France's new socialist government has announced an immediate, dramatic clampdown on fat-cat pay, promising to cap the salaries of chief executives at state-owned companies which could see top pay-packages slashed or halved.

The president François Hollande vowed during the election campaign that in majority state-owned companies, the highest salary must not be 20 times more than the pay of the lowliest worker. The squeeze on state fat cats, expected to be enacted by decree next month, is part of the new government's quest for France to set a moral example in a crisis-hit Europe where top earners' stratospheric pay packages and benefits has exasperated workers and voters. The measure will sit alongside Hollande's promised new top tax rate of 75% on income over 1 million euros, which is extremely popular among the French public, and which he has described as an act of "patriotism" and "morality". Socialists brushed aside criticisms from the right that state pay-caps could make it difficult to recruit from private sector.

The prime minister Jean-Marc Ayrault, aware of the unease at fat-cat excesses weeks before the parliament elections, took a hard line, announcing in an interview with the weekly L'Express that the executive pay-cuts would apply to those already in their posts rather than only new contracts. "I believe in the patriotism of company leaders. They can understand the crisis requires the political and financial elite to set an example". The president and cabinet have cut their own pay by 30%.

The French state owns stakes in 52 companies, although only 23 are 100% state-owned, including the railway SNCF, the post office La Poste and various ports and airports. Companies where the state is a majority stake-holder, and which will be affected, include the energy giant EDF and nuclear power plant builder Areva, both currently expanding internationally including in Britain. Only companies controlled at more than 50% by the state will have to abide by pay changes. The state could also seek to pressure those where it has a minority stake, such as France Telecom, Air France and Renault, although there is no guarantee they must abide by government demands.

One of the biggest hits could be taken by Henri Proglio, the chief executive of EDF, who currently earns around 1.55m euros, 64 times the lowest paid electrician. Proglio might have to take a 68% pay cut and see his package dip below 500,000 euros. According to the daily Liberation, the chief executive of the French post office could also lose 41% of his package. On over 600,000 euros, he currently earns 34 times the wage of the lowliest postal worker. Guillaume Pepy, head of the railways, SNCF, earns an estimated 250,000, around 15 times the lowest-paid rail workers, so would not face a cut.

The finance minister Pierre Moscovici said a decree would be issued by cabinet within two weeks over the pay caps. But the state sought to send a clear message by announcing it would oppose a 400,000 euro indemnity payout to the former chief executive of the loss-making Air France, in which the state holds a 15.9% stake. "It's called decency in pay," said Arnaud Montebourg, the minister for Industrial Recovery.

Louis Gallois, outgoing chief executive of the European defence group EADS, in which the French government has a minority stake, said there shouldn't be "tears" on the part of executives, but told Europe 1 radio, "I do recognise it's steep for some." He added: "For me, it's a crisis measure, like the 75% tax on remuneration over one million euros … These are measures that should be provisional, an expression of a crisis situation and necessarily solidarity." He said in general, companies should be given more flexibility on setting pay.