With issues of cost of living, austerity and economic inequality making a comeback in New Zealand politics, there is likely to be an increasing focus on the incomes of this country’s super-wealthy and on the question of whether such people are also ‘suffering’ or prospering during these austerity times. In this regard, two recent newspaper reports provide conflicting evidence on the plight of CEOs. Jennie McManus, a very business-friendly journalist reports on Stuff that ‘Kiwi CEO salaries have been hammered harder by the recession than those of general staff’, while Christopher Adams says in the NZ Herald that the average pay of the bosses rose by an average of 14% last year. This blog post unpacks some of the figures and claims. [Read more below]
But is the austerity of the rich really true? After all, according to Statistics New Zealand, the average wage increase for all New Zealanders in 2010 was only 1.7%. (And the CPI rose 4.5% during this period).
A more insightful article by Christopher Adams was published in the Herald a few weeks ago, and gives some very different data on CEO pay trends. The article – Pay rises for bosses surge ahead of ordinary Kiwis – reported that, in contrast to the 1.7% increase figure for all New Zealanders, and in contrast to McManus’ figure of CEO’s only getting 1.5%, the Herald’s survey found that there had been a 14% average pay rise for bosses. This is based on the Herald surveying the bosses of the top 47 biggest listed firms and state-owned enterprises.
The average pay of these super-wealthy CEOs was $1.6 million (up from $1.4 million in 2009). The fast-rising upward trends are indicated in the article: ten years ago, there was only one ‘million-dollar man’ amongst CEOs, but now there are dozens. The new delineator threshold amongst them is now the $5m income mark, of which four CEOs now qualify: ‘Westpac New Zealand's George Frazis, Nuplex's John Hirst, Fonterra's Andrew Ferrier and [Paul] Reynolds’ of Telecom. The year before, only one CEO earned over $5m.
And apparently ‘Each of them earned in a single week more than twice what a worker earning $40,000 annually made over the entire 12-month period’. This partly shows why the issue of economic inequality is starting to arise in politics – the income gap between rich and poor is getting rather large.