Advocates for a mandatory wage equality ratio are being promoted by the Left
In a bold move to address the growing income inequality within companies, the Left party in Germany has proposed a wage justice quota. The policy aims to link CEO salaries directly to the wages of employees, capping CEO pay at a certain multiple of the lowest or median employee salary in a company.
The proposal, outlined in a paper by Maximilian Schirmer, a party vice, seeks to create a more equitable wage structure inside corporations. It targets excessive executive pay and incentivizes companies to balance internal pay scales more justly.
According to Schirmer, being a billionaire involves responsibility, quoting the German Basic Law. He questions the absurd imbalance in current wage structures, particularly in light of the fact that CEOs like VW's Oliver Blume earn over 10.6 million euros per year, or over 880,000 euros per month. This translates to a wage gap of around 41 times the average in DAX companies, and an even wider disparity in companies like Adidas, where the wage difference is 95 times.
Schirmer's paper, titled "Limit Greed, Reward Performance," demands that only companies with collective bargaining agreements should receive state funding. He also suggests either capping managers' salaries or increasing workers' wages.
The wage justice quota would impose a maximum ratio, meaning that a CEO’s salary cannot exceed a certain fixed multiple of the lowest-paid or median wage earners. If a CEO earns 880,000 euros per month, employees would be entitled to 44,000 euros according to the proposal.
The proposal is addressed to companies that receive public funds. Schirmer argues that these companies should not be allowed to pay dividends. He also suggests the reintroduction of a wealth tax with progressive rates: one percent from one million euros, five percent from 50 million, and twelve percent from one billion. The aim is to make million-dollar salaries based on the work of everyone.
This approach reflects a broader wage justice or pay ratio regulation agenda aimed at curbing the growing pay gap between executives and ordinary employees, a significant concern in Germany and many other developed economies. While exact numeric details such as the exact multiple or enforcement mechanisms were not found in the search results, such proposals are generally designed to require companies to disclose pay ratios and to limit CEO pay growth relative to employee wages as a regulatory or legal requirement.
This contrasts with deregulation trends seen in some countries' labor policies, aiming instead for more direct wage equity within companies. The aim is to create a ladder of justice by linking top salaries to the reality of employees, ensuring that salary increases at the top correspond with fair wages for all employees.
- The policy-and-legislation proposed by the Left party in Germany, titled "Limit Greed, Reward Performance," intends to implement a wage justice quota that would limit CEO pay by linking it to the wages of their employees, promoting equal treatment of men and women within corporations and addressing the growing income inequality.
- In a move to address the widening pay gap between executives and ordinary employees, the wage justice quota aims to create a more just wage structure in politics through a maximum ratio, incentivizing companies to disclose pay ratios and limit CEO pay growth relative to employee wages, reflecting a broader wage justice regulation agenda.
