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Kazakhstan To Cut Executive Pay As Crisis Bites

Kazakh Prime Minister Karim Masimov
ASTANA (Reuters) -- Kazakhstan's prime minister has said executives at state-run firms and banks should not be paid more than him, capping their salaries to try to prevent social unrest in his Central Asian state.

Prime Minister Karim Masimov set his monthly wage as the sector benchmark, hoping to address growing public concerns over rising unemployment and falling incomes in the oil-producing country's worst economic crisis in a decade.

"We know that even in the leading developed countries executive pay has come under intense scrutiny," Masimov told members of his government.

"I think we should not ignore this issue. I suggest that...chief executives [at state companies] should not be paid more than the prime minister."

Masimov wrote in his blog,, that his monthly pay was about 700,000 tenges ($4,700).

This is a modest sum compared to what executives earn at some of the former Soviet republic's big oil and mining companies, but it is nearly 12 times the average monthly wage.

His decision is likely to be implemented immediately, because state companies follow government orders.

It follows moves in other countries to limit bonuses and salaries in sectors where a culture of large bonuses and high pay is held partly responsible for the financial crisis.

Kazakhstan has been hard hit by the global financial crisis, which has brought economic expansion to a virtual standstill and left the central bank trying to prop up the tenge.

The government sees growth in 2009 of around 2 percent, but the International Monetary Fund projects only a 1 percent expansion. This compares with 3.1 percent growth in 2008 and nearly 9 percent in 2007.

Although President Nursultan Nazarbaev has been accused in the West of showing little commitment to democracy, he has long been popular in Kazakhstan, Central Asia's biggest economy.

But the tough economic times have rekindled memories of the chaotic 1990s when the collapse of the Soviet Union was followed by years of high inflation, unemployment, and crime.

Criticism of the president remains taboo in Kazakhstan but many Kazakhs fear salaries will be eroded and some have accused the government of mishandling the crisis, although there have been no signs of public unrest.

"Respect, Karim Kazhimkanovich!" one visitor wrote on Masimov's blog page.