-term equilibrium relationship between China's economic growth and employment, and economic growth is the source of driving employment growth. Only by maintaining high-speed economic growth can more jobs be created to absorb rural labor and employment, thereby increasing farmers' income. Second, actively promote the process of urbanization and gradually reduce the proportion of rural population in the total population. Only in this way can we increase the per capita land ownership in rural areas and increase the demand for agricultural products, thereby driving up the price of agricultural products and ultimately increasing farmers' income. Third, speed up the construction of the rural social security system and reduce farmers' expenditures. It is necessary to start with the medical insurance and minimum living security system that farmers need most urgently, and gradually increase their level of protection. Actively explore the establishment of a rural endowment insurance system to solve the problem of old-age care in the rural elderly.

(3) Gradually narrow the economic development gap between the central and western regions, thereby narrowing the income gap between regions. Actively promote economic development in the central and western regions, especially rural areas in the central and western regions, and gradually reduce the income gap between regions. Local governments should actively guide surplus rural labor in the central and western regions to the eastern coastal areas for employment and increase farmers' income. The central government must increase its support for economic development in the central and western regions. Increase capital investment in the central and western regions, and at the same time appropriately implement a policy tilt towards the central and western regions.

(4) Eliminate industry monopoly profits and gradually narrow the industry income gap. The existence of monopoly profits is the root cause of high wages and benefits in monopoly industries, so only by eliminating monopoly profits can the industry income gap caused by monopolies be eliminated. For general monopoly industries, the monopoly threshold is eliminated, the development of other ownership enterprises is encouraged, competition in the industry is increased, and the industry income gap is eventually eliminated. For special monopoly industries related to national economy and people's livelihood, strengthen the management of corporate compensation systems, clarify the interest relationship between the state, enterprise managers and employees, and the state controls all operating profits. ^[3]