European governments should introduce curbs on management rewards or run the risk of mounting public anger that could threaten social cohesion, the head of Europes umbrella body for trade unions said on Friday.
Following proposals to tighten financial regulation, countries should go further and tackle corporate pay and other executive perks, John Monks, general-secretary of the European Trade Union Confederation, told Reuters in an interview.
"The next in line should be corporate governance, executive pay, the way company auditing is done, the way companies judge their success or failure," he said. Monks said the wage differential between management and workers has widened over the years, especially in the United States where executive pay is now about 200 times more than that of the average worker compared with two decades ago when it was just 20 times more.
"I think this is totally intolerable and must be addressed with new codes for executive pay," he said. Public anger is growing over excessive management pay on both sides of the Atlantic amid daily announcements of plant closures and job cuts by firms as the economic downturn deepens. Between 1.2 million and 3 million people took to the streets of France last week, demanding more help for struggling workers and calling on the government to cap executive rewards. France, Sweden and the Netherlands have in recent months taken steps to curb executive rewards especially at companies receiving state aid.
Monks said managers should be rewarded for their successes but not excessively. He suggested decoupling executive pay from shareholder value as "clearly many of them have been manipulated and inflated assets just before their bonuses have been calculated".
Governments and management could learn a lesson from the French Revolution when public opinion was disregarded with disastrous consequences, said Monks.
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