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France’s newly-elected Socialist government has announced an immediate clampdown on executive pay at state-owned firms.
LONDON, UK – France’s newly-elected Socialist government has announced an immediate clampdown on executive pay at state-owned firms, amidst a climate of popular bitterness towards pay packages viewed as excessively generous in crisis-stricken European economies.
According to the Agence France Presse, President Francois Hollande’s government has promised to unveil measures within two weeks which will honor a campaign pledge to ensure that salaries for top executives in majority state-owned companies will be no more than 20 times the pay of the firm’s lowest-paid employee.
The announcement follows similar moves by the Socialists in recent weeks, including a 30 percent pay cut for the president and ministers and pledges to implement a new 75 percent top tax rate on incomes greater than one million euros.
According to The Guardian, the French state has a stake in 52 firms, although only around half of those are 100 percent state-owned, such as the post office La Poste. Companies in which the state owns a majority stake – such as energy utility EDF – will have to abide by the new pay arrangements, and the government could also try to influence firms in which it has a minority stake to do so as well.
Government spokeswoman Najat Vallaud-Belkacem told Reuters news agency that it was normal for top executives at public firms to accept pay curbs as presidential and ministerial income had been slashed once Hollande became president.
"The measure will apply equally to contracts in place today. Waiting for contracts to end would equate to kicking the can down the road when the urgency of the crisis means we need to act fast," she said.
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