The Battle for Fair Wages - Richard Schütze

The Battle for Fair Wages by Richard Schütze

Are the exorbitant salaries of managers like Martin Winterkorn (VW) and Bill McDermott, who received 15.6 million euros as the CEO of SAP in 2016, ethically justifiable and economically sensible? Should politics intervene and ensure fair wages? These questions shape the debate on social justice in the beginning of the election year 2017. Martin Rhonheimer from the "Austrian Institute of Economics and Social Philosophy" even sees the danger that a legal regulation could politically cater to feelings of envy. Switzerland is experiencing what the SPD is currently initiating. Swiss chief physician Daniel Vasella, who has become an international top manager, was one of the highest-paid managers in Europe. Under his leadership, Novartis had risen to become the world's second-largest pharmaceutical manufacturer. However, with Vasella, the US-influenced management culture also made its way into the Swiss society. His "resignation" contract from 2013 was supposed to bring the manager 58 million euros. From the Swiss Bishops' Conference to the National Council, the Swiss public was first incredulous and then deeply outraged; more than two-thirds of the Swiss voted for a popular initiative against excessive executive pay, which resulted in the enactment of a "Regulation against excessive remuneration in listed stock corporations" in 2014, and the ongoing debate could lead to further tightening of Swiss stock corporation law. In the case of Vasella as well, the public questioned what knowledge was so crucial, what skills and performance were so extraordinary that they would be compensated with double-digit million salaries. What soothes budding envy in Microsoft founder Bill Gates and SAP owner Hasso Plattner rarely works for employed top managers. Constitutional lawyer Paul Kirchhof warns that the socio-economic market order could degenerate and the institution of private ownership of the means of production, along with entrepreneurship, could suffer significant damage if the link between private property, entrepreneurial responsibility, and personal liability is severed. Entrepreneurs and company owners like Madeleine Schickedanz (Karstadt/Quelle/Arcandor), Adolf Merckle (Ratiopharm/HeidelbergCement, among others), and Maria-Elisabeth Schaeffler (Schaeffler Group/Ina) could tell a tale of this. Schickedanz nearly lost her entire fortune in 2009 due to the mismanagement of her top managers, Merckle saw suicide as the only way out in January 2009, and Schaeffler is still struggling with the consequences of the acquisition of Continental at the beginning of the auto crisis triggered by the banking and financial crisis in 2008. Those belonging to the caste of top managers bear the responsibility for the fate of companies, for whose potential decline they have rarely or to a limited extent been held accountable. Wandering like nomads or as a football coach moving from one company to another as a mercenary, being supported by the network of relationships in the upper echelons of corporations like a safety net, raises suspicions that anonymous economic conglomerates in the form of legal entities are a hallmark of the transition to the age of managerial socialism. However, the primary responsibility lies with and remains with the owners, in the case of public companies, the shareholders. Large corporations continue to be of existential importance. They enable the convergence of higher wages and a broader distribution of risk than an individual entrepreneur can provide. The alternative would be, as Rhonheimer suggests, an economy without mass production, without economies of scale, and with only small family businesses - Germany would no longer be competitive. Smaller companies, as suppliers, depend on larger ones just as much as the larger ones depend on the agility and creativity of the smaller ones. The problem seems to be unholy entanglements, standstill agreements, and counter-deals in the supervisory boards. While co-determination has integrated the unions into the German corporate and operational structure, resulting in much pacification and fewer strikes, manipulations in the supervisory board and political influence, as seen at VW, can also blur responsibilities. Therefore, in line with the demands of CDU politician Jens Spahn and also the "Bund Katholischer Unternehmer" (Association of Catholic Entrepreneurs), the rights of owners and thus the general assembly should be strengthened in the remuneration of top management. Whether in the future salaries will be more closely linked to the stock price and a reputation index with sustainable parameters as indicators of corporate success, and whether repayments will be agreed upon in case of mismanagement, can be decided there. Furthermore, it may be useful for successful managers to accumulate a high fortune, with which they can then establish their own companies after leaving a corporation, as is often the case in the USA, contributing to innovation and employment. For more information on the topic of wages and on Richard Schütze, visit: http://www.trainers-excellence.de/redner/ra-richard-schuetze.html