Saturday 24 August 2019

IFA bosses not the only ones coining it

Our executive class can't be expected to muck it with revolting peasants and urban riff-raff, says Gene Kerrigan

Illustration by Tom Halliday
Illustration by Tom Halliday
Gene Kerrigan

Gene Kerrigan

Here we go again. Into one of our periodic eruptions of moral indignation. Just because an Irish Farmers' Association bigshot had a bumper harvest of lovely money.

What's the problem?

Isn't that the basis on which this country operates? Get into an executive position, then salivate as the money flows.

Mind you, the IFA executive goodies are spectacularly juicy. Up to half-a-million a year. A €2.7m pension pot, with a goodbye gift of another two million.

I mean, you have to admire the ambition of these guys. The complete lack of false modesty. No self-esteem issues troubling these lads.

Two years ago, we got upset about the executives who run the charities.

My favourite was the lad who was paid €106,000 a year. His fellow executives felt so bad that he was on such a lowly wage that they topped it up with another €136,000 a year, making a grand total of €242,000.

And that truly is a grand total.

Mind you, there were some who got almost twice that. But what I loved about this guy was that when he retired his fellow executives wept at the prospect of him struggling to live on a pension of no more than €98,000 a year.

So they gave him a goodbye gift of €200,000. You have to admit these were very nice, very thoughtful people.

Then, they had second thoughts. After all, €200,000 isn't what it used to be, so they threw in another €273,336.

Then someone worked out that if this chap hadn't been on the pension he was on, if he'd been on a better pension, he'd have got more than €98,000 a year.

So, they worked out he was due another €268,689.

When all this - and more - came out, the politicians declared themselves shocked, truly shocked.

This was despite the fact that two years earlier the Irish Independent had reported: "Secret top-up payments to disability charity chiefs on salaries up to €150,000 are being investigated by Department of Health officials."

And the Minister for Health, when he enquired about the money these lads were taking home, was told to bugger off, it was none of his business.

Some claimed to be outraged that such salaries came from money contributed by the public. Ah, child, dear child - whether through contribution or tax or price, every cent of every salary and bonus and pension comes from the public.

Of course, no one - least of all the politicians - knew the extent to which the IFA lads were bringing home the bacon. Shocked, the politicians were, totally shocked.

They were shocked even though there had been public controversy and resignation within the IFA over the same issue.

These days, we insist on everything being run as a business. The rules of the market govern every level, even in charitable outfits.

We deliberately deprive people of services, charities emerge to take up the slack. And those charities have to have a CEO (it says so in the Bible).

And where there's a CEO, there are layers of executives. And everyone knows that executives have to get multiples of what the rest of us get (it says so in the Bible).

The scramble for ever-bigger payouts rages like a virus through the entire executive class.

More than two dozen in the Central Bank are on bonuses.

Politicians fought doggedly to breach the pay cap on advisers. Such geniuses couldn't be expected to earn a mere €90k or so.

In 2011, some politicians retired on pensions that were larger than the salaries they would have enjoyed had they remained in politics. Not working paid better than working.

No executive would today consider a job offer unless it came with all the bells and whistle and bonuses to which such folk are accustomed.

In recent years, layers of executives at the top of the corporate heap have been harvesting astonishing levels of pay. The gluttonous demands of the 1pc and the 10pc at the top have siphoned off vast amounts of resources.

Unlike the money the rest of us earn, this enormous pool of wealth is not productive - it doesn't circulate through the economy.

Much of it is spent on over-priced luxury goods; some goes into property, pushing up prices for everyone else. More of it is simply tucked away in tax havens.

So much money has been siphoned away into non-productive accumulations that many economists see it as creating a dangerous imbalance in economies.

Gross inequality isn't just unfair, it's bad economics.

We really should be used to all this by now. What happened in the IFA isn't unique. It's kind of small beer. We should either do something about it or stop getting excited about individual bonanzas.

But, don't these extra special people deserve to be feted like gods? Aren't they worth every cent they can extract from of the system? Shouldn't their pensions be bigger than our wages? Don't executives need big bucks, with incentives and bonuses?

If these people were merely paid a fair wage, I mean, they wouldn't be motivated to do their best work.

Without bonuses on top of the wage they're paid to do their jobs, these people just wouldn't do their jobs.

There's a bit of a backlash against this kind of thing.

I refer you to John Cryan, the new CEO of Deutsche Bank, who said: "I have no idea why I was offered a contract with a bonus in it because . . . I will not work any harder or any less hard in any year, in any day, because someone is going to pay me more or less."

Mind you, John is reacting to shareholder pressure to curb the big bucks. He's being coy about his own pay, but the lad who had the gig before him grossed just short of €4m last year.

From this, I think we can speculate that John isn't short of the folding green, bonus or no bonus.

There are people with rare skills. They can look for a premium, to make up for the time and effort it took to acquire those skills. This is fine for surgeons, plumbers, electricians and the like. Within reason.

Executives need management skills - but these are not remotely comparable to the practical skills required of a technician. The demand for high CEO pay isn't based on scarcity value or special skills, it's based purely on position. These people aren't paid in any ratio to the value they bring to the job.

And to justify the huge rewards, spurious claims are made about the supposed magic talents of the top executives. Talents so rare and miraculous that no one can explain in plain language what they are.

If that kind of thing ever had any claim to validity, it was blown by the 2008 crash. Right across the executive classes, people who were being paid massively for their alleged talents were shown to be bugger all use.

Bankers taking home millions, it turned out, didn't understand how credit works. Alleged boardroom geniuses hadn't a clue how capitalism works.

Politicians will do nothing, they approve of this (except when they are occasionally shocked, shocked). Occasional bouts of moral indignation are pointless.

Perhaps the trade unions should benchmark their members' wages against boardroom pay. Perhaps when it's time for pay demands, we ought to take these people as role models.

Sunday Independent

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