Fearing for salaries…for bosses?

  • Future salaries for public institution directors should be decided on before they are appointed. This has been an ongoing issue for several years.

Here’s an issue that’s been making life hard for the governments for close to five years. It should finally end on Wednesday during a last restricted council of ministers meeting (kern). What is a fair salary for the managing directors and board of director members for businesses whose majority or total shareholder is the State (postal service, railway, air traffic control)?

The initial question made its appearance in 2008 when some managers of banks that were involved with the state received golden parachutes, despite the cost of the banking crisis to the taxpayer.

As one thing led to another, the issue resulted in autonomous public service enterprises’ upper management salaries being much higher than, say, that of the prime minister. Belgacom’s director earns more than sixty times the lowest salary in his company.

Several systems were considered without consensus ever being reached. The dilemma was how to reduce these salaries while making sure they remained attractive enough to recruit quality people. Secondly, there is an obligation to find a political distribution of appointments that maintains the balance of power in the government.

In the meantime, there are seven enterprises where directors’ expired terms have been prolonged to ensure continuity of the State budget (National Lottery, Belgocontrol, the SNCB and Infrabel, SFPI, Bio SCK.Cen).  Eight executive committee presidents must be added (national airport, Belgacom, Belgocontrol, SNCB, Infrabel, SFPI, Creg, FSMA), and while we’re at it, over 60 administrative positions need to be renewed. All while bearing in mind that the size of executive committees of the future SNCB and Infrabel has yet to be determined.

On Tuesday, the minister of public enterprises, Jean-Pascal Labille, presented a draft of rules that would apply to all senior management. A variance will undoubtedly be established based on whether the enterprise is listed on the stock market (bpost, Belgacom) or not (SNCB, Belgocontrol…). This is an essential step in order to be able to nominate the future enterprise leaders.

A selection process was put in place, in some cases using headhunters, to end up with a list of five candidates. The government made the final decision. This last selection seems to have been delayed until the end of August. The decision on salaries will be reexamined on Wednesday.

Discussions regarding the 1996 law reform have advanced, and they could conclude this Wednesday. This law aims to protect Belgian competitiveness by keeping too large a salary gap from developing between Belgium and its three main competing neighbors (Germany, France, the Netherlands). The deputy prime ministers were to come to a consensus on the calculation of the size of the gap considering the public aid granted to companies to attenuate the cost of work. Following the reading of the experts’ report, the managers were discussing a 16% gap. The unions on their end were calculating around 1%.

The principal Di Rupo government ministers then were to come to an agreement on how to react in case the gap widened too much. The 1996 law reform will set the next interprofessional agreement (AIP) negotiating conditions.



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