Labor leaders at last week's Alpine assembling of global bankers and CEOs came with a simple pledge: We're going to fight to cap your pay.
At Davos, the Swiss resort where global corporate and financial execs assemble every winter at a glittery “World Economic Forum,” gentility typically reigns. The notables and experts who show up to address this annual bacchanalia of cogitation don’t speak truth to power. They flatter it.
Not this year. Among the 2,500 power suits high in the Alps last week for the 2010 forum: over a dozen international trade union leaders who came to demand an end to the global economy’s “vicious cycle of recklessness and greed.”
The union leaders trekked up the Alps on behalf of the International Trade Union Confederation, the global group whose affiliates represent 175 million workers in 155 countries. The top leader at one of those affiliates, Philip Jennings, carried the group’s single boldest proposal to a packed session on the forum’s first day.
Jennings, the general secretary of the global union confederation that unites telecom and other workers, called for a cap — at 20 times worker pay — on all corporate and financial sector executive salaries.
“The people at the top have done a very good job at looking after themselves,” Jennings told the bankers and CEOs assembled at Davos. “Trickle down has not worked. The compensation system is a racket. It is corrupt.”
“Working people are angry,” added Jennings, who hails from the mining towns of Wales. “What we are seeing is obscene.”
The Jennings remarks, another speaker quickly replied, had violated Davos decorum. His stark exclamations, charged Mark Mactas, the CEO of corporate consulting giant Towers Watson, would only serve to “raise the temperature.”
“I see it as my job to raise the temperature,” Jennings shot back. “Sorry.”
The International Trade Union Confederation leaders at Davos detailed the Jennings call for a corporate “maximum wage” the next morning at a news conference where they unveiled a white paper on the reforms the labor movement sees as critical to global economic recovery.
That recovery won’t come, the labor paper argues, unless nations reject corporate greed and the banker push to get the global economy back to “business as usual,” complete “with multi-billion dollar bonus packages.”
Corporations and banks, noted the labor paper, have already begun “adding risk and deepening inequality” with a new round of leveraged buyouts that are eliminating jobs and lavishing huge rewards on wheelers and dealers.
“This needs to change,” urged the union statement.
And no single change would stop this return to business as usual more than “a strictly regulated upper limit on corporate bonuses and CEO pay,” a real “ceiling of no more than 20 times average earnings for the salaries of CEOs and a limit of bonuses to 100 percent of salary as an absolute maximum.”
In a bank or corporation where workers averaged $30,000 a year, this “maximum wage” formula would limit total executive pay to $1.2 million a year.
Why an executive pay cap set at 20 times worker pay? At last week’s Davos labor news conference, Philip Jennings pointed out the founder of modern management science, Peter Drucker, had advocated a 20-to-one executive-to-worker corporate pay ratio for years before his 2005 death.
The next stage in the labor struggle for a maximum wage? The union leaders at Davos pledged to continue their campaign against “unsustainable” executive pay at this summer's upcoming G20 economic summit.
That summit will bring together the leaders of the world’s top economies. One of those leaders, French president Nicolas Sarkozy, also spoke at Davos last week — and his remarks added to the pay-cap momentum. Sarkozy called current levels of executive compensation “morally indefensible.”
“We can't allow a tiny minority,” he pronounced, “to skew the system.”
Sam Pizzigati edits Too Much, the online weekly on excess and inequality.