Reinfeldt calls for end to banks’ bonus culture

Swedish Prime Minister Fredrik Reinfeldt took aim at bonuses common at large banks when he opened the Swedish parliament on Tuesday, saying big bonuses "must come to an end".

His comments came 10 days before a meeting of the Group of 20 top developed and developing countries in Pittsburgh to discuss new ways to regulate the global financial system.

“The bonus culture that has emerged must come to an end. We have a unique opportunity to make progress on this issue when world leaders meet in Pittsburgh,” Reinfeldt told the Swedish parliament, the Riksdag.

“More stringent rules are needed to restrict over-generous bonuses and compensation systems,” he added.

The Swedish government said in March that it would ban all bonuses in all public companies and called on the private sector to follow its example.

On September 5th, G20 finance ministers agreed at a meeting in London that the bonus system should be transparent and should only reward long-term success.

They also said bonuses should be not handed out to bankers who performed badly and created losses.

France has been pressing for a cap on bonuses but that proposal has found little favour with Britain or the United States.

Reinfeldt, whose country currently holds the presidency of the European Union, said meanwhile there were “ever more signs now indicating that both the global and the Swedish economies are beginning to stabilize.

“We seem to have weathered the worst of the storms. The risks of a substantial economic downturn have abated,” he said.

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‘CEOs earn in a year what workers earn in a lifetime’: union

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.