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Swedish CEO salaries ‘unacceptable’: union

The CEOs of Sweden's 50 largest companies earn on average 40 times more than an industrial worker, a finding that a union organisation head believes is "totally unacceptable" and requires a "popular uprising" to remedy.

Swedish CEO salaries 'unacceptable': union

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.

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WORKING IN SWEDEN

EXPLAINED: Can you negotiate a pay rise in Sweden to offset inflation?

With Sweden's central bank expecting inflation of nearly 8% this year, everyone working in the country is in line for a real-terms pay cut. We asked Gunilla Krieg, central ombudsman at the Unionen union, what scope there is to negotiate a salary hike to compensate.

EXPLAINED: Can you negotiate a pay rise in Sweden to offset inflation?

With Sweden’s central bank expecting inflation of nearly 8% this year, everyone working in the country is in line for a real-terms pay cut. We asked Gunilla Krieg, central ombudsman at the Unionen union, what scope there is to negotiate a salary hike to compensate.

How soon can I get a pay rise to compensate for high inflation? 

Probably not for a while. 

About 90 percent of workers in Sweden are covered by the collective bargaining agreements made between employers and the country’s trade unions. The last round of salary deals was negotiated at the union-employer level back in 2020, and most of them will remain valid until March or April next year.

This means that most employees in Sweden will not see their salaries adjusted to take inflation into account for at least nine months. 

“Under this special model that we have, we already have a level for the wage increases for this year, so you can’t get compensation for the inflation right now,” Krieg explained. 

You might be able negotiate a pay rise in addition to what the unions have agreed in your personal salary review, she added. 

“Of course, you have that freedom. Whether you work in a small company, or a big company, a company that has a collective agreement, or one that doesn’t, you always have the freedom to ask for a salary rise,” Krieg said. 

The only issue is that most unionised companies only offer personal salary reviews once a year, and for the majority of employees, the window of opportunity passed in the spring. 

“You have to find out when you have a salary review as part of the collective agreement you have at your own workplace,” Krieg recommended. “For most collective agreements, that is in the spring, although some collective agreements have it in the autumn.” 

What if I’m not part of a union? 

If you are among the 10% of workers not covered by a collective bargaining agreement, you can ask for a pay rise whenever you like, but unlike union members, you have no right to a pay rise. The decision is wholly up to your employer. 

Gunilla Krief is the central ombudsman for the Unionen union. Photo: Patrik Nygren/Unionen

So will the unions eventually negotiate above-inflation pay increases? 

Probably not. 

Unions in Sweden have historically been quite responsible, and understood the risk of creating a wage-price spiral by demanding wage increases that match or exceed inflation.

“Twenty-five years ago, we had a really high wage increases in Sweden, and we had very, very big inflation, so people got more money in their wallets, but they couldn’t buy anything, because inflation went up much higher than wages,” Krieg explained, putting the union perspective.

“We always take responsibility for the entire labour market, and that’s good in the long term,” she added. “There’s been much more money in the wallet for employees in Sweden over the past 25 years. That’s why we think we should we should not panic because of inflation. It may be that for one year it will mean less money in the wallet, but in the long run we benefit.” 

Can I argue for an inflation-busting pay rise in my salary review? 

You can certainly argue for a pay rise of 8 percent, or even more, but you don’t cite inflation as a reason for it. 

“Everything is individual, so you can, of course, negotiate up your salary, and there is no limit to how much you can ask for,” Krieg explained.

“If you have a job or an education for which there’s a shortage on the Swedish market, then you can get a much higher wage increase. Up in the north of Sweden, where we have [the battery manufacturer] Northvolt, and we have mines and the steel industry, they are looking for a lot of competence right now, and there you can have a much higher rise in wages.” 

But, particularly if you’re covered by collective bargaining, you can’t really cite inflation as justification, as that is one of the factors that unions and employers are supposed to factor in during their negotiations. 

What’s the best way of getting a big pay rise? 

The best way to get a pay hike of as much as 5,000 kronor or 10,000 kronor a month, Krieg suggests, is to apply for other jobs, even if you don’t end up taking them. 

“You can get offers from other companies, and then you can tell your employer that ‘I really liked it here, I enjoy this work, and I want to stay here, but now they are offering me 10,000 kronor more at another company, and if you can raise my salary like that,  of course I will stay here’,” she said.

In a normal salary interview, she adds, it’s important to be able to demonstrate your results. Look again at your job description, and what your goals are for the year, and identify concrete achievements that meet or exceed these goals. If you have any additional duties, you can cite them to argue for a higher salary. If you’ve done any courses, or learned any skills, you can cite these. 

At any time in the year, if your superiors praise any work you have done, keep those emails, or write it down, so that in your salary review, you can say, “you said that this report I did was ‘the best you’ve ever seen’,” or such like. 

Finally, you should find out in advance if there are any salary criteria being applied, so that you can argue that you exceed them, and so demand a higher raise than that agreed for the company as a whole with the union. 

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