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Feb 16, 2021
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Will Mishustin dare to shake Putin’s vertical

Will Mishustin dare to shake Putin's vertical

Photo: Alexey Filippov / TASS

A number of telegram channels close to the Kremlin reported that all state-owned companies prepare data on the salaries of their top managers and send them to the government. Surely, this is due to the recent so-called “salary” order of the Prime Minister, according to which the Ministry of Labor must by April (that is, by the end of March) of this year give a complete picture of what is happening with the wages of state employees.

At first glance, it seems that if not a salary reform, then serious changes are being prepared, which will affect not only teachers, doctors and researchers, but also top managers in companies with state participation. Let us remind you that it will be exactly one year in March when Putin, commenting on the crazy salaries of top managers, he unexpectedly admitted: “To be honest, it hurts and jars me.”

However, then the President of Russia, in his usual manner “not to offend anyone,” said what both critics and supporters of gold salaries and parachutes liked.

On the one hand, the GDP made it clear that it was dissatisfied with this state of affairs, giving hope for justice, but on the other hand, it immediately justified the flagrant wage inequality. “It’s not as simple as it would seem at first glance,” explained Vladimir Vladimirovich, “… (state-owned companies)“ employ a large number of foreign specialists, they work efficiently, and they are worth something… on the international labor market ”.

These most foreign highly paid specialists are subordinate to Russian top managers, while “nowhere in the world does a leader receive less than his employees,” explained President Putin.

However, it is a controversial statement, especially against the background of the fact that in the West it is a common practice when directors appoint themselves low and even symbolic salaries. In particular, Bill Ford during the next crisis, he set himself a rate of 1 dollar, and nothing on top. A fresher example can be cited: the notorious Elon Musk appointed himself the minimum salary possible under California law, and without any bonuses and bonuses. But if the Tesla company he runs achieves the goals set by the shareholders, his remuneration is 1% in shares per year.

In a word, highly paid foreign specialists were not offended and, for sure, would not be surprised if their Russian leaders earned less. Moreover, the directorate would be less tempted to invite foreigners with very high demands (which does not always correlate with professionalism). Not like now, when top managers, knowing that their personal income depends on how much a foreign recruit will receive.

We also note that the political discussion about the sky-high salaries of top managers is gaining momentum in the EU and even in the United States. Thus, the German newspaper Nachrichten aus Hamburg reported that the authorities are preparing a bill to limit the salaries of top managers.

According to Dieter Brock, editor-in-chief of another German newspaper Handelsblatt, top executive salaries will be a very hot topic in Germany in 2021. Despite the coronavirus crisis, senior executives are gearing up to earn record-breaking bonuses and bonuses. But the power, most likely, will give them a hand.

The message of the article is as follows: while the majority of Germans have lost up to a third of their earnings, the directors found a reason to pleasantly encourage themselves, they say, their stock quotes are growing, things are not going so badly, despite the shutdown of production, a drop in sales and even a loss. Everyone knows, however, that exchanges have become detached from the economy due to high money supply, so this trick is unlikely to work. In particular, because in the FRG, as in the Russian Federation, a new parliament will be elected.

It is curious to know how our top managers look against the background of their foreign counterparts. For example, in the United States, top managers write out annual bonuses for themselves much more than their European counterparts. Moreover, the gap between the wages of the directorate and the wages of the average American worker is greater than in other Western countries.

As Forbes writes, “CEOs of the largest US public companies received an average of $ 14.3 million a year, more than double their Canadian counterparts and 10 times their Indian counterparts … while Norway and Austria have one of the smallest margin differences. ”

The INSEAD business school, cited by Forbes, explains salary inequality in an American way: “CEOs earn as much or more in one working day than the average employee in a whole year.” However, according to Quets de Vries, an outstanding overseas professional in the field of professional leadership, there is no correlation between the quality of work of top managers and their huge salaries.

It is a myth that “CEOs need high salaries to motivate them,” Kets de Vries is convinced. The reality, he says, is that high-performing leaders will work hard no matter how much they get paid. On the contrary, ineffective careerists are chasing high salaries. Workaholics and power-hungry people in the good sense of the word do not need gold salaries and parachutes: they are “married” at work.

And the second myth, imposed by paid experts and corrupt politicians, is that talented leaders have unique qualities. In fact, CEOs are not so exceptional leaders. Moreover, it is almost impossible to measure their personal contribution to the common piggy bank.

The economic calculations of Professor Kets de Vries and experts from the Economic Policy Institute (EPI) show that the problem of inadequate incomes of top managers can be solved simply: “by introducing higher marginal income tax rates at the very top”, which closes the political the problem of wage imbalance.

Thus, criticism of insane top managers’ salaries is based on a simple logic: “if there is a minimum wage, then there must be a maximum wage.” This approach is based, among other things, on the accumulated historical experience. So, Luke Hildyard, executive director of the UK High Salary Center, said that in the recent past, top managers were paid much less, although they were equally, if not more efficient.

“The typical CEO of the FTSE 100 (top 100) went from 60 times the salary of his average employee in the late 1990s to nearly 150 times today. In fact, there was no corresponding improvement in the performance of the leaders, ”writes Hildyard.

The risk that a talented top manager will change jobs or go abroad in search of a better life is many times exaggerated. According to the executive director of the British Center for High Salaries, there is nothing wrong with this “brain drain”. As the saying goes, the road is like a tablecloth. Hildyard writes: “If you look at what makes Western companies successful … they are especially motivated people who push forward and come up with the inventions and innovations on which the company’s success is built. They are motivated not so much by payment as by status, responsibility, prestige and the importance of achieving something greater. “

In Russia, unfortunately, the right of top managers to a large salary without “high marginal income tax rates” has led to the fact that “especially motivated people pushing forward” companies were simply thrown overboard. At least so that against their background the thieves’ careerists do not seem insignificant.

However, the authorities may not even dare to even at least the semblance of a salary reform, fearing to undermine Putin’s notorious vertical. Everything can end as it did before: blah-blah-blah about the need to fulfill the presidential decrees in May. It is not for nothing that telegram channels close to the Kremlin write that the government has asked only for salaries, that is, “we are talking about base rates without bonuses and bonuses, which allows you to maneuver data, otherwise many would have their eyes on the forehead from real income.”

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