Ibex35 Firms’ Top Managers Earn On Average 207 Times Companies’ Minimum Wage

Ibex 35 indexIbex35

The difference between top managers’ salaries in Ibex-35 companies and the lowest salaries in these same firms is on average 207 times, which shows the salary gap in Spain is increasing. This is one of the conclusions from the report “Abysmal differences: the role of the Ibex-35 companies in inequality“, in which Oxfam Intermón has claimed that specific practices carried out by these companies, in terms of salaries and taxes, have a direct impact on the current global inequality crisis.

The three firms where there is the greatest difference between the top managers’ remuneration and that of the lowest paid employees are Banco Popular, Ferrovial and Inditex. There is also a significant gap between the top salaries and the average wage: a top executive earns 112 times the average salary in his company. These differences would be even  more serious if we took into account the salaries of the multi-service companies hired by the Ibex-35 participants.

In light of the figures published by the companies themselves, we can see that the salary inequality for the Ibex-35 firms as a whole is on the rise. These are the figures: between 2014 and 2016, top salaries rose 40%. Between 2015 and 2016 alone, the rise was 15%, with the average top executive’s salary standing at 4,2 million euros. Meanwhile, the average salary only rose 0.3%.

With combined revenues equivalent to 42% of GDP, and a total of over 1.5 million people on their workforces, the policies and practices of the Ibex-35 firms have a “clear impact” for the rest of the Spanish economy. Oxfam Intermón managing director, José María Vera, says:

“They are a reference for many companies, in particular as far as wage policies go. The enormous gap which these figures demonstrate brings with it a direct impact on inequality, with serious social and economic consequences for society.”

Multi-service agencies or externalising inequality

Another factor which fuels greater economic inequality is the externalisation of services carried out by these companies. In this sense, the wage inequality outlined above would be even greater, given that the Ibex-35 firms don’t provide information on the employees who are sub-contracted by those agencies known as multi-service, who are normally worse off in terms of salary and trade union representation.

Oxfam Intermón’s Vera says:

Externalisation via these companies is a practice which is extended amongst 90% of Spanish firms, with revenue volume in excess of 12 million euros. For that reason, regulating these type of companies is a matter of urgency to ensure their employees have the same level of pay as those of the client company, and never below that included in the sector wage agreement.”

In order to reduce and ease the effect of this inequality gap, the organisation is asking companies and the government to raise the minimum inter-professional wage by 13% in 2018, with the aim of boosting this to 1.000 euros by the end of the legislature. So looking ahead to guaranteeing greater salary equality, Oxfam Intermón recommends establishing an approximate scale of 1:20. In other words, that the fixed part of the highest salary is not more than 20 times the lowest salary.

A lack of transparency in gender terms

With regard to the salary gap between men and women at the heart of the Ibex-35, the companies don’t provide enough details to allow for an in-depth analysis. The data available shows that women make up 40% of the workforce, but only 20% have executive posts.

The report also analyses the tax practices of the Ibex-35 firms and how they have a direct impact on inequality. All the companies in the index with one exception, Aena, have a presence in tax havens. The number of subsidiaries in those locations almost reached 1,000 (996) in 2016.

Between 2009 and 2016, on average 103 new subsidiaries have been set up annually, or in other words one new one every three days. In Vera’s opinion:

“This is a persistent rate. And it shows the companies’ intention of continuing to use these locations, which clearly supports the current inequality crisis, as they provide a way of reducing the tax contribution to a minimum.”

The report reflects a new trend here: in 2016, the total number of subsidiaries fell by 22, a drop of 2.2% with respect to the record number of 1.018 in 2015.

Banco Santander leads the ranking for yet another year, with 225 subsidiaries, representing 23% of the total. ACS, with 108, and Repsol, with 93, are next in line. These last two have actually implemented plans to withdraw from tax havens, which has meant the number has declined this year.

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.