A lesson from Switzerland

A salary cap for CEOs? Not a bad idea. Would any North American government try it?

Get out the red paint and colour me a socialist, because I’m about to decry wage inequality.

Later this month, Switzerland voters will have their say in a referendum calling for a cap on CEO salaries to 12 times the salary of the company’s lowest paid staff member.

While this proposal may or may not pass, the fact is that Switzerland already has far greater wage equality than Canada and the U.S.

At the moment, Swiss CEOs earn about 43 times the average worker.

Meanwhile in Canada, studies show that in 2011, our top 100 CEOs earned 175 times more than the average Canadian.

Put another way, by 1:18 p.m. on January 2, Canada’s top 100 CEOs will have already pocketed $45,448. It takes the average Canadian an entire year of full-time work to earn that.

Inequality is the steepest in Calgary, where the richest one per cent earn 26 times the average Canadian worker. In Vancouver, that figure is 15 times the average, while in Halifax and Ottawa it is 11 times the average.

Resource, pharmaceutical and technology companies paid their CEOs the most in 2011. The year’s largest earner was Frank Stronach, former CEO of Magna, which makes technologically advanced automotive systems. With a base salary of $68,000, Stronach earned a $38 million bonus that year.

Bradley Shaw of Shaw Communications earned $15.8 million in 2011, placing him at number four.

The Bank of Montreal and TD Bank paid their CEOs $11.4 million, while RBC paid theirs $11.2 million.

Don Lindsay, Teck Resource’s CEO was number 22 on the list, earning a base salary of $1.3 million, a bonus of $1.4 million, shares of $2.9 million, options of $2.9 million and a pension of $495,000, totalling $9.3 million.

These statistics are courtesy of the Canadian Centre for Policy Alternatives.

Yet compared to other Western economies, Canada is about average, according to the Gini Index. Worse than us is Japan, Australia and the U.K, but we are less equal than Spain, Germany, Austria and Sweden.

Wage inequality in the U.S. is close to the worst. CEOs earned 231 times the typical worker in 2011. In the restaurant industry alone, the average pay for a restaurant CEO is $11.8 million, a staggering 788 times what a worker on minimum wage would earn working full time in a year.

Putting Switzerland’s proposal aside, what can Canada do about wage inequality? Many say that if CEOs were being paid more than they are worth, shareholders and the directors of the board wouldn’t stand for it.

But if the governance of one company lowered its CEO’s salary, they would simply find it impossible to fill the position. It would need to be an equal drop in all of the country’s top-paying positions.

Taxation, of course, goes a long way to remediate the inequality across the board.

Researchers at the Ottawa-based Centre for the Study of Living Standards found that between 1981 and 2010, before-tax income rose 19.4 per cent. But government taxation and benefits meant that income inequality rose 13.5 per cent during that period. That means that income inequality was 44 per cent less severe than it would have been had government not intervened.

This all goes to indicate that a salary cap for CEOs is a pretty good idea (thanks very much, Switzerland). Yet no North American government would try it, because it would be hugely unpopular among the people who fund political campaigns. And there’s the rub.

There seems to be no way around it. And that’s very grim.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

It happened this week in 1914

April 11 - 17: Compiled by Dave Humphrey from the archived newspapers held at the Cranbrook History Centre and Archives

FILE — In this March 31, 2021 file photo, a nurse fills a syringe with a dose of the Johnson & Johnson’s one-dose COVID-19 vaccine at the Vaxmobile, at the Uniondale Hempstead Senior Center, in Uniondale, N.Y. The U.S. is recommending a “pause” in administration of the single-dose Johnson & Johnson COVID-19 vaccine to investigate reports of potentially dangerous blood clots. In a joint statement Tuesday, the Centers for Disease Control and Prevention and the Food and Drug Administration said it was investigating clots in six women in the days after vaccination, in combination with reduced platelet counts. (AP Photo/Mary Altaffer, File)
72 new COVID-19 cases in Interior Health

This brings the total number of cases in the region to 9,666 since the pandemic began

Photo collage of loved ones lost to substance use and overdose. (Photo courtesy Moms Stop The Harm)
B.C. overdose deaths still rising five years after public health emergency declared

Moms Stop the Harm calls on B.C. to provide safe supply in response to deadly illicit drug use

Kootenay-Columbia MP Rob Morrison. Photo courtesy Conservative Party of Canada.
MP Morrison hopes for economic recovery plan in upcoming federal budget

Kootenay-Columbia Conservative looking for post-pandemic recovery plan in next week’s Liberal budget

Alexa Vanoni passed away in January, 2021 and her father Blair donated her drum set to Selkirk Secondary where she went to school and played in the music program.
Alexa’s drums: Behind every overdose statistic is a story

April 14 marks five years since the opioid crisis was declared a… Continue reading

A person receives a COVID-19 vaccine at a vaccination clinic run by Vancouver Coastal Health, in Richmond, B.C., Saturday, April 10, 2021. THE CANADIAN PRESS
B.C. sees 873 more COVID-19 cases Tuesday, decline continues

Hospitalizations up to 377, two more deaths for 1,515 total

FILE – People hold signs during a memorial march to remember victims of overdose deaths in Vancouver on Saturday, August 15, 2020. THE CANADIAN PRESS/Darryl Dyck
B.C. to request federal exemption for simple drug possession

Announcement comes on 5-year anniversary of B.C.’s first public health emergency

(AP Photo/Matthias Schrader, FIle)
Rare blood clots ‘may be linked’ to AstraZeneca vaccines: Health Canada

One case of the adverse effect has been reported in Canada

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has restricted indoor dining at all restaurants in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C.’s COVID-19 indoor dining, drinking ban extending into May

Restaurant association says patio rules to be clarified

Two men walk past a sign on Main Street in downtown Vancouver, B.C., Monday, April 5, 2021. THE CANADIAN PRESS/Jonathan Hayward
Calls for government transparency in COVID data continue as B.C.’s 3rd wave wears on

Social media, where both information and misinformation can spread like wildfire, has not helped

Two men were seen removing red dresses alongside the Island Highway in Oyster Bay. (Submitted photo)
Observers ‘gutted’ as pair filmed removing red dresses hung along B.C. highway

Activists hung the dresses to raise awareness for Indigenous Murdered/Missing Women & Girls

A grey whale off the coast of Vancouver Island is being monitored by Canadian and U.S. researchers, as it has developed lesions after being tagged last year. To try and prevent systemic infection from developing, the team administered antibiotics to the whale on March 31 and April 1. (Photo from the NOAA Fisheries website)
Grey whale off Vancouver Island develops lesions after being tagged, researchers monitor its condition

Canadian and U.S. whale experts administered antibiotics to the animal on March 31, April 1

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

Join Black Press Media and Do Some Good
Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Most Read