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CEO Salaries and the Minimum Wage

by Gisbert Otto Wednesday, Feb. 20, 2008 at 5:35 AM

"After the fall of the Berlin Wall, capitalism let its mask fall. Capitalism did not have to be social any more since socialism did not exist any longer as a counter-movement..Most economic leaders act irresponsibly today toward Europe's people and the future."


Extravagance, Envy or Fraud

By Gisbert Otto

[This article published 1/3/2008 is translated from the German on the World Wide Web,]

Within 20 years, the salaries of the chairpersons of the German DAX 30 corporations compared to workers’ wages rose from 14-fold to 44-fold – and even 87-fold for the German postal service. To justify these mammoth manager salaries, the following statements are repeated in the newspapers:

“A society that stylizes businessmen as thieves is immature.” “No one is excited about millions for a racing driver or a soccer player,” employer president Hundt said on German radio. “Manager salaries are not disproportional in any international comparison.” Even Robert Oswald, chairperson of the board of BASF, who “represents hard-as-steel employer interests,” wants to bring the discussion out of the “envy corner” and sees the salaries of managers every much in order. Most commentators had this desire while tacitly approving the surging compensations. SPD leader Beck is even considering a law to stop golden handshakes in the millions. Nevertheless freedom of contract is stressed. Politics cannot meddle here.


The escalating salaries of managers are a scandal. They violate our sense of justice. However the real scandal is indifference toward workers. Persons with responsibility are not concerned about their workers doing well. Quite the contrary! The high salaries that the managers give themselves must be paid by employees whose incomes stagnate. That is the great fraud! While on one side, not enough money can be shoveled there, the other side is often in distress. The real shame is that persons with responsibility stand back and watch. Most economic leaders probably do not even worry about the inhumanity. In contrast, payment of a minimum wage is vehemently refused out of “concern” that jobs could be endangered. The one-sidedness of this way of looking at things is terrible because people are not worried about paid wages enabling survival. Instead an economic upswing is announced officially that will not reach the majority of workers. This deceit has been occurring for decades. It is practiced by all government departments and nearly all the media, not only by the wealthiest persons. In the budget debate on November 22, 2007, Chancellor Angela Merkel said the population profits from the positive development. “The upswing helps people. That is the Good News,” she said. Did she really mean our population?

Doesn’t she know the upswing came about through the realization of Agenda 2010, precarious working conditions (1-euro jobs, low wage jobs, limited positions and so on)?

Doesn’t she know that Germany had no real wage growth from 1995 to 2004? Real wages even fell 0.9 per cent in this period while they rose 7.4 percent on average in the 15 old European Union (EU) countries (data from the European Wage Report of the Institute of Economics and Social Sciences).

Doesn’t she know that 7.5 million persons in Germany are Hartz IV recipients (Hartz IV combined income support and unemployment insurance and set grievous limits on benefits) who must manage with 345 euros per month?

Does she know nothing of the many children who go to school hungry (2.6 million children live below the poverty line)?


We must assure that Ms. Merkel knows these numbers. But they are not themes because Europe still pays homage to the US and the American economic system – neoliberalism. US president Ronald Reagan and the British Prime Minister Margaret Thatcher introduced this system in the 1980s. Reagan spoke of “trickle down economics” which means: “When the rich do well, something falls down for the others.” What is elitist in this sentence is probably blatant to everyone. Nevertheless life deteriorated.

After the fall of the Berlin Wall, capitalism let its mask fall. Now it did not need to be social any more since socialism did not exist any longer as a counter-movement. In the years before, it was important to show that capitalism helped people more than socialism. This was not necessary any more with the collapse of socialism in Eastern Europe and dissolution of the Soviet Union. Instead of this, sales and profits were declared idols, regardless of what they mean for people. The effects of this policy appear clearly today. They are catastrophic in the US. Approximately 47 million Americans have no health insurance, 20% of Americans are illiterates. Do we want this? Hardly. However to better understand this development, we have to know the political themes of the 1990s.

On September 27, 1995, a conference was held in San Francisco with 500 participants from all continents. The way into the 21st century was described: 20% of those able to work would be enough to keep world trade going. The 20-80 society was represented as the goal of this “global world.” 20% would have power and wealth; the remaining 80% should be content with “titty-tainment – a mixture of intoxicating entertainment and sufficient food (tits). That is the vision from San Francisco, from which we in Europe are not so far removed.


Protests against this disgraceful development come more from the church side than from the union side. Radio Vatican spoke clearly in its December 10, 2007 news program: “Announcing an upswing now in Germany is hypocritical if this is at the expense of people. […] What is demanded of people is degrading. […] Wages must allow a dignified life for the person and his family […].”

What is crucial is not a “better globalization” or a “better neoliberalism,” for example through a stock ownership of employees (which is nonsense since the normal employee has too few resources to survive the risks from a sudden price drop). No, a turn to more honesty – payment of a just wage that shares in the productivity gains – is vital. This would allow employees to breathe again and also stimulate the domestic market, a problem that is often discussed without result.

The responsibility to “shareholders” promoted today is a chimera. Responsibility always includes a whole and cannot only be for a small minority. In this sense, most economic leaders act absolutely irresponsibly today toward Europe’s people and future. Europe must become impoverished when exposed to the cheap competition from China and India in the future. Making general protective measures and ensuring dignified working conditions and just wages at home and abroad would be more sensible. Such measures could make Europe into a model for other economic blocks, a model urgently needed today. Reflection on the historical and social achievements of the European social model would be helpful. These achievements and values are still in the heads of people today – unlike the US where a relatively high degree of inequality was historically accepted. Therefore an economic system in the US that allows great differences in wealth encounters little resistance. In Europe on the other hand, equality and social security play a great role in the value system.

The question whether or not there are influent6ial economic leaders and politicians in Germany or in Europe who are occupied with these reflections is reasonable. The great abuses that determine and threaten the lives of many persons today – the wars the US will wage in the next decades in its striving for world power (US vice-president Dick Cheney speaks of 10, 20, 30 or 40 years of war) could be signs of a turn to reason if Europe’s sustainable future were seriously discussed. Europe’s citizens would make a constructive contribution to structural change since renewal, not abolition, of the European social model is crucial.


On December 10, the “Day of Human Rights” was celebrated worldwide. This day commemorates the passage of the Human Rights declarations on December 10, 1948 by the UN General Assembly. Human rights are on the agenda. The UN has begun a one-year campaign up to the 60th anniversary of the declaration in 2008. Human rights are also violated in Germany. The current minimum wage debate in Germany demonstrated this, the emeritus profess or Christian social ethics in Valendar Ernst Leuninger said. It is a scandal, Leuninger argued, that persons in Germany must work for a pittance and cannot secure a reasonable livelihood. If this is not seen and changed, we enter into a degrading situation in the world of work with precarious working conditions. When an upswing in Germany is announced, this is hypocritical if it is at the expense of people. “What is demanded of people is degrading. Slowly there are conditions as in the past in the East: people with two work obligations or earning their money in the summer time. When one sees the increasing numbers of so-called precarious working conditions, that is mostly due to the theoretical upswing! Therefore the church demands a just wage for labor. Otherwise an old principle of catholic social teaching is violated, that wage payment must enable the worker and his family to live a dignified life and take care of sickness and old age.”

Source: Radio Vatican, 12/10/2007

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