The $94 million question; Austrian steel executive aghast at Corporate America’s wage disparities


VIENNA, Austria After a virtually sleepless flight across the Atlantic punctuated by crying babies, we touched down in Vienna’s international airport. I didn’t blame the wailing children one bit after all, they are merely expressing (loudly) what the rest of us passengers feel inside. Because air travel sucks.

My in-flight companion and I only had one exchange. I accidentally knocked over his iPod while trying to close a tray-table he’d left ajar as we were taking off. He shot me a withering look as I mumbled a profuse apology; we didn’t speak or so much shoot a glare at one another after that which was just fine with me.

As the dozen hours wore on, my halting Kann ich bitte noch eine Biere haben? become more polished with each discarded can of Ottakringer lager. At least there is the stupefying effect of free alcohol in international airspace.

We touched down at 8 a.m. and were immediately spirited away to our first meeting. On no sleep, we met a Dr. Claus Raidl, a captain of the Austrian steel industry. As CEO of one of the largest steel firms, Bhler-Uddeholm, Raidl gave us an overview of the history of state-owned industries in his country. Having attended a year of high school in Massachusetts a stone’s throw from my mother’s hometown, his English was impeccable though my fellow American journalist did make an effort to use some German.

Following the second world war, we were told, Austria’s main industries were taken over by the state. This was a compromise reached by the competing Christian Conservatives and Social Democrats leaders both of whom had plenty of time as concentration camp prisoners to hash out the details during the latter years of the war. The leftist socialists were realizing their dream of public control of industry, while the conservatives had made a realization that private concerns could easily be bought up by the Western powers (the United States controlling about half the world’s wealth at the end of the war).

Because many industries were nationalized, from 1945 to the 1980s when privatization began, Austria’s national economy was only as stable as its parliamentary coalitions. That’s because every time there was a change of power and new ministers installed, these leaders were free to meddle.

Austrian workers have a lot more protections than most countries. Wage increases are negotiated across the board and the role of the labor unions have a cemented supervisory role of the companies. Raidl said this arrangement has worked out well.

When you treat them well, he said of the rank-and-file workers, they will run for you. It’s always in the interest of the company, you don’t have these unions that are driven by ideology.

Of course the tradeoff with privatization, Raidl admitted, is that the country’s industries can be bought up by anyone with the cash to buy shares. But he was dismissive that foreign ownership had a significant meaning in the world of international finance.

On closing, I asked Mr. Raidl if he had any questions for us. He did. He asked how American workers felt about the mammoth disparity between chief executive’s salaries continually on the rise and that of the average workers, which has been stagnant at best in most industries.

American executives can fetch pay in the hundreds of millions. By comparison, Raidl said his salary (about 370,000 euros) is relatively high in his country. His steel company has an annual turnover of about 3.5 billion euros and 14,400 employees. An American executive of a similar sized company would be making money in the multiple millions.

I told him that there is a debate in the United States. But it’s mostly framed as a fight between the ownership (shareholders) and management (high executives) in a company.

So it’s the rich verses the rich, he said.

Yeah, exactly.

In Austria, we will get a hug discussion on how a profit of a company is being distributed, Raidl continued. I think it’s unthinkable that my salary be doubled or that dividends go up a third and then fight with our employees over a 2.3 percent pay increase.

He added: Jack Welch of General Electric is a great man; but does he really need a $94 million salary?

Good question, Claus.

FULL DISCLOSURE: After posting this, I learned that Herr Raidl is one of the sponsors of this Austrian-American journalism exchange I am participating in. My ethical radar (which only works sporadically) tells me I should make this clear. (20 Feb.)


10 responses to “The $94 million question; Austrian steel executive aghast at Corporate America’s wage disparities”

  1. “Kann ich bitte noch eine Biere haben?” Funn, the first sentence I recall I ever said in German was “Noch ein Bier, bitte.” I have no idea how I got the first one.

    Now go, get some sleep. The Bier might help. 🙂

  2. keep em comin’! i like to read your distinctive style. And good luck, take a picture or two.. I wanna see bier labls.

  3. Jeez Louise! While U.S. executive compensation is grossly unfair, it’s still a diversion. If you wanna see European business and economic success that compensates everyone better, if not equally, look at the Republic of Ireland where GDP per capita is the fourth highest in the world behind the U.S., Luxembourg and Norway. Unemployment in the Republic of Ireland in 2006 was 4.4 % and quality of life is very high. Austria has twice the population of Ireland, a slower growth rate, and 4.9% unemployment in 2006.

  4. I think part of the reason that we tolerate, if not thoroughly accept, a socio-economic structure that keeps the vast majority of wealth at the top of the corporate heap has to do with American mythology. We lionize the self-made man — the idea that anyone can pull themselves up by their bootstraps — which contributes to the notion that if one is successful, then they and they alone are entitled to the fruits of that success. But that success doesn’t exist in a vacuum — whatever one achieves, there is invariably a network of other people who have contributed to it and make it’s continuence possible. I.e. Jack Welch couldn’t bring in millions a year if it weren’t for the thousands of people working for him — he’s steering but they’re the ship keeping him afloat. Our individualist ideology promotes industry and innovation, but also resists a more equitable distribution of wealth. While most Americans would like to make more an hour, many would still be uncomfortable with the idea of formal curbs on individual gain. And of course, the enmeshment of private business and government doesn’t help, regardless of whether or not people are clamoring for change.

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