Commotion emerged in the Netherlands in recent weeks on salaries and bonuses at large financial institutions, which ultimately even led to explanations by these institutions.
Three weeks ago the debate erupted due to a raise of salary for the board of the nationalized bank ABN Amro. There is a legal ban on bonuses for financial institutions that received state aid and hadn't repaid the aid completely. To compensate for this loss of income for employees, the law on bonuses gave space to an increase of fixed salaries once by up to 20 percent.
The decision to raise the board members' fixed salaries by 100,000 euros (about 106,000 U.S. dollars) was approved in June 2012 by the then Finance Minister Jan Kees de Jager. Nevertheless, in 2012 and 2013 the directors voluntarily decided to waive the salary increase.
Last year, the supervisory board of ABN Amro decided that the six board members would get the salary increase and current Finance Minister Jeroen Dijsselbloem was informed about this.
On March 20 this year, ABN Amro formally announced this salary increase, which triggered a storm of protest from customers and criticism in Dutch media.
"We should not exaggerate, the debate about salaries and bonuses of bankers is universal," Esther-Mirjam Sent, professor of Economic Theory and Policy at Radboud University in Nijmegen, told Xinhua. "But the discontent seems to be greater than in neighboring countries, not just because some Dutch banks were in the hands of the State."
"Basically Dutch society is an egalitarian society," Aljo Klamer, professor of the Economics of Arts and Culture at the Erasmus University Rotterdam, added to Xinhua. "Not only now, but for the last centuries."
The merchants who ruled the Dutch Republic in the 17th and 18th centuries were often extremely rich, but they did not show off, in fact they did their best to hide their richness, faced with "The Embarrassment" of it, as the title of Simon Schama's famous book suggests. Now and then the popular discontent, historically rooted in the Protestant ethic, will come to the surface.
"It comes down to a sense of proportion," Klamer added. "The differences between high and low incomes have never been that great. But since the nineties also in our country market thinking became increasingly dominant. Neo-liberalism has become dominant. The market determines. Pay for performance."
"Now that popular egalitarian feeling seems to have returned because of the anger about banking bonuses and salaries," Klamer continued.
"The old values and feelings of before the nineteen nineties have come back. But meanwhile, the differences in incomes have steadily grown. Politicians, who live in this society, and want to be re-elected follow the example of the popular anger."
"I see a shifting social norm," Klamer said. "You're not a big guy anymore, if you make more money. Actually it has moved the other way. You must be sick and out of you mind if you go for the highest reward."
Due to the lack of support for the bank and the worsened image Dijsselbloem even decided to postpone the planned IPO of the nationalized bank. He made a moral appeal to the ABN Amro board to drop the salary increase and after intensive discussions the commissioners did.
On Thursday in parliament, Dijsselbloem reacted by saying that he had told the ABN Amro board already last year "in the clearest and strongest terms" he did not find it prudent to increase salaries.
He had said he would find it an "unwise decision" and "harmful to the bank", but he could not stop it, because he could not change legislation retroactively. Dijsselbloem insisted that from now on, as long as ABN Amro is a state bank, a large increase of salaries is excluded.
The scheduled IPO is only postponed and not canceled, the minister stressed. He hopes that the IPO will happen "as soon as possible" and can still continue. Dijsselbloem added that despite everything he maintains confidence in the supervisory board of ABN.
At the invitation of the House of Representatives, members of the supervisory board of three large financial institutions (ABN Amro, ING bank and Aegon insurance) explained their bonus and salary policy in The Hague last Tuesday. They said they understood the commotion in the society, but also asked for understanding, because according to them, these salary increases were needed.
All these institutions claimed to work in international financial markets and this justified their remuneration policy.
ING commissioner Henk Breukink spoke of "undeniably high rewards" involved in attracting top executives.
Rik van Slingelandt, commissioner of ABN Amro, said his bank has to compete with other large (foreign) companies to attract capable administrators. However, he admitted having underestimated the reaction of the society. He should have known better maybe, also looking at Dutch history.