Germany's Social Democratic Party (SPD) just made a European Parliament self made millionaire its candidate for chancellor in the 2017 national elections.
The gentleman, Mr. Schulz, made the money as a EU politician.
First, let's back up a little
Germany's Social Democratic Party (SPD) has had a rough decade. While they formed the federal government around the 2000s with the Greens as their junior partner, things went downhill pretty quickly afterwards, making the SPD the junior partner in the next government 2005 to 2009 under the Christian Democrats/Christian Social Union (CDU/CSU) of Chancellor Merkel.
Another four years out of the federal government followed this "grand coalition", and since 2013, they have been in yet another one of these bland and politically suffocating administrations.
The SPD's share of votes declined over the past decades, from over 38.5% in 2002 to just under 26% in 2013. In comparison, the CDU/CSU, also with 38.5% in 2002, recovered from a 2009 dip to 33.8%, and garnered 41.5% in 2013.
After pushing throw social benefits reforms in the early 2000s, best described in the words of 1990s Bill Clinton as "ending social welfare as we know it", the SPD failed to gain substantially from the fall out of the 2008 crisis, and - together with the CDU/CSU - witnessed the recent rise of the "right populist' AfD.
Recent developments
Heading for 20% in the fall elections, the SPD called in Mr. Schulz, who resigned from his position as president of the EU parliament to take the job.
Mr. Schulz's first grand gesture in the new job was to waive the "transitional compensation package" he was entitled to upon departure.
And in a matter of a couple of months, polls gave the SPD a remarkable bump. Just a few days ago, it surpassed the previously seemingly unchallengable Ms. Merkel and her party in this poll with 31% to 30%.
But, in the upcoming edition of Der Spiegel, questionable compensation of Mr. Schulz's campaign manager surface. The gentleman was officially based in Brussels but worked almost exclusively from his home city of Berlin (273 days out of 365 in 2012). He nevertheless received a tax free foreign employment allowance of some 840 Euros a month plus travel expenses for the largely non-existent Brussels-Berlin commute.
The article also reports that another close co-worker was given a raise of 24 000 Euros by Mr. Schulz as president - odd, but apparently not illegal.
This is not the first time that Mr. Schulz his handling of compensation has been criticized. In 2014, for example, in the run up to EU elections, it was reported that he was paid (again. legally) a per diem of 304 Euros a day for 365 days/year, i.e. 110 000 Euros a year on top of other compensation. His slogan at the time?
"A Europe of the people. Not a Europe of the money."
Compensation of elected officials has been hotly debated - or not - in all democracies. If they get paid next to nothing, as in some places in the U.S., only wealthy people get to do politics.
If they get paid "too much", resentment follows.
European politicians typically uses the argument that they need to be compensated well in order to attract qualified people and to reduce the chances that special interest money will by favors.
To get there, various bodies have instituted interesting rules. A favorite approach found everywhere was to split pay into various components. Typically, there is a base compensation taxed like ordinary income, plus a number of fully or largely tax free lump sums and bonuses. The tax free lump sums are generally discretionary, meaning parliamentarians for not have to account what this money is being used for, or if it is spent on work related expenses at all. Generous benefits plus the best retirement packages anybody can ask for, round out the deal.
The German parliament managed to pull of a scoop by finally killing the periodic public debate: it granted itself automatic raises.
To state the obvious: minimum wage workers don't get those.
The self service system works so well because everybody gets a share. The per diem payments of the European parliament are a wonderful example.
Technically, members are only eligible for the 304 Euros or so on days when the parliament is in session and when the member physically attends a session.
But, what's good for the boss is good for the commoner: a TV investigation from 2012 showed members lining up on Friday morning to sign in and leaving immediately for the weekend in their home countries.
The sample shown in the youtube video includes members of all parties, left, right, green or not so green.
The European Parliament, unlike the Commission, used to be without real power. The parliament has been known to be a great alternative employment for family members (the daughter of a Bavarian prime minister), for people who fell out of favor or were unsuccessful in their country (make fun of UKIP's Farage for failing to get into Westminster all you want - he's getting more money from his EU pension than most us will ever have), or as an early retirement gig.
In this context, Mr. Schulz is typical.
Whether voters will forgive him or pick the Teflon like Ms. Merkel for yet another useless grand coalition will become clear in the next months.
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