Sam Pizzigati: Taking aim at executive excess
Something astounding is happening in Switzerland. For the first time ever, citizens in a modern nation are voting on whether to create what essentially amounts to a “maximum wage.”
On Nov. 24, the Swiss will vote on a ballot initiative that bans any Swiss corporate executive compensation that runs over 12 times worker pay.
Under this “1:12 Initiative for Fair Pay,” no Swiss company would be able to pay its top executives more in a month than the company’s lowest-paid workers make in a year.
Some perspective: At Swiss pharmaceutical giant Roche, CEO pay has been running at 236 times the firm’s lowest wage. At Nestle, the divide spreads 188 times.
Gross margins like these caught the attention of activists in Juso, the youth wing of Switzerland’s Social Democratic Party. The activists sensed growing public outrage at a corporate pay system that has, as former Juso president Cédric Wermuth recently told me, “greedy managers earning millions while other people earn too little for living.”
Juso decided to challenge corporate pay inequality head-on through Switzerland’s “direct democracy” initiative process. Under current Swiss law, propositions that gain 100,000 signatures can trigger a national referendum.
Earlier this year, the 1:12 effort filed enough signatures for ballot status — and Corporate Switzerland has been feverishly attacking the initiative ever since.
Any move to limit CEO pay to 12 times worker pay, charges SwissHoldings, the federation of Swiss-based multinationals, would constitute “a frontal attack on freedom.” If the measure passes, SwissHoldings declares, “almost all” of Switzerland’s largest corporations “would be forced to restructure or move parts of their companies abroad.”
One Swiss lawmaker, Zurich’s Ruedi Noser, has ratcheted up the hysterics to an even higher level. A “yes” vote on the 1:12 proposition, he’s claiming, would turn Switzerland into the “North Korea of Europe.”
But Swiss society, 1:12 supporters counter, has functioned quite successfully in the not-so-distant past with quite narrow gaps between executive and worker compensation. In 1984, points out the Swiss Denknetz think tank, CEOs in Switzerland only averaged six times more in pay than average Swiss workers.
Many Swiss today still remember those more equal times, which is one reason why headlines about 21st century executive paydays — like the $100.5 million Credit Suisse CEO Brady Dougan grabbed in 2010 — so infuriate the general public.
Corporate interests don’t have to reveal how many millions they’re pouring into the campaign to kill the 1:12 initiative, and some observers are estimating that initiative opponents may be outspending supporters by as much as 50 times.
Adding to the drumbeat against 1:12: official opposition from Switzerland’s Federal Council, the country’s ministerial cabinet. The Swiss media, meanwhile, have been overwhelmingly hostile as well.
Remarkably enough, given this deeply unequal political playing field, the 1:12 initiative has remained competitive in the opinion polls. In October, one survey had the measure in a virtual dead-heat, with 44 percent both pro and con.
Polling released last week does have the “no” side gaining ground, and passage this Sunday, observers feel, remains a long shot. But however the vote goes, activist Cédric Wermuth stresses, egalitarians have made substantial progress.
“We’ve launched,” he notes, “a major debate about wage equality and a just income distribution, a subject regarded as taboo before.”
Switzerland’s 1:12 activists see themselves as part of a global effort, and 1:12-like campaigns, they note proudly, have taken root in France and Germany.
The Swiss 1:12 activists are also staying in close contact with leading global egalitarian thinkers. They’ve hosted talks, for instance, by the British social scientist Richard Wilkinson, one of the world’s foremost authorities on the impact of inequality on our daily lives.
I just asked Wilkinson for his reaction to the 1:12 effort. The initiative, he stresses, has already made a major contribution — by helping the entire world understand that businesses “do not have to be organized as systems for the undemocratic concentration of wealth and power.”
SAM PIZZIGATI, an OtherWords columnist, edits “Too Much,” the Institute for Policy Studies’ weekly newsletter on excess and inequality. He can be reached at OtherWords.org.