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Friday, 12 January 2018

"Show us the kwan!" In 2018 it is time to radically kick the wage restraint and excess taxation for lower and middle class workers out of the door and stop the canonization of the executive management

The sheer canonization of the executive management in Dutch (multinational) companies has reached a level, in which the executive managers think they all did everything by themselves. They speak in singular, first person about the achievements of the company, as if they were their own achievements. On top of that, they think they have to earn more than 150 times the median wage of their common employees to make a lasting impression upon the world. At the same time their lowest paid workers see their income security, as well as their purchase power erode.  

This erosion happens as a consequence of the mounting tax pressure and the fact that the salaries and hourly fees of lower and middle class workers not really grow, due to the enduring wage restraint. 

Flexibilization of labour, outsourcing of whole departments to Eastern Europe or the Far East and the emerging robotization of their workspace are the other issues haunting lower and middle class workers in 2018.

It were three articles in the newspapers of the last few days that all three described different sides of the same problem: the circumstance that the income gap between the highest and lowest paid workers is getting out of hand.

This problem is caused by both the (yet unstoppably growing) excessive payment for executives and (at the other side of the spectrum) the excess taxation of especially the lower incomes in The Netherlands. This all is turning into a real problem, as the economy is becoming a two-track road:
  • one fast track with enduring economic success and unstoppable profit growth and a group of companies and people that can litterally afford themselves everything that they want;
  • one slow track in which the rest of the population and the less fortunate (i.e. smaller and more local oriented) companies are trapped. This is a track with no tax-breaks at all, hampered growth and enduring economic difficulties, due to salaries and annual income that are hardly enough to pay for housing and food.The latter is not only among contract workers and freelancers, but also among small and medium entrepreneurs, who see their income erode as a consequence of to their customers staying where they are. 

This two-track road is dangerous for the stability in the country, as the group of people that has to work really hard in order to earn their necessary monthly income, sees how the “fat cat” executives and wealthy investors don’t know where to put their nearly unlimited investment money, that they can acquire against nearly free interest rates.

The first article that I want to share is a letter by a reader, André Rapati from Rotterdam, sent to Het Financieele Dagblad, of which the cynisism is dripping out of every pore:

When the ABN AMRO has a good PR Manager – I have no reason to doubt that – then I presume that he had his annual holiday at the time that CEO Kees van Dijkhuizen was interviewed. When one reads the interview, he sees that the words ‘I’, ‘my’ and ‘mine’ appear very often (29 times), while the words ‘we’ and ‘our’ score not more than 8 times. This paints an image of someone who is rather busy with himself than with the team he is supposed to lead. History teaches that companies led by presumptuous people very often underachieve in the end.    

The original article that provoked this letter by a reader probably said it all. “I am the leader of ABN AMRO. I am the single source of its success, as I decide the strategy and the modus operandi. The 21,000 people who form this bank must be glad that I offer them the opportunity to work for me and share in my success and glory!”.

And who can blame him?!

Forgotten are the enormous blunders that the bank made in the prelude to the economic crisis, when the cockiness, ignorance and bad business / investment decisions – partially under pressure of aggressive shareholders – almost led to the downfall of this once proud bank, together with the other large, Dutch bank ‘Fortis Bank’: the profits were privatized and the losses were socialized.

Forgotten is the fact that the Dutch people kept the bank upright with their tax money and saved the bacon of the Dutch executive management! The current success is his achievement and his success story. He is the king on his throne and he needs to be rewarded like a king.

And Kees Dijkhuizen is not the only one who is canonized by the general public, as the winners of the 21st Century. Almost all CEO’s of large companies think they are indispensable nowadays and deserve to be rewarded like kings and queens. Hence the following article in Het Financieele Dagblad:

Dutch CEO earns 171 times

Dutch chief executive officers of companies with a quotation at the stock markets earn generally 171 times the median salary of an employee of their company. Only in the United States, India, the UK and South Africa the salary gap between the executive wage and the median wage is larger. This was disclosed by an investigation performed by press agency Bloomberg. On average the CEO’s of the 25 largest quoted, Dutch companies, among which Akzo Nobel and Shell, earn €6.9 million per annum, including bonuses and pension payments. With that, the Dutch CEO’s are at a global third place, after Switzerland and the United States.

That the salary gap is so large in The Netherlands, is conspicuous, as the average income is already quite high in The Netherlands. An explanation is that large, international companies as Shell, Unilever and Relx have a quotation in Amsterdam.

This last paragraph is only part of the explanation, in my humble opinion... 

The Netherlands has always been a country that looked at the United States – and to a lesser degree the United Kingdom – as both the promised land and the favourite role model. Especially the executives, who were often responsible for writing their own paychecks, have traditionally looked at these countries and especially to the executive paychecks, as an inspiration for their own salary demands.

Their – long worn out – argument was always: “When I move to the United States I can easily earn a seven figure salary, so I want to earn the same amount of money in The Netherlands! Good executives are very scarce, so deal with my demands!”. 

And the boards of directors, that in many consisted of the same group of old boys, swallowed such arguments; often out of self-interest or under peer pressure.

The same executives did their best to keep the salaries and wages of their normal workers relatively low, in order to save costs and look good towards the shareholders.

They did so by:
  • Enforcing wage restraint among their fixed personnel, in order to let them keep their job;
  • By selling less profitable parts of the company and making their company lean and mean, under fierce pressure of assertive (or aggressive) shareholders;
  • By outsourcing work and complete departments to Eastern Europe and India or China;
  • By hiring foreign workers from Eastern Europe and India, who would do “the same work” for a fraction of the wages that Dutch workers earned;
  • By flexibilizing the work force via temporary contracts and massive hiring of freelance workers, that could be hired and fired at the spot.

The results of all this was that the salary gap between executives and common workers grew and grew until the current, excessive levels. The salaries of especially the lower and middle class workers stayed at roughly the same levels for many years (i.e. roughly fifteen years) in a row, only rising with percentages that were at par with or even well below the annual inflation rate. This led to loss of purchase power for the lower and middle class workers, in spite of the steady productivity increases.

And so the situation has emerged that the Dutch economy is seemingly in a period of steady growth with truly excellent growth figures, but the lower and middle class workers are still cautiously spending their money, as they don't feel the improved economy in their wallets yet.

This effect is dramatically reinforced by the strongly increased tax pressure as a consequence of government policy. The subsequent governments had to earn back the money, that had been spent on saving the banks and other large Dutch companies. To do so, they strongly increased the wage and income taxes.

This policy of increasing almost all direct and indirect taxes (except for wealth taxes) has endured until this very day, in spite of all the (empty) promises of PM Mark Rutte that he would increase the purchase power of the middle class workers in The Netherlands.

Also for 2018, Mark Rutte made the same promise regarding the purchase power, but actually the opposite happened. The consequence of the increased taxes and levies for the lowest paid workers is that their salary will actually drop in 2018, just like in the years before. All other workers – except of course for the highest paid workers – get ‘pennies’ in salary increases.

This is disclosed by the third article, that was printed in het Algemeen Dagblad:

Salary slip for 2018 assessed: lowest incomes lose money

Most employees find hardly extra money on their salary slip of January 2018. The highest incomes gain most, but lower class workers with a minimum wage even lose money. This is disclosed by calculations of ADP, the financial data processing company. Workers with an average salary (i.e. €2,894 gross salary per month) earn net €7 more per month. People earning 1.5 times average get one extra Euro on top of that. However, people that earn a minimum (part time) wage between €1000 - €1500 per month get the shortest straw, with €4 less(!) per month.

The calculations of ADP are based upon all changes in a.o. the new fiscal regulations, employee charges and pensions. These are separated from wage increases that people get, due to collective labour agreements (i.e. CAO in Dutch) or payment rises. The CAO wages rose by 1.5% last year, according to the Dutch Central Bureau of Statistics.

The factual decrease in wages for the lowest incomes is caused by the fact that the labour charge deduction cannot be fully used by these workers. This is true for all incomes until €1,750 per month, according to ADP salary specialist Dik van Leeuwerden. “These workers have to take care that they demand the full labour charge deduction in their income tax statement for 2018. This could yield them €250 in extra income for 2018”.

A factor that suppresses the wage increases is the repair arrangements for the (lost) third year of Unemployment Benefit (UB). The Cabinet has decided that employees, who lose their job, are entitled to receive UB for only two years. 

With the Social Partners (employers’ associations and labour unions) it is arranged that a third year of UB remains possible, as long as this is paid by the employees.

The whole article can be roughly summarized with the statement that most of the workers go up in salary a few bucks and some workers even lose a little of their purchase power. However, virtually nobody among the lower and middle classes sees a substantial wage increase, as both company policy and national politics prevent that from happening.

The fact that remains is that most people wonder when for themselves the economy really starts to grow and when the wage restraint policy comes to a definitive end. 

Even the most profitable multinationals and successful national companies s still scare away from paying their loyal personnel 5+% wage rises. They look instead to freelancers and people from India and East-Europe, as a solace for their increasing need for qualified staff.

The bottomline is that the most profitable firms don’t want to pay the high payment increases for their personnel and the less profitable firms simply can’t pay these wage increases.

And so the personnel is trapped in an economic crisis that does not seem to end, as wage restraint was the message for the last fifteen years and will remain the message for the years to come.

As it is a trap indeed: the lower and middle classes keep their wallets firmly in their pockets and don’t spend much more money in the Dutch economy, except for mobile phones, cheap electronic gadgets and cheap holidays. 

The SME companies (small and medium enterprise)  have to deal with yet disappointing sales figures as a consequence of this and therefore can’t pay their personnel much more than the current salary. This explains why the cheap discount stores and thrift stores are blooming in The Netherlands, while the middle class store chains are still suffering from disappointing sales.

Or do you think that it is a coincidence that Primark (selling the cheapest clothes of all department stores) is so successful, while Hudson’s Bay is threatening to become a trainwreck in “Holland”.

So please, politicians and successful multinationals, please throw the excess taxation of middle class workers and frugal remuneration policy overboard. And please stop with your cheapskate personnel policy, that offers a little or no job security to your very loyal personnel.

Let’s show that the economy is indeed doing fine and give your personnel a substantial payment rise. The government, at the same time, should stop with giving tsmall ax breaks with one hand, while grabbing more money back with the other hand.

The Dutch lower and middle classes need a reward for their very hard work of the last fifteen years; perhaps in the form of a fifteen(!) per cent higher wage! Yeah, I said fifteen per cent, as I think that this is very well possible for quite a lot of companies.

So please don’t tell us that that is impossible. We see the hysteria with the Bitcoin and other crypto currencies and the massive amounts of money invested in those. We see the money splashing at the ceiling of the multinationals and we see the gargantuous amounts of investment money floating all over the world.

And a company that can pay its CEO a multi-million reward has enough money to pay all personnel higher wages.

So stop saying that you can't afford it. We (i.e. the Dutch lower and middle class workers) simply don’t believe you anymore. So show us the kwan! Show us the money!

Saturday, 30 December 2017

Will the liberal-conservative VVD in 2018 throw off the veil of nihilism that has covered the party since the early 21st Century?

You know you live in a civilized country
When not only you and your political allies behave valiantly and fair,
But also your political opponents…
Ernst Labruyère

I am a social-democrat, I have always been one and I probably will always be one. It felt naturally for me to pay my taxes and share some of my wealth with people who were not so lucky as I was. I never had the intension to become really rich and to work so hard that I lost track of what was going in the world. Leisure time and nature were just as important as the time spent in the office.

Therefore, as a citizen living in The Netherlands, it always felt naturally to vote for the social-democrat Partij van de Arbeid (i.e. PvdA, the Dutch labour party). And even though I have been quite dissatisfied with this party over the last ten to fifteen years, I could not think of another party to vote for. Just because…

Nevertheless, the PvdA is nowadays not the pivotal party anymore that it was in the past. The steady decline of social-democracy during the last twenty years, in combination with the devastating effect that participating in Cabinet Rutte II had on the leftwing voter’s confidence in the party, made that the PvdA is currently at the edge of the cliff.

Will it rise again? Or will the PvdA definitely topple over into the abyss? It is anybody’s guess…

As also the Christian-Democrat CDA party is not the pivotal party anymore that it was in the past, there is only one party left that deserves this statement: the liberal-conservative VVD.

Even though I would never think one second about voting on the VVD, it has always been a quite dignified and worthy party. A party that represented people with above average wealth, but of which the representatives did not seem to forget that they lived and worked in a world in which people took care for each other. A party also that brought forward good officials, responsible civil servants, as well as excellent aldermen and governmental representatives inside and outside The Netherlands (i.e. in the Europe forae).

However, that changed since the emergence of the rightwing populists in The Netherlands – initially represented by the murdered Pim Fortuyn with his “Livable Netherlands” movement and at a later stage his Lijst Pim Fortuyn – at the beginning of the 21st Century.

Suddenly the VVD felt like a party that was overtaken at the right flank by the populists, whose real “moment of glory” came with the initially unstoppable rise of Geert Wilders and his Party for Freedom: a former member of parliament for the VVD.  

Since then, the VVD has been torn between its more centrist leaders, who see the VVD as a broad, centrist ‘people’s party’, that brought numerous decent government officials in the past, and the people in the party who wanted to follow the footsteps of the populists closely, in order to not loose more votes to them. 

Especially during the heyday of Geert Wilders the voices of the right-wing semi-populists within the VVD started to sound louder and louder. The choice between these two parts of the party was in fact an impossible choice. Simply, because both goals  being a moderate liberal-conservative party vs a semi-populist, very conservative party  can hardly be combined under one roof, unless at least one share of the party members gives in to its goals and values.

This conundrum might explain the surprisingly quick, but nevertheless enduring success of party leader Mark Rutte, who came into power in 2006 as fraction leader and political chief and stayed at the top without ‘wearing out’ too much, in spite of already three periods as Prime Minister.

Mark Rutte is a thoroughbred bridge builder, seemingly without an own face or opinion, and an excellent manager, who can keep everybody more or less happy and can follow the agenda of the greatest common devisor, until the end of the cabinet period.

In a centre-rightwing cabinet with the Christian-Democrat CDA and the Party for Freedom, he followed the rightwing agenda with initially enough keystones to keep Geert Wilders and his extreme-rightwing party happy.

In the “leftwing-ish” cabinet with the social-democrat PvdA, he built up very good personal relations with his vice-PM Lodewijk Asscher, as well as a very tight and structured agenda, that he followed to a T. Therefore Rutte kept the cabinet afloat for the whole five year period, in the longest stint for a Dutch cabinet since the Second World War.

And at the end of every cabinet period with him at the helm, all the participating other parties suffered substantial losses in the national elections, but Rutte always survived with unchallenged confidence and his signature “stainless steel grin” glued to his face: the undisputed winner of the elections.  

These substantial losses of the popular vote happened to the CDA and especially to the PvdA (this party was almost annihilated in the last elections), but to a much lesser degree to the VVD itself: the party also suffered losses, but remained the largest party by far.

Therefore one could see Mark Rutte as a textbook example of a good leader and an excellent manager. Even I have to give him that.

The only thing that should bother his voters, however, is for what Mark Rutte himself stands in the elections. 

Mark Rutte has made so many statements and promises in the past that were either blatant lies or that he knew in advance he could not keep that people don’t have an idea what is the truth with him and what not. And he was also political friends with so many people with so many 180 degree different opinions, that he seems without any form of spine or conscience.

His greatest strenght is therefore also his greatest pitfall: he can be friends with anybody and seemingly never draws the line of decency, that other politicians would have drawn in the same situation.

This habit of the PM has not been bad per sé for the VVD as a party (i.e. in sheer number of voters, compared with the other parties), but the consequence is that the VVD is still a “schizophrenic” party with two incompatible sides in it, that might fall apart as soon as the leadership changes.

In my humble opinion, it must be worrisome for the more moderate (i.e. liberal) members of the party and for a list of decent ex-politicians, like Erica Terpstra, Frans Weisglas, Ed Nijpels, Joris Voorhoeve and Pieter Winsemius, that their party has turned into a hotbed for increasingly radical and populist politicians, with a very self-interested view on the world.

These politicians steer the party in a more and more conservative, even xenophobic and anti-European direction, in order to not lose track to the PVV and to the also extreme-rightwing and xenophobic Forum for Democracy of the ‘new political talent’, Thierry Baudet.

Compassion with the less fortunate people in society, with the goals and foundations of the European Union and with the necessity for a fair tax payment for rich people and (large) companies have been exchanged for a “me first” politics. And Mark Rutte remained ‘on course’ as the perfect manager and never raised his voice to clearly draw the line, in order to stop this more and more conservative direction.

This is the reason that I – as a social-democrat person with respect for some past politicians of the VVD – think that it is time for the other leaders and pundits within the VVD to draw the line for Rutte in 2018:
  • either become more conservative, more anti-EU and selfish in your vision for the future and loose the other members of the party;
  • or again become the broad, liberal party with a great tradition of very good, moderate officials and leaders. A party that encloses all people and also encloses the European Union concept and the need for cooperation in Europe with respect to the global challenges of this time.

The latter undoubtedly means that the conservative and populist voters and politicians within the VVD will leave the party disappointed. But you really can’t have it all, even though the contrary seems to be true at this moment.

In my vision, Mark Rutte, in spite of his chameleontic characteristics and his excellent management skills, is not the leader that the VVD needs for the future. 

Too long he has held the party hostage with his failure to choose a sustainable road for the future and with his lack of choice for the party that he wants to lead.

The rumours of Mark Rutte aiming for an important position in the European Union are enduring, in spite of his categorical denial of these rumours. 

Nevertheless, his excellent management skills would make him a very good follow-up for current president of the European Council, Donald Tusk (i.e. “the other Donald”) and he did not make many enemies in Europe. 

On top of that, Rutte would be an excellent guy to keep up the good old Atlantic connection with the United Kingdom and the US, in spite of the Brexit.

After he would have left national politics in The Netherlands, it would give the VVD the time for a very thorough cleansing within the leadership and directions of the party. 

There have been simply too many scandals and too many politicians in distress within the VVD. This can’t go on and this should not go on! And then the VVD can finally make the important choice to become the party that they really want to be! 

So they can finally throw off the veil of nihilism that has covered the party since the beginning of the 21st Century!

Thursday, 28 December 2017

2018 should be year in which we throw away the shackles of fear and anger that keep us locked and just start to live with each other again, like we always did.

Fear is the path to the dark side.
Fear leads to anger. Anger leads to hate.
Hate leads to suffering…

Star Wars 1- The Phantom Menace was far from the best film in the Star Wars series. This was due to the fact that George Lucas paid so much for his computer equipment and computer artists, in order to develop all these extraterrestial cities, vehicles and creatures, that he had to save money otherwise spent on a real good script.

Nevertheless, the aforementioned quote by the wise Jedi Master Yoda in the movie, is spot on. How spot on it is, can be seen on a daily basis. 

People all over the world, often under the “inspired leadership” of their governments, are talking each other deep into a depression, based upon fear, anger and resentment against other groups of people: 
  • Fear for poverty and for losing their current lifestyle, caused by others;
  • Fear for an unbalanced budget and for “squandering tax money” on wasted social security;
  • Fear to lose one’s wealth, due to national taxes;
  • Fear that the multinational corporations either leave one's country or don’t want to establish themselves overthere;
  • Fear to lose the euro due to the Greek and Italian mountain of debt;
  • Fear to lose the battle for economic prosperity to the Chinese and Indian people;
  • Fear for the radical islam;
  • Fear for terrorism on people's home turf;
  • Fear that normal people might grow bad ideas regarding the government;
  • Fear for unfavourable climate change AND fear that saving the climate might come at the expense of the economy's health ;
  • Fear that someone else might have it better than ourselves.
In other words: there is a lot of fear in modern societies. A whole lot of fear… And that the fear leads to anger and resentment (even hatred) is also crystal clear. 

The leadership of for instance American president Donald Trump is largely based on fearmongering and protecting himself and his rich friends from dangers that are not really palpable, but attend to feelings of insecurity in American society.

In the process he makes promises to the average middle and lower class Americans that he won’t keep, while his promises to his wealthy friends and especially himself are rocksolid.

The same is true for the presidencies of Vladimir Putin in Russia and Xi Jinping in China. 

Both are extremely afraid for the forces in society that could end their presidency untimely, while at the same time they are robbing society from the money that it earned and deserved... Therefore they are using every trick in the book (and outside the book) to prevent anything – aimed against their position  from happening.

And even in the more moderate Europe a lot of decisions have been fear-based... 

Take the Brexit, which was based on fearmongering and longing for a imaginative situation, that in reality has never existed. Or take the South- and East-European leaders with their outrageous fear for the islamist immigrants and the societal unrest coming from dissidents within their own country.

They are closely followed by the cowardice and ignorant North- and West-European leaders, who are willingly shutting their eyes towards the deteriorating situation in Greece and Italy; countries which “have to keep their own pants up” (i.e. Dutch expression).

“Keeping the budget clean and being frugal” is their eternal mantra that should prevent the Northern and Western countries from showing a human face towards the countries that saved them from the “refugee influx”: Spain, Italy, Greece and Turkey. "Pity is good, as long as it doesn't cost us money!"

All of this is fear in disguise. And just like in the Star Wars movie, this fear leads to anger and – if we don’t look out very carefully – to hate and suffering. Just like it did during World War 1 and 2 and during the numerous other wars that have been fought in the meantime.

Would it not be great when we could simply stop being afraid for all these useless fears?! And start to care for the things that are really important?

Personally, I don’t give a rat’s behind whether the headoffice of Shell and other (paper) headoffices would leave The Netherlands. We have already been too long taken hostage by these companies with their demands and lobby for customized regulation, that is eventually bad for the country; not good!  

The climate and the heating of the earth, however, decide whether my beloved city Almere will be threatened by the rising tides of the 21st Century. That would be a real threat for my wife and me and (especially) for my children and future grandchildren.

And the increasingly erratic behaviour of our world leaders is also a direct threat for world peace: after the devastating explosion happened, it is not so important anymore what caused the fatal spark. Now, however, it is important to prevent this spark from setting everything on fire.

Mass immigration, even though an important theme for the future, is never the fatal ingredient for riots and civil war to these eyes and especially not in the current situation with moderate immigration.

Look at for instance Jordan and Turkey and decide how much these countries are destabilized by the influx of the millions of refugees that they received. And then think how much the tens of thousands of refugees could destabilize Europe. You can do the math…

To name an important cause for the current fear in society and at the same time debunk its influence: islamic – or other kinds of – terrorism are painful and cruel for a country, but not a fatal cause of revolts either.

Look for instance at the United States, where domestic violence and even ‘involuntary manslaughter’ by toddlers(!), are causings many more deaths than (islamic) terrorism in 2017. If you are afraid to be killed in an attack, please be careful for your husband, your wife and your children. And for your own gun, of course!. As this is the sad truth in the United States.

Yet, worldwide governments are starting to treat all their citizens as possible suspects of dangerous crimes. People that need to be closely monitored by street cameras, eavesdropping of telephone, mobile channels and the internet, as well as all other kinds of vigilant pursuit.

Citizens are not trusted as good people that can be mostly left alone without governmental hindrance. 

No, they are seen as theoretically bad people that must be closely followed to prevent bad plans from happening. And the worst thing is: when intelligent and angry people have really bad plans, the governmental agents are in some cases not in time to stop them from fullfilling their plans. 

And after every (extremely rare) successful attack, the need for more vigilant pursuit is expressed by attention-hungry politicians, useless as it is to stop all bad things from happening. Thus millions of good people have to suffer for a few bad people, by losing their privacy and everything that is dear to them "for the greater good", which is bad in fact.

Let 2018 be the year in which the trust in each other returns. The year in which we take societal risks for what they are: sometimes dangerous, but seldomly fatal for society. 

The year in which we disclose populists and cynical demogogues for what they are: pathetic parasites that feed upon other people’s fear and misery in their daily cries for attention.

I know a lot of people, but I know very few really bad people. They do exist and they can be dangerous for myself and my loved ones. 

But probably the most dangerous people are politicians who see everywhere enemies of the country and who think they have the solution for every problem.  

They are people who are willing to sacrifice everything – except for themselves and their loved ones – for their ideas and solutions. Especially when they think that everyone, who does not agree with them, is a potential enemy of the country. We know already where this leads, as we saw this film before...

So let’s celebrate 2018 as the year of the return of common sense and friendship: in politics and in our daily lives. 

Let us have that, instead of hostility between people. Let us throw away the shackles of fear and anger that keep us locked up in ourselves and our self-destructive ideas. The pied pipers of fear will not guide the way to more prosperity and happiness. 

Life is beautiful and we should spend the short time that we are around on this earth to create things of beauty and joy for each other. Let us not spend our lifetimes in fear and anger, but in joy and amazement. 

That is my wish for the new year 2018.