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Swedish CEO salaries 'unacceptable': union

Swedish CEO salaries 'unacceptable': union

Published: 07 Feb 2011 12:05 GMT+01:00
Updated: 07 Feb 2011 15:12 GMT+01:00

The average Swedish CEO of the country's 50 largest companies earned just over 12 million kronor ($1.8 million) in 2009, equivalent to the salaries of 40 industrial workers, according to Wanja Lundby-Wedin, the head of the Swedish Trade Union Confederation (Landsorganisationen i Sverige, LO).

"Prime Minister Fredrik Reinfeldt has repeatedly asserted that income inequality has not increased since 2006. This is not true," wrote Lundby-Wedin, along with LO economists Jeanette Bergström and Ola Pettersson, in an opinion piece published in Dagens Nyheter (DN) on Monday.

The trio referred to an LO report released on Monday, claiming it showed that the salaries of the executives of Sweden's 50 largest companies "stand in a class by themselves in a 'bureaucratic elite'" consisting of "managing directors, chief economists and other top managers in government and private business."

LO's annual review of the difference between the executives' and industrial workers' wages have not produced any effect. The gap has increased, although the financial crisis reduced it slightly from 2007 to 2009.

However, it is probably just a blip in the curve, according to LO.

"It is clear that we have not succeeded," Lundby-Wedin said at a seminar on the power elite's wages.

When asked if the LO is too toothless, she said, "We cannot be those who determine the directors' wages."

According to Lundby-Wedin, the aim is to shape public opinion and create a "popular uprising" against the excesses of the directors.

According to the report, the difference in average wages between workers and the "bureaucratic elite" years from 1950 to 1980 went from the salaries of 11 industrial workers to five.

However, it has grown in the last 30 years and the average salary of the elite in 2009 was eight times higher than an industrial worker's. In the same time period, the salary of CEOs at large companies fell from the equivalent of the wages of 26 industrial workers to nine, only to increase again to 41.

The abolition of taxes on wealth, inheritance and donations have "very likely" increased the difference between the "bureaucratic elite" and industrial workers, the trio wrote.

The ruling Moderate Party slammed the findings.

"You can see from the statistics, there was an increase under the Social Democrat governments and a peak in 2007, but we only took power in 2006. The increase seems to have stopped," Anna Kinberg Batra, group leader of the Moderate Party, told The Local on Monday.

"We have also focussed on the greatest inequality: those who have a job and those who don't. We are lowering the threshold for those with the weakest position. That is the most important," she added.

On top of that, tax cuts have benefited lower income groups in addition to the highest income earners, Kinberg Batra observed.

"The study shows income before tax, so it is difficult to compare real income. For the lower groups, we have decreased their taxes too for normal or blue-collar workers. It has enabled people to go from benefits to get back to work, improving the incentive to rejoin the workforce," she said.

Kinberg Batra questioned findings since it appears at the very least, the gap is not increasing.

"More people are at work and the differences between the different groups is diminishing. Our aim is twofold: keeping stable public finances and steady interest rates and getting people into work, whether off benefits, into their first job or from too-low incomes," she said.

"The level of unemployment is decreasing, I hope this is the result of our policies through lower taxes and active policies such as coaching. People were increasingly leaving the labour market," Kinberg Batra added, pointing out that Swedish society is quite equal compared to most countries.

TT/Vivian Tse (news@thelocal.se)

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Your comments about this article

12:30 February 7, 2011 by flintis
and a pension of unbelievable proportions to support their extravagant lifestyle.

Whereas we mere mortals have to survive on the basic minimum
13:17 February 7, 2011 by International Man of Leisure
What they fail to understand is that if you want to attract international-class C-level executives, you are in competition with other companies internationally who would also like their services. Therefore, you have to pay them an internationally comparable salary to join your company. If you do not, you end up with second-rate management.

This whole article smacks of jantelagen to me.

IMoL
13:20 February 7, 2011 by rymagnusson
The dreaded "brain drain" never really comes to pass as it turns out many CEOs are just incompetents who make a short-term profit at one company and jump the sinking ship to another.
13:57 February 7, 2011 by RobinHood
"Popular uprising"! What on earth can she mean?

Corporate salaries are not at the discretion of the government, the unions, the public the media, or posters on this forum. They are at the discretion of the shareholders who bought that right with the money they paid for their shares.

If Wanja Lundby Wedin, Fredrik Reinfeldt, or you don't like how much a company pays its employees, then buy its shares, and you too can pay them whatever you choose to; all the way down to the minimum wage.

Of course you could vote for the Left party, or the Greens who want to deprive shareholders of their traditional right to manage their own companies, but don't be suprised when hordes of major companies abandon the good ship Sweden for a less intrusive jurisdiction.

"Popular uprising" indeed. Don't you just love a loopy leftie on a soapbox. They all want to be Lenin back in 1917.
14:51 February 7, 2011 by Rick Methven
A CEO like his employees "Should be worthy of his hire"

Problem in recent years is that Companies end up with a head honcho who has no capability to improve the profits of the company but takes a leaf from the Bankers book -

Screw as much as you can and run before the sh*t hits the fan
14:51 February 7, 2011 by Rishonim
Wanja Lundby-Wedin is an ugly wrinkle baboon ass communist who should have been sacked last year for her involvement into the pension scandal. I still think CEO's and most people doing monkey job in Sweden are under paid. Yet, this doesnt mean that she should try to lobby to reduce their compensation.
15:07 February 7, 2011 by roaringchicken92
You have to understand her motivation, Rishonim. She is only getting 15 times the average worker's compensation. That's just not fair.
15:33 February 7, 2011 by Rishonim
You reckon that's what it is roaringchicken92? ;-)
15:35 February 7, 2011 by Rick Methven
@Rishonim.

If your work is up to the standard of your posts then your pay should be about 1kr - A year that is
15:54 February 7, 2011 by engagebrain
Most institutions are actually run for the benefit of the those closest to the levers of power.

The shareholders may get a look in but as most shares are held by pension funds and pension funds are run by CEOs - they don't complain.
16:15 February 7, 2011 by skatty
A study on comparing the average of incomes between a CEO, and industrial workers in different periods is just part of the story in calculations of incomes. Generally, a CEO in a big company gets remarkable benefits in different forms by resigning or even moving from one position to another, which most of the industrial workers don't have those kinds of possibilities. The CEO has many different kinds of alternatives to transfer wealth and investments, which cannot be imaginable for a worker!

It's true that income inequality has been increased since 2006; however, it usually takes time to realize the result of economic activities, which mean the inequality since 2006 has been the result of economical remedies done by the Social democrats before 2006 (usually 5 to 6 years before).

The directors' wage reminds me what John Rockeffeller said:

"I would rather earn 1% off a 100 people's efforts than 100% of my own efforts."
19:44 February 7, 2011 by BillyB
Funny thing is, if any one of the people who gets angry about these stories was given a CEO position would they accept the salary..YES..would they change the set up to get less and give more to others...NO, not a chance.

Green eyed monster seems to be at work....
20:45 February 7, 2011 by kenny8076
i keep telling my girlfriends brother to move to America, I cant stand to here people complain about CEO's and business owner's income, Thats why theres a latter!! people want to work at the bottom in Sweden and get paid at the top, its incredible!! I guarentee the majority of those CEO's started off as the "industrial worker", they had more passion, will, and smarts to get where they are today, but shame on them for making a million bucks a year. And why are people crying, the more these people can make the more THESE people can tax them to feed all these lazy swedes and educate them all, give them insurance and let them ride the welfare system their whole life!!
23:38 February 7, 2011 by rymagnusson
Wait you really think that people who rise to CEO and managerial positions do so through a meritocracy? How naïve can you be?
09:43 February 8, 2011 by engagebrain
CEOs take has increased out of all proportion to economic growth - is there any evidence that the better paid CEOs perform better - thought not.
15:29 February 8, 2011 by Syftfel
While there may be some relevance - although not much - to the point made here, the focus ought to be on the entitlement culture of the drama queens of the unions. It is the union thugs who demand ever higher salaries, and benefits to the detriment of the Swedish tax payer, slurping up the hard earned cash from the public trough. They're out to punish success, and redistribute our incomes. And let's face it, most union workers are lazy, uninspired and grabbing ever more for doing nothing. In the annals of modern Swedish history tax payers lose, the unions win as they, with unruffled arrrogance, put forth their radical doctrines of orthodox socialism. LO's marxist tinged rants demand an ever increasing remorseless expansion of the welfare state. It is time to abolish LO and its pathetic totalitarian SSU and, poorly concealed, communist lackeys. It outserved its usefulness long ago. Nowadays it consists of mainly, laughable, lefty rabble rousers. If they had their way, Wilhelm Pieck and Ernst Thälmann would adorn every train station in the nation, just like in the good old days in the proletarian paradise just south across the Baltic back in the 60s. May the socialist vermin LO forever disappear into a workers' heaven. They've already caused enough societal deterioration. Crush their so called "popular uprising" and forget them!!
21:22 February 8, 2011 by Just_Kidding
I sometimes wonder what keeps my boss and his boss in Sweden. They would easily earn salaries several times larger while living in Texas or California.
11:13 February 9, 2011 by djmarko
there are 100,000 of Swedes that work Abroad, Uk for example due to higher salaries, to attract the best talent, one has to be prepared to pay market rates and not what these union suggest they should earn, eventhough i am for an equal society where there is not a wide gao between the rich and the poor, the talented should not be punished for their sucess, it does not send the right signals that hard work and talented individuals should be paid accordingly, what will happen is people will leave Sweden and work elsewhere and contribute to their tax system rather than Sweden
20:15 February 9, 2011 by mkvgtired
"@rymagnusson

Wait you really think that people who rise to CEO and managerial positions do so through a meritocracy? How naïve can you be?"

I know quite a few millionaires in their 20's. All of which made their fortunes themselves. If someone with will and drive can not make the salary they want they can always start a business. But then who would want to in Sweden where as soon as you become successful the average person on the street wants to vote for government officials to take it away from you? The fact that the article states "The abolition of taxes on wealth, inheritance and donations..." proves that these unions/government officials would rather drag down the top then promote the bottom.

@Robinhood, that is too simple an explanation, it can not be correct unless some conspiracy is mentioned.
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