• Sweden edition
 

'CEOs earn in a year what workers earn in a lifetime': union

Published: 29 Feb 2012 08:09 GMT+01:00
Updated: 29 Feb 2012 08:09 GMT+01:00

CEOs in Sweden earn on average in one year what manufacturing workers stand to earn in their entire lifetimes, according to a report from Sweden's main trade union group.

After a dip following the financial crisis, the salaries of top-level executives in Sweden are now once again growing faster than those of blue collar workers, the head of the Swedish Trade Union Confederation (LO), Wanja Lundby-Wedin, along with two LO economists, wrote in an opinion piece in the Dagens Nyheter (DN) newspaper.

On average, members of the "power-elite" have incomes that are 17 times higher than those of manufacturing sector workers, according to a new report by LO charting the salary developments of top-ranking managers in Sweden.

The study is based on a selection of around 200 "power positions" from different sectors of Swedish society, which LO breaks down into the economic, democratic, and bureaucratic "elite".

In the corporate sector or the "economic elite" it's common for managers' monthly salaries to be complimented with different forms of "soft bonuses", something which the union group examined more closely in the new report.

The benefits include the use of company care, private healthcare and domestic services.

"Housing benefits can also be found among top bosses, a well-known example of this was when Nordea bought a flat that cost more than 20 million kronor ($3 million) to be used by the bank's CEO," wrote Lundby-Wedin along with economists Jeanette Bergström and Torbjörn Hållö.

LO has examined the different types of benefits for the leaders of the 50 largest Swedish companies.

The results show that different types of "soft bonuses" exist at 44 of the 50 companies.

On average, CEOs at the companies with such "soft bonuses" received 200,000 kronor in benefits in 2010, although one CEO received 1.3 million kronor worth of benefits.

The union representatives point out as well that corporate managers' salaries have climbed at a higher pace than those of blue collar workers.

While the "economic elite" earned the equivalent of 26 manufacturing workers in 1950, by 2010, the 50 top managers included in the LO survey earned 46 times as much as labourer, on average.

"That's the equivalent of what a manufacturing earns during an entire working career," the union representatives wrote.

TT/The Local (news@thelocal.se)

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Your comments about this article

08:35 February 29, 2012 by karex
The education and experience, not to mention talent are not comparable so why just compare salaries and benefits? Swedish execs earn in average a lot less than their counterparts in other countries, perhaps a good explanation as to why Sweden loses a lot of its top talent to overseas companies.

PS: I am NOT a CEO. Not even a manager. I've truned down several offers simply because in my opinion the amount of politics, BS and extreme stress these people have to endure no salary in the world can compensate for. I'd rather have my health, peace of mind and quality time with my family instead.
08:39 February 29, 2012 by RobinHood
There are about 300 000 CEO's in Sweden, each representing one of the 300 000 companies. Wanja seems surprised to learn that the top 50 earning CEO's earn huge amounts of money. Please would someone tell her the other 299 950 earn much less than that; most of them earn less than she does. I know I do.

Does the poor thing actually think all 300 000 of us drive about in Ferraris and live in Stureplan?
11:03 February 29, 2012 by engagebrain
Companies end up being run for the benefit of senior management, not the shareholders or workers.
11:11 February 29, 2012 by Scepticion
@karex

I'm not convinced of the competence of at least some of these bosses (not Sweden specifically). They get hired from somewhere, have no idea of the company, make a mess for a year, get huge benefits to last a life, get fired with a parachute. Anybody can do that, no special talent or education needed. I'd like to have a job like that for a while.
11:47 February 29, 2012 by eppie
@karex

The actual issue is that top managers don't have any personal risk and also get paid when they screw up (which happens a lot).

Top managers en-masse moving abroad because they can earn more is a proven lie.

The bonus culture exists because top managers and the board of companies decide eachothers compensation and because apparantly share holders approve more of a manager that makes a lot of money.

So give an average manager a huge salary and stock prices will rise.

I agree with the fact the (most) top managers are very capable people and deserve a good salary but it should be fare and not based on wrong assumptions.
11:53 February 29, 2012 by skogsbo
I'm sure their are CEO and owners of much smaller companies who are probably earning less than some of their employees, having taken serious cuts help keep their own business alive and not shed staff, easy to look at the top 1%, but it's hardly a representative average.

Plus if a CEOs skills and experience is helping to keep 1,2 or even 10,000 swedes in job, he surely deserves something for his efforts. If he doesn't then a foreign competitor will happily pay him.

Engage Brain - please do, Companies run for profit, simple as. This could be for a workers co-operative, the shareholders, directors or sole owner, but it's profit that keeps a business running. Business isn't a charity, it has to work. It's easy to moan, but you try having the pressure of running a business, making sure you can pay your staff etc.. it's quite a burden for some. Especially smaller businesses where they know their staff and families. You clearly have no idea. Employees can walk away at 4pm and sleep easy, many owners haven't slept easy for the past 3-4 years.
12:37 February 29, 2012 by karex
@skogsbo

Exactly what I meant. If a blue collar worker screws up, chances are his/her company won't break because of it and the livelihood of all his/her co-workers will not be at risk.

OK, for the rest of you just forget talent, experience and education. Let's focus on responsibility. The pressures associated with that alone are worth compensation. Test pilots, race car drivers and other professions get paid a lot of money because they risk a lot: their lives for the most part. Top executives often risk their health and family, if they are to fulfill their responsibilities and live up to expectations they cannot be expected to clock in at 8 and out at 5. They work basically 24-hours per day. How many of you are prepared to do that?
16:13 February 29, 2012 by Cosme Fulanito
CEO deserves theirs salary, if oyu think they dont then try to get that job and tell me about later on.
18:26 February 29, 2012 by cogito
Much more outrageous are the salaries and pensions handed out to high bureaucrats, the chiefs of, for example, Aoteket or Systembolaget. Moreover, these hold their positions thanks to cronyism or nepotism rather than to talent or education.
23:22 February 29, 2012 by Kevin Harris
This would be same Wanja Lundby Wedin who awarded a 60 million crown pension to her predecessor at the union? I wonder what her pension will come to, significantly more than 60 million I expect. At least the CEOs don't pay their huge salaries with public money. What a hypocrite!
09:47 March 1, 2012 by jamesblish
Great, then that's settled. CEO:s can never be overpaid and there's nothing to talk about. Why not raise their salaries x100?
10:37 March 1, 2012 by the fonz
Here's an idea..... Why not advertise CEO jobs at the same salary level as manufacturing workers. Then when all the big companies go bust due to incompetent management - we will maybe understand why there is a differential!
11:38 March 1, 2012 by stevo1
so the assumption is you shouldn't be paid well as a CEO when your on call 24/7?

CEO's have their positions due to a mass of experience and qualifications. All CEO's I have worked for work weekends, evenings, early mornings etc. they work hard. if this journalist did half the amount of work one of these CEO's did, they'd be crying for more money.
14:15 March 1, 2012 by skogsbo
easy for unions to moan, when most union officials work less than anybody else, but always seem to want to take the moral high ground. They should be pushing for the lowest paid workers to get more, but those in charge to take a cut.
16:33 March 1, 2012 by Scepticion
First, all the "CEO"s of small businesses, I wouldn't consider them CEOs. They tend to be the actual business owners. CEO's is really for big companies traded publicly on the stock market. So, I wouldn't count all 300'000 small business owners (the pizza or kiosk owner) as CEOs in Sweden. And yes, these people work hard for often little money. Small SMEs tend to be the backbone of a country.

But in big companies, how much do the CEOs contribute? Do they really have super qualifications and experience?. If the company is making a product, the heros are the engineers that make the product, if the product stinks, the company fails. Very few CEOs are involved at the product level (Steve Jobs), most have to make decisions based on what their marketing people and their engineers tell them. Then they have a couple of options to choose from. Perhaps a monkey tossing a coin would be as efficient :-)

Or they look over a spreadsheet and say, hmm, that section is not making much of a profit, it's not good for our share holder value, let's lay off a couple of thousand people and close that section.

Or, hey, we have no new products (ah well, we closed down our R&D a while back because it wasn't making enough profit), what company could we buy? Oh gee, let's spend XX billion on that company and see how that goes... oops...

My satirical interpretation of business headlines.
19:28 March 1, 2012 by swedejane
Let's compare each to their counterparts in other countries. CEOs in the US and other countries make double and triple what they do in Sweden. "Blue collar workers" earn 100x less in China and other manufacturing centers. Count your blessings swedish blue collar workers. Not one of your peers has it any better anyplace else in the world.
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