Volkswagen shares bonuses among employees, caps them for top management

We like the German model.

Volkswagen is has just announced that it's doing something rather good - splitting bonuses between employees. It is giving everyone a a bonus of 7,200 euros for 2011, after the company posted strong profits.

"The bonus payment is hard-won and deserved, it's justified that employees participate in the company's success," board member Horst Neumann told Fox News.

Interestingly, this follows news that it will cap the bonuses of top managers, reported in the Wall Street Journal on Friday:

The company added that it had moved to cap the compensation of its top managers, deciding to pay bonuses only in years that Volkswagen's annual operating profit exceeds €5 billion. For 2012 and 2013, it added Mr. Winterkorn's bonus would be capped at €6.75 million, while bonuses for other top managers would be limited to €2.5 million.

..which went along with a 20 per cent pay cut for their CEO.

If this is the German model I like it.

Photograph: Getty Images
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The economic slowdown is another reason Theresa May called an early election

The Prime Minister has gone to the country before the living standards squeeze becomes too strong.

The recession that the Treasury and others forecast would follow the EU referendum never came. But we now have the clearest evidence yet of an economic slowdown. In the first quarter of 2017, GDP grew by just 0.3 per cent, down from 0.7 per cent in the previous three months and the slowest rate since the beginning of 2016.

For individuals, growth is now almost non-existent. GDP per capita rose by 0.1 per cent, continuing the worst living standards recovery on record. As the Resolution Foundation noted, GDP per capita is just 1.7 per cent above pre-crisis levels, compared to 16.3 per cent after the '90s recession and 24.5 per cent following the '80s recession. Higher inflation (owing to the pound's depreciation) and stagnant pay are hindering Britain's main source of growth: consumption (which accounted for 100 per cent of per capita growth in 2016).

As I recently noted in my column, the economic slowdown was another reason for Theresa May to call an early general election. A renewed living standards squeeze has begun but it is too early for much political damage to result.

It was precisely to deny prime ministers the chance to call an election at the most favourable moment that many argued for the introduction of fixed-term parliaments. Labour had little choice but to constent (though some argue Jeremy Corbyn should have forced Theresa May to hold a vote of no confidence). But today's figures will be cited as evidence of why future prime ministers should not be allowed to repeat May's trick.

George Eaton is political editor of the New Statesman.

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