CEO cap

Germans want to put a cap on CEO salaries

It’s been just over a year since the German government, introduced a national minimum wage. A survey by Die Zeit indicates that almost half of Germans would like to see a maximum wage cap.

Now, this isn’t Germany trying to talk itself out of an extra buck – far from it. The survey – designed as “a typical snapshot through which a country’s pulse is felt” – aims to find out how do Germans feel about the rising gap of wages between CEOs and average employees. The disparity between CEO and employee earnings is currently a hot topic in Germany, prompting public scrutiny and debate.

A 44% of the participants said that they were in favour of a national maximum wage. Interestingly, there is a strong difference of opinion between East and West Germany. 58% of east Germans indicate that they are strongly in favor of such a move, but only 41% of West Germany residents agree to this proposition. Over a quarter of survey respondents indicate that a wage cap would be a bad move, and 29% of those questioned said they are undecided.

CEO cap
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A Stronger Economy?

Arguments from both sides focus on whether a wage cap would be detrimental to the national purse. Business advisors claim that more state intervention into the private sphere could be hugely damaging to Germany’s thriving economy as it could lead Germany being hostile towards investors. They also believe that introducing a wage cap will lead to a loss of top talent, causing businesses to falter and consequently widespread job losses.

In their view, wages should be decided by the market alone. However, supporters of the idea say that “company performance is rarely reflected in employee wage parity.” In their opinion, the success of a company or business depends primarily on the quality of the product or service they are offering, and whether there is a niche in the market for them. They stressed that a company’s growth, relies far less on the individual performance of workers, citing as an example the banker-led financial crisis.

This matter continues to polarize the country, eliciting some pretty sensationalist remarks from some corners. Newspaper editor Henning Hoffgaard, famous for heading up the right-wing publication Junge Freiheit, weighed in on a debate by referencing the country’s turbulent history. “44 percent of Germans have learned nothing from socialist terror,” he tweeted.

The Swiss Vote

Die Zeit’s poll was based upon a 2013 referendum in Switzerland, headed up by the Young Socialists and supported by the Greens and the Social Democrats. The 1:12 Initiative proposed limiting the salaries of CEOs to just 12 times that of their lowest-paid employees. The proposal was taken to the polls and was firmly rejected by the Swiss population, who disagreed that a smaller wage gap would lead to better living standards.

Just 34.7% of Swiss voters showed their support for the proposal, in contrast to the whopping 65.3% of citizens who turned out to vote against the plans.

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