Hollande Institutes Daring Salary Changes

France’s new president, Francois Hollande, has made it clear that large pay gaps are no longer acceptable, at least when it comes to state-controlled businesses. This week, Hollande and Prime Minister Jean-Marc Ayrault announced that all companies controlled by the state will now have a 20:1 pay gap rule.

This new rule means that any CEO or head of a state-controlled business cannot earn more than 20 times the lowest paid employee in that same company. This move means that many CEOs will see a gigantic change in the amount they make. Time notes that Henri Proglio, the CEO of electricity company EDF, will see a 68 percent cut to his salary.

The move will affect about a dozen top managers in companies connected to the government, such as the railway SNCF, and the post office system La Poste. The move was made in order to set an example for pay ratios throughout the rest of the country. The Guardian quotes Jean-Marc Ayrault as stating, “I believe in the patriotism of company leaders. They can understand the crisis requires the political and financial elite to set an example.”

The new president and his cabinet have officially cut their salaries by 30 percent and the new rule for company CEOs goes into effect next month. This new measure goes hand-in-hand with Hollande’s hopes to reform the tax system. He hopes to place a top tax of 75% on those earning 1 million euros or more.

Both of these unique moves come in the wake of financial hardship throughout Europe. Spain, Greece and Italy have all faced catastrophic unemployment numbers and difficult government and bank loan issues. Hollande hopes that these reforms will spur on economic growth and encourage a fairer pay system in France.

Hollande has only been in office for a number of weeks but his socialist government looks to be at the center of any new changes coming out of discussions in the European Union. He has already challenged Angela Merkel on a number of austerity measures in European Union meetings in the month of May. While Merkel stands firm that austerity measures need to be instituted, Hollande hopes to encourage new growth through tax reform and some government spending.

His new measures also contrast sharply with tax and pay gap discussions going on in the United States election debates. Mitt Romney wants to eliminate most investment taxes and keep the current 15 percent capital gains rate for households making more than $200,000.

President Obama wants to raise these numbers and place more of the tax burden on the wealthiest households. Romney, on the other hand, claims that any increase in taxes, even on the wealthiest top percent of households, risks damaging the economy. His stance on capital gains and a slowing of investment and growth has no substantial evidence, according to research posted in Bloomberg Businessweek.

Hollande’s move to push the government leaders to set an example for the rest of the country may stop at just that. It is difficult to tell if the new measures will have any effect on private companies and CEOs. Hollande seems to hope the standard set by government officials will shame some business leaders into making a change in pay gaps.

At the very least, Hollande’s strong stance on taxes, austerity measures and top pay have changed the tone in the European Union. As Reuters notes, Hollande opted to meet with Spanish Prime Minister Mariano Rajoy this month before a summit of European leaders. Traditionally French and German officials hold a small meeting together before meeting with the rest of the EU leaders. Hollande refuses to be strong-armed into submission by Merkel or Britain’s David Cameron, and his stance is making an impression.

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Photo Credit: Kenji-Baptiste OIKAWA


Frank Mugford
Frank Mugford5 years ago

And never forget where and how GREED started; in the US in the '80's under buffoon Regan and in the UK at the same time under Fascist sympathiser Thatcher.

Frank Mugford
Frank Mugford5 years ago

It will have to come; GREED will have to be squeezed out of the Human genome, along with arrogance and hubris before we will have the right to continue to exist as against other life forms.

Rebecca F.
Rebecca Flock5 years ago

woot woot! If only I thought that we might see something like this happen in the US in my lifetime!!!!!!!!

Martha Eberle
Martha Eberle5 years ago

GOOD FOR HIM!! Inequity is at the root of our problems too.

Lynda Harrison
Lynda Harrison5 years ago

Shame such a ruling is not made and enforced in the United States where greed rules supreme!

Gayle J.
Gayle, J5 years ago

We all know that austerity doesn't work, ie. that's what caused the Depression in 1929, yet 90 years later, we act like somehow this time around it will work. Really sad that humans are so ignorant that they refuse to learn from past mistakes. Isn't that the definition of insanity when you keep doing the same thing over and over and expect a different result?

Ken W.
Ken W5 years ago

Hay US take note !!!!

Claire M.
Claire M5 years ago

France I salute you!

Frank Mugford
Frank Mugford5 years ago

Yes, if only other socialists would join up and do the same. Well done the French under Hollande. Indeed, a very brave move and everything he said he would do.
Now we shall see if those disaffected so called 'top' people up roots and go elsewhere to the terrible disadvantage of those 'poor' people left behind. Mind you, they could find much to please them in the UK.
But now we shall see if France founders because of this terrible Socialist move. I think not; au contraire.

Luvenia V.
Luvenia V5 years ago

Way to go FRANCE!!! Imagine a country working to bring equality to ALL their citizens instead of just the 2% of the GREEDIEST SOBs.

Cathleen S. both you AND Adam S. are nothing but Corporate butt kissers. Maybe if some of the companies do leave some REAL Patriots will start up MORE with all the people in mind. Most people won’t miss the TRAITORS.