Challenge for Europe

The salaries of financial executives and directors of large firms have soared over the past two decades. It is no longer rare to see certain individuals gain the equivalent of centuries of work at the minimum wage level within a single year. According to some, these salaries are the price to pay in order to recruit exceptionally competent individuals. And yet, many studies have shown that there is no direct link between the salary of the director and the performance of their firm. Stated otherwise, the extravagant salaries of directors of large firms are not justified in economic terms. There is no economic or philosophical justification for current pay differentials.

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Post written by Gilles Raveaud: Economist, Lecturer at the Institute for European Studies (University of Paris 8 – Saint Denis), http://www.alternatives-economiques.fr/blogs/raveaud

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