The outrageous salaries of Eurocrats

Olli Rehn

The European Commissioner for Economic and Monetary Affairs and the Euro, and vice president of the European Commission earns some €25,000 per month. That is Olli Rehn. And that is 40% more than the average salary in Spain, according to national official data and the International Monetary Fund, whose managing director Christine Lagarde receives one of the highest salaries among international bureaucrats, too.

Both Rehn and Lagarde have recently floated the idea that cutting 10% down wages in Spain would generate jobs against the country’s staggering unemployment rates. The IMF estimates, in fact, that such a strategy could make the main jobless rate fall by six or seven percentage points in the next three years from its current 26% level–which means that there are six million Spaniards who cannot find a job.

There is little doubt why in southern European countries an increasing sector of the population seem to feel uneasy or plainly reject policies coming from the European Union institutions.

The context in which some of the reforms are proposed is obviously unfair: commissioner Rehn, for instance, got his position by just being nominated by his political party and, moreover, will continue being paid between 40% and 65% of his base salary during three years even if he loses his job in June next year after the European Parliament elections take place and the Commission is renewed. This is supposed to support his transition back to the labour market, but other remunerations could be added because there are no incompatibility rules.

European commissioners and top officials can receive up to 70% of their salary when they retire, which in most cases translate into more than €10,000 per month. Those in office enjoy an extra compensation for their residence needs. The president of the European Commission, Jose Manuel Barroso, who also agrees lower Spanish salaries would reactivate the labour market, and Foreign Affairs commissioner Catherine Ashton, both earn more than €300,000 per year–more than German Chancellor Angela Merkel.

True enough, unless something is done, the IMF says unemployment in Spain will remain above the 25% mark during the next five years. President Mariano Rajoy’s government, on the contrary, believes its labour market reform only needs some months to prove it was the correct move and it will be efficient enough. And workers’ unions, exceptionally, back Rajoy.

In response to this wave of criticism, commissioner Rehn has opted for lashing at journalists, accusing them of seeking controversy but offering poor analysis. Coming from one of the strong men in Brussels, whose economic recovery plans have Europe still strangled after half a decade in crisis, that argument makes little sense.

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.

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