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Unions target "fat cat" salaries

The gap between top managers' incomes and average salaries is widening. imagepoint

Top managers' salaries have come under heavy fire from trade unions that accuse executives of "endangering Switzerland's successful economic model".

This content was published on June 30, 2006 - 13:59

The difference between the leading earners and those at the bottom of the pay scale continued to grow last year, encouraging unions to call for a four per cent salary rise across the board.

Trade union federation Travail.Suisse, which studied the annual reports of 27 leading Swiss companies, said on Friday that managers' incomes increased by 30 per cent last year.

Average executive pay rises were between ten and 15 per cent. The "praiseworthy" exceptions, according to the federation, were retailers Migros and Coop, as well as Swiss Post.

Travail.Suisse singled out five companies with the highest executive salaries: banks Credit Suisse and UBS; pharmaceutical specialists Novartis and Roche; and food giant Nestlé.

The federation accused top managers of a "self-service" mentality and described pay packets levels and pay differences as "beyond belief".

Martin Flügel, head of social policy at Travail.Suisse, criticised salary levels, which he said were not really linked to manager commitment, or levels of responsibility or risk-taking.

He added that decisions on salaries lacked control, a sense of reality and were characterised by unbridled greed.

The difference between top and bottom pay packets increased last year, and according to Travail.Suisse, the top bosses earned 800 times more than some of their employees.

Going up

Last week a study of 362 Swiss companies revealed that the rise in executive salaries would continue in 2006.

According to Travail.Suisse, this tendency results in a lack of confidence towards top management, especially as the real value of average pay packets fell by 0.2 per cent last year.

It also warns that if nothing is done about it, Switzerland's successful economic model could be in trouble.

To help remedy the situation, the federation's president Hugo Fasel called for measures such as salary caps.

Fasel is particularly keen for companies to be fully transparent about what they pay their staff – at both ends of the salary spectrum.

Level playing field

This week, the Swiss Federation of Trade Unions called for a generalised four per cent salary increase in 2007 to ensure that everyone profits from Switzerland's improving economy and to even out differences between pay packets.

Whereas shareholders, directors and, to a lesser extent, top managers have enjoyed the fruits of the economic upturn over the past two years, the federation said, low and medium-level salaries have barely budged during the past 15 years.

"It's high time that those who have made major contributions are properly rewarded," said federation vice-president Vasco Pedrina on Tuesday.

Getting the message across will be difficult though, as unions demands have so far fallen on deaf ears: the Swiss employers' association has already responded by saying the requested increase was too high, and hard to apply across the board.

Unions are planning a national demonstration on salaries in Bern in September.

swissinfo with agencies

In brief

The unions are not the only ones complaining about high executive salaries.

The former boss and honorary president of Nestlé, Helmut Maucher, recently criticised the "ridiculously high" salaries of certain top managers.

Johann Schneider-Ammann, vice-president of economiesuisse, the Swiss Business Federation, and president of Swissmem, the umbrella organisation of the mechanical and electrical engineering industries, feels that managers should be rewarded appropriately, but that salary levels should not endanger social cohesion.

Credit Suisse and UBS shareholders have also recently expressed their disapproval of high executive pay packets.

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Key facts

Best-paid Swiss managers (Travail.Suisse figures):
Oswald Grübel, Credit Suisse - SFr37.8 million ($30.7 million);
Marcel Ospel, UBS - SFr24.2 million;
Daniel Vasella, Novartis - SFr21.2 million;
Franz Humer, Roche - SFr18.9 million;
Peter Brabeck, Nestlé - SFr17.8 million.

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