By Ian Harris Otago Daily Times March 22, 2013
You’ve got to hand it to the Swiss. They acted decisively this month [March 3] to rein in the money-grubbing excesses of the top business echelons. In other countries the public has been left seething helplessly at them.
That happened because Switzerland’s constitution provides for binding referenda on important public issues – and because Thomas Minder, who runs a family toiletries business, became incensed by the self-indulgence of the corporate elites. In particular, he never forgave Swissair for backing out of a contract when it flew close to bankruptcy in 2001, and then awarded its former chief a mouth-watering bonus – a procedure now almost routine among the big banks and corporates.
Three Sundays ago a citizens’ initiative to shut that practice down won 68 per cent support, a majority no doubt boosted by news that pharmaceutical giant Novartis intended to lavish a severance package of SFr72 million (NZ$92 million) on departing chairman Daniel Vasella. After an outcry, Vasella refused it. The initiative, which will be written into the constitution, will give shareholders a binding voice on executive pay and ban severance packages, side contracts, and rewards for buying or selling company divisions. Ignoring it will carry a maximum penalty of three years’ jail or forfeiting six years’ salary.
Switzerland’s Social Democrats are now pushing for another referendum that would limit pay for top managers to 12 times that of the lowest-paid employee. The multiple of 12 may be debatable, but such a step would at last restore a semblance of proportionality to pay structures across the board. Fuelling public revulsion at “Abzockerei” (rip-off or fatcat pay) is the way it is justified by the coterie who stand to benefit from it. Big money is said to be necessary to attract talent, who may or may not then deliver. The lure of bonuses has at times undermined ethics, distorted decision-making, and worked against a company’s long-term interests.
To all of which the Swiss have cried “Enough!” Opponents of the initiative were sobered, saying: “The clear support for the initiative reflects the understandable anger of the electorate at the self-serving mentality of certain managers. With their misconduct, they have done the economy as a whole a disservice.” The same unleashing of greed and entitlement has also contributed to New Zealand’s lurch away from the ideal of a just society. As salaries have become more and more bloated at the top, unemployment has put downward pressure on wages at the bottom.
So we have former Solid Energy boss Don Elder happily sitting on a salary of $1.3 million while on “gardening leave” following the company’s $389 million plunge into the red. That makes “enticing talent” and “rewarding superior performance” look like a sick joke. And the run of golden handshakes bestowed on public service chiefs in recent years only adds to public cynicism.
Contrast the $425,000 payout to departing education CEO Lesley Longstone with Labour Minister Simon Bridges’ announcement of a 25c-an-hour increase for those on the minimum wage. He said it illustrated the Government’s firm focus on growing the economy and “boosting incomes”. Another sick joke. This steadily widening inequality of income bodes ill for our social future. New Pope Francis’s excoriation of growing inequality in Argentina in 2009 as “immoral, illegitimate and unjust” applies equally here. “Human rights are violated not only by terrorism, repression or assassination,” he said then, “but also by unfair economic structures that create huge inequalities.”
I am haunted by a phrase in the Lord’s Prayer that shines a light, both disturbing and encouraging, on our current social dis-ease: “Give us this day our daily bread”. Those who pray that are setting their sights on everyone having enough to live at a reasonable standard – not hundreds of thousands for the few while the poor scratch a living on wages too low to ensure them adequate food, shelter and participation in society. The prayer is for enough – a living wage – for everyone.
Ah, but the cost to the economy, the affordability to business, the squeeze on profits, the impact on jobs – the objections come thick and fast. A living wage is dismissed as a pipe-dream, “Give us this day our daily bread” as a dewy-eyed vision. It is far from that. It is a test of New Zealanders’ basic instinct for fairness. It is an aspiration everyone can and should share. It is a realistic goal for political leaders to pursue. It is part of what Christians mean when they pray for the kingdom of God to become real among us.