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Public sector salary ceiling will slash central bank chief's pay

Friday 30 November 2012

Central bank president Klaas Knot will have to hand in almost half his salary while the chairman of the financial services authority will lose more than half his when new rules on public sector pay come into effect.

The Volkskrant has researched the new legislation which will fix public sector pay at no more than the prime minister’s, plus pensions and other benefits.

This means around €228,000 will be the maximum anyone can earn in a public organisation. Knot currently earns €443,000 while AFM chairman Ronald Gerritse earns €510,000.

Phased out

High earners will be allowed to keep their original pay packets for four years, but it must then be brought back to the accepted level over three years.

Third on the Volkskrant’s list of high earners is Wander Blaauw of healthcare group Noorderbreedte, with an annual salary of €372,000. Fourth is air traffic control chief Paul Riemens on €358,000 and fifth, Wageningen university chief Aalt Dijkhuizen who earns €346,000.

The paper says it remains to be seen if officials on a permanent contract, such as Dijkhuizen, can be forced to hand back their salary. Knot is on a seven-year contract and would have to accept the lower pay level if he wants to renew this.

Best people

Banking professor Harald Bennink told the paper salaries in the financial sector are high in order to attract the best people. ‘If a good banker has to sell his house in order to work in the public sector something is wrong,’ Bennink said.

Finance minister Jeroen Dijsselbloem is due to update parliament on how he plans to apply the rules to the financial service chiefs. Both the central bank and AFM declined to comment on the Volkskrant’s report.

Former Shell chief executive Jeroen van der Veer told the paper it is right that public sector salaries are pegged to that of the prime minister. ‘For a quality system, the prime minister should earn double what he does now,’ Van der Veer said. ‘That gives space for the others to earn less.’

Is this the right way to tackle public sector pay? Have your say using the comment form below.

© DutchNews.nl


Readers' Comments

Jeroen v/d Veer is spot on. The Prime Minister here is the CEO of NL Inc. His employees should earn less than him. IF however you pay CEO a salary that is way below the market average for top talent, (and by definition underpay pretty much every single person in your company)the result is easy to predict: talent drains away, company get in trouble then failure.
The fact that the salaries themselves are very high here is an issue in itself but - as with footballers, baseball stars etc - a unilateral move to cut across the board simply puts you, you company, you team - or here your country - at a immediate disadvantage. Full stop.

By Stewart | 30 November 2012 9:05 AM

Lidl has at the moment Caviar on offer.

By Terence Halet | 30 November 2012 9:40 AM

Just ask real top talent Warren Buffet how much he is being paid. Top talent is oversold these days. Lots of fake ones around else please explain the huge screw up everywhere. Just ask real top talent Warren Buffet how much he is being paid. The gov here is really amazing. While gov in other countries are paying themselves obscene wages, the ones here are getting a humble pay.

By ufo | 30 November 2012 9:59 AM

Pay peanuts, get monkeys . . . Apart from the obvious contractual issues and potential lawsuits (which I can assure you are never ever cheap), if you do not pay top dollar, you will not attract top people and should not expect a top job !

By Peter | 30 November 2012 4:46 PM

€228,000 is an excellent salary. There is plenty of top talent patriotic enough to accept that salary and perform well.

By Chris V | 30 November 2012 6:49 PM

@ufo: Warren Buffet has a lot of capital gains from his investments. He's a financier who makes money out of investing.

Does Warren Buffet earn a living managing a Central Bank, a university or a health research institute? No. Do these Dutch official earn bonuses according to profits (!) they make? No.

So it is not an appropriate comparison.

By A.L. | 1 December 2012 1:49 AM

I am very glad to see this issue being properly addressed by our newly elected government. Finally!
A side note, I have worked in the semi-public and private sectors extensively. Most public employees, including top managment, are not capable of carrying the amount of responsibilty and actual work required by private functions. This is why they stay in the revolving public sector so long. They know, and we in the private sector know it. If they were ever 'top talent' they would already be in the private sector.

By paul | 1 December 2012 2:08 PM

@ Paul...please forgive my ignorance. What is the "semi-public sector"?

By Roy | 3 December 2012 2:36 PM

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