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ISSUE 62 page 3

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Bonus caps spread as last ditch fight by UK fails

 NEW RESTRICTIONS ON BONUSES IN THE BANKING sector are likely to come into force next year following an agreement between the European Parliament and Member State governments. Once again, as with the Financial Transactions Tax, the U.K. was isolated in resisting the new law but this time the provisions will apply across the EU as the decision was made by the weighted majority method. Bank employees will have a maximum possible bonus of twice their annual salary. However this will only apply at the top of the hierarchy, probably to about 300 to 500 ‘risk-takers’ at each large bank. There was more bad news for the high-rollers when Swiss voters backed curbs on pay throughout their corporations in a referendum. 68% were in favour of the ‘Minder initiative’ which applies beyond the banks to all corporations in Switzerland. It bans one-off extra payments when an executive joins or leaves a
Giegold, S.

years’ imprisonment.  A series of scandals has radicalised public opinion including a proposed 72 million Swiss franc (£50 million) payoff to a director of pharmaceutical firm Novartis. Shareholder-activist Brigitta
Moser-Harder said ‘The EU is already capping bankers’ bonuses and now the Swiss people has spoken very clearly as well’. 
There are also signs that the EU will extend its bonus curbs to  a wider swathe of the finance sector. Executives working in UCITS, a kind of investment fund, will have their bonuses restricted to a maximum equal to their salaries with 60% deferred and paid in the units of the fund that they manage. German Green MEP Sven Giegold commented ‘This will ensure a level playing field with the banking industry and reduce systemic risk by avoiding the bonus cap on banks from being circumvented’.

Sven Giegold MEP

company (‘golden hellos and goodbyes’), requires directors to be elected annually, and gives shareholders a binding say on pay, all backed up with criminal sanctions of up to three




Euro-parliament opposes EU budget as Barroso accused of complacency on austerity

WITH MOST EU MEMBER STATES CUTTING EXPENDITURE UNDER the continent-wide policy of austerity, the European Parliament hoped that some of the gap could be filled by European Commission funds, but the Council of Ministers had other ideas when they recently agreed a 3% cut in their contributions for 2014 to 2020. The parliament has now rejected this deal by 506 votes to 161 and given itself a mandate for negotiation with national governments without necessarily seeking to increase the €960 billion total. The first thing that it wants is for deficits from 2012 and 2013 to be covered so that bills are not unpaid. Secondly, MEPs are asking for flexibility between budget headings and, thirdly, they think that at least some of future budgets should be met by EU ‘own resources’ which could come from the new Financial Transactions Tax or earmarked V.A.T. They are particularly concerned about the culture and education programmes. Already, this year, the amount allocated for lifelong learning, including the ‘Leonardo’ programme which sends workers abroad, of €120 million has been described as the ‘bare minimum’ by a senior MEP. From 2014 the new ‘Erasmus for All’ heading which will incorporate a number of education programmes, has had its funding reduced by about 20% according to the European students' union despite EU leaders’ pledge that the budget for education and research would be protected.
Meanwhile Commission President José Manuel Barroso has been criticised for a letter that he sent to Member States imploring them to continue with austere economic policies. Socialists & Democrats group deputy leader Stephen Hughes condemned the letters as ‘complacency in the extreme’ and  recommended ‘radical measures’ to reverse “the economies of several countries...[that]...are heading in the wrong direction’.

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