Cites wage deflation and freeze of CEOs' salaries the world over as reasons
A core group of the World Trade Organization’s (WTO’s) budgetary committee has shot down a demand from its director-general Pascal Lamy for a 30 per cent hike in his salary and other emoluments on the ground that it was not proper to raise such a demand at a time of wage deflation and a generalised freeze of salaries of the top CEOs, trade diplomats told Business Standard today.
Despite 50 million job losses and rapidly growing wage deflation due to the festering economic turmoil, the WTO director general pressed the budget committee to increase his current salary and emoluments of about half a million Swiss francs (a little less than $500,000) by over 130,000 Swiss francs (about $125,000).
Surprisingly, Lamy’s demand included only his salary and emoluments but not the Secretariat’s staff, said a trade envoy from a West European country.
“What is more disturbing is that the director-general makes such a demand when the world is going through a rough patch,” said a trade envoy from an industrialised country.
WTO has a staff of over 500 persons and is provided with an annual budget of about Swiss franc 160 million (over $150 million) through members’ contributions. Each member pays annually its contribution to the budget based on the country’s share in the global trade. Consequently, countries with largest share in the world trade like the US, Japan, Germany, China, France and Britain pay maximum contribution to the trade body’s overall budget.
During a meeting of the core group of the Budgetary committee which is headed by Sweden last week, the Secretariat’s proposal for an exclusive pay hike for its director-general came up for discussion.
The US, which is the largest contributor to the WTO’s budget, said it was unrealistic to consider a demand to increase the salary and the emoluments of the director general when many CEOs all over the world are forced to live with either steep salary cuts or a generalised freeze. A senior US official, who took part at the meeting, conveyed that Lamy was no exception and it was improper to raise his salary, trade diplomats said.
Several other industrialised countries such as Japan, Germany, Britain, and Australia said it was not an appropriate time to consider such a demand when the economic downturn is severe and bonuses for CEOs were being frozen in many countries.
In a separate development, India’s trade envoy Ambassador Ujal Singh Bhatia expressed concern on Monday that while the US “is at the epicentre of the global economic crisis, it is one of the countries least affected by the financial fallout in terms of currency depreciation, fall in equity markets and bond spreads.”
“Instead, it is several developing countries or countries in transition that are experiencing severe economic downturns,” he said.
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