Anyone who knows me, understands my level of engagement in politics.
It is at best, superficial.
Of course I am interested in how the world turns and I would go as far to say, that I have an opinion on most things, yet my involvement and public display of my political thoughts is somewhat non-existant.
Yet, there is a movement here in Switzerland, that I have become increasingly aware of and increasingly thoughtful about.
It is the 1:12 movement.
In laymans terms, here it is. "No one should earn in a month more than someone else in a year"
Sounds quite good on first read.
The bill, as I understand it, says the state would dictate the salaries of employees in a company of a certain size.
Today, it is the company and the employee who make this decision. I would like to think that these decisions are taken carefully by considering relevant external data and internal data and comparing it to the experience of the employee, but once this has been taken into account, it is the company and to some extent, the individual who get to agree on a salary. Yet this bill would demand that the state is involved and that salaries are capped. I think involved is even too mild, the state would dictate the level of salary.
This bill is clearly a reaction to the crazily high salaries of certain characters in Switzerland, of recent years, so I can kind of see where this law is going and what it is trying to acheive. A few leaders of large and famous companies have been quoted to receive 10, 20, 30 or even 100 times the salary of their employees, also their exit packages or "golden parachutes" were reported as shockingly lucrative. Whether they deserved it or not, is irrelevant according to this bill.
But really?
Doesn't it sound lke something from former Soviet times? Weren't the people impacted during such regimes thrilled when they were over?
Questions that spring to my mind as I ponder this one
1. Will companys get rid of the lower paid jobs and outsource them? This would ensure that the lowest salaries are already quite high.
2. How will the gap of the taxes of these huge salaries be filled?
3. Will people leave Switzerland and find employment elsewhere if they believe their salaries will be capped?
4. How will this be administered and checked. Will this mean a whole lot of administration for the payroll / HR departments?
5. What about the benefits of employees eg car, stock, bonus, medical insurance, will these be rolled into the formula of the calculation?
6. Will people in lower paid jobs benefit? Is this good for them? If so, how?
I have searched around for the arguments on why this bill is a good thing for the economy and the people of Switzeland, but I have to say that I am struggling to find reasons.
So hereby endeth my political blog. Don't worry it's a one off, but this one really got my attention as I could not grasp both sides of the debate.
However I am sure some of you out there get it and will educate me accordingly................
I wont be moving to Swiss!!!! lol
ReplyDeletexoxoxox
Dear BBB… i loved this article in the Economist by our friend Henry Mintzberg… hope it is of value to you… http://www.economist.com/blogs/freeexchange/2010/12/management
ReplyDeleteDear Edyta. Nice article. Love the quote. Leadership is about conveying signals that engage other people in the company
ReplyDeleteThanks to Edyta for providing a great link. I wanted to respond more fully to this post, but my studies (international political economy) are a little hectic at the moment. However, here are three links that might be of interests. The first highlights the scale of global wealth disparity that unfettered corporate remuneration produces, there are many economic arguments for and against this, but to me it seems morally unjust that so many should starve while so few should are so wealthy. It is also apparent that in the developed economies that have embraced the global neo-liberal economic paradigm for the longest (e.g. the USA and the UK) the internal GINI coefficients (the measure for wealth distribution) are demonstrating increased inequality (this is not show in this video, but the data can easily be found from the UN and others).
ReplyDeletehttp://www.youtube.com/watch?v=uWSxzjyMNpU
The second is a report from a US think tank (admittedly left of centre) countering whether CEO remuneration really does reflect a job well done. Allied to this I want to point out that if a factory or mine collapses, it is the workers who die, rarely the CEO. This raises the question of what we value more, leadership skills or life. Steve Jobs was undoubtedly a visionary, but could Apple have achieved all it did (including staff suicides in its Chinese supply chain) if it were just Jobs?
http://www.ips-dc.org/reports/executive-excess-2013
Thirdly, one of the branches of political theory that has interested me most is that of Elite Theory. For a brief description here is the wikipedia page:
http://en.wikipedia.org/wiki/Elite_theory
There are countless studies on the links between money and power, witness Murdoch and the UK government as an example or a recent study (sorry, can't find the link) that suggests legislation supported by financial inducements is more likely to be passed in the US. I would argue that there are links between excessive CEO pay and political power.
In addition, as part of my research I recently read of a European country that already has exercises less of a disparity between lowest and highest salaries within firms. As I recall this is not necessarily legislated but a societal norm adhered to as it is considered a fair system. I'm afraid I can't recall which it was, although I have some vague recollection that it might be Sweden.
Finally, your concern about lost taxes on high earnings is probably needless. Most high earners have devised ways of ensuring that their salaries are often tax efficient. Warren Buffet has been very vocal about the fact that he probably pays less tax than his secretary.
And this...
ReplyDeletehttp://www.businessinsider.com/walmart-asks-customers-to-donate-food-2013-11
Sorry, this is a bit of a passion for me.
Thanks Bezza. Enjoying your comments and links. Where is it you are studying?
ReplyDeleteThanks. University of Cape Town, where we can experience the impact of income disparities between the capitalist class and the dispossessed and landless daily.
ReplyDeleteI see that the 1:12 bill was only support by 44% of the voters, nearly half. This initiative has already been adopted as part of the economic policy manifesto of the Spanish social democrats and in France there are discussions of capping senior state sector pay at 20% of the lowest state salaries. We even debated such a move when I worked in government in the UK. I hope despite this vote that globally we continue to debate and reform remuneration, so that it is based on input and achievement rather than influence and power. For too long those who risk the most (miners, garment manufacturers, nurses, etc) get rewarded the least.
And then there is also this...
ReplyDeletehttp://iacknowledge.net/major-ceo-makes-100-million-as-taxpayers-spend-650-million-on-his-employees-welfare1/