Germany: BMW couples senior executives and workers’ wage increases

Herald Kruger, director of personnel at BMW, announced the news in an interview to the Frankfurter Allgemeine Sonntagszeitung on October 24, 2009. The carmaker, which never drew attention with high wages, decided to sync managers’ and workers’ bonuses. This should only affect the variable part of wages, i.e. profit sharing. The fixed and variable part based on individual performance won’t be affected. Until now, BMW calculated profit sharing based on several criteria but inside of every wage category. “We’re making remuneration fairer and more transparent; we’re currently working on it with out works council” explained Mr. Kruger, who thinks that the primary goal of this approach is to remove the feeling of injustice governing the bottom of the wage scale, based on a growing fracture between managers and workers’ wages. “Our goal is to establish a stable relationship. During difficult times, with less profit, the fracture can even get smaller: management is affected by a bigger loss of earning than workers on assembly lines.” At BMW, the ratio between the remuneration of a production worker (about €40,000 a year) and of a management member (about €1 million a year) is 1 to 25, and 1 to 38 when the salary of Norbert Reithofer, the CEO, is taken into account. This is pretty low compared with the CEOs of other businesses, like Josef Ackermann (Deutsche Bank – 1 to 349) or Martin Winterkorn (Volkswagen, 1 to 162). As Harald Kruger explained, the final system is still being discussed by BMW’s management and WC. No further information or introduction date have been mentioned.