Finance minister: Swedish bosses overpaid

Sweden's finance minister Anders Borg has said that top Swedish bosses are overpaid, putting him at odds with leading industrialist Michael Treschow who said earlier this week that Swedish executives should be paid more.

Treschow, head of the Confederation of Swedish Enterprise and chairman of Ericsson and Electrolux, was criticised last week by other business leaders and by unions for saying he did not see a link between high executive pay deals and union demands for pay rises.

Now Sweden’s finance minister Anders Borg has joined the fray:

“Top bosses in industry have given themselves very big pay increases,” Borg told TV8’s financial news programme.

He said it was good that Treschow was participating in public debate. But, he said, “I personally think that salaries and compensation for top bosses in industry are a bit high.”

Fellow business leaders also disputed Treschow’s statements. Olof Stenhammar, chairman of stock market company OMX and venture capital firm Ratos, said Treschow was “tone deaf”.

But Treschow was unrepentant. Writing in Dagens Industri on Monday, he pointed out that many apparently Swedish companies are no longer owned by Swedes. Profits from big Stockholm-listed companies often do not derive from operations in Sweden and cannot therefore be the basis for Swedish wage agreements. Nor, he said, were Swedish companies run exclusively by Swedes.

In the space of just a few decades, foreign ownership in Swedish companies has increased significantly, Treschow said. Forty percent of the average Stockholm-listed company is owned by foreigners.

Swedish companies have seen both production and sales increasingly move abroad. Treschow admitted that there was a strong psychological link between directors’ pay packets and union wage demands, something he said needed to be met in the future with better communication.

Prime minister Fredrik Reinfeldt called for restraint from executives over their own pay.

“Bosses’ wages affect wages overall, and so are not divorced from the general debate. I don’t want to point fingers at any of those groups who are now going to sit down and negotiate; I am just pointing out good general rules of life, which usually form the basis for gaining confidence and showing leadership,” he said.

Reinfeldt said that high wage agreements would pose a risk for the economy.

“Very high wage agreements lead to higher unemployment. But we have confidence that the unions and employers are aware of this. We also have had a situation for the past ten years in which an independent Riksbank follows developments closely, which has created a good balance in the Swedish economy.”