Presidential salaries – particularly during and after the European financial crisis – have been a hotly debated topic in a number of European republics and several office holders have voluntarily taken a pay cut. Last year, I wrote two blog posts about the earnings of Western and Central and Eastern European presidents or my old blog (presidentialactivism.com) which proved to be highly popular and generated some media attention. The posts which are reproduced here today and tomorrow try to answer the questions How much do presidents actually earn? Did the crisis have an impact on presidential salaries? And how do their earnings relate to other factors?
Presidents’ absolute salaries in comparison
Given different regulations about salaries, lump sums and other benefits it is difficult to establish universally how much presidents actually earn. For this post I tried to ascertain (accurately, I hope) presidents’ yearly gross annual income exclusive of benefits. However, I decided to include so-called 13th/14th salaries as these are part of the taxable income and many presidents were either entitled to receive those or were recently deprived of them (see more under the penultimate subheading). Although the national gross average income would certainly be easier to interpret as a point of reference, I had chosen the 2012 GDP per capita for the sake of reliability. I was also not able to find reliable data for Cyprus (please leave a link in the comment section if you know a reliable source).
The bar chart shows that there is a huge variety in presidents’ salaries in Western Europe. The top-earner is the Swiss Federal President, i.e. the chairperson of the seven-person collegiate presidency that is elected ‘President of the Confederation’. Members of the Federal Council receive €360,358 annually, the president receives an additional €9,735 (i.e. 370,093 annually). The runner-up and top earner among the ‘normal’ presidents – the Swiss-type collegiate presidency is worldwide unique – is the Austrian president. Current incumbent Heinz Fischer receives a gross annual salary of €328,188 which consists of 12 regular monthly salaries + two additional monthly salaries (not benefits) of €23,442 each. George Abela, the president of Malta,, on the other hand earns the least with just €56,310 and thus almost six times less than the Austrian counterpart. The average presidential gross annual salary is €191,149, the average GDP per capita (2012) is €30,860. There are only few presidents who earn a similar absolute gross yearly salary, although this looks different for relative yearly salaries.
Setting earnings into perspective
Absolute numbers are always present a somewhat distorted image in cross-country comparisons, which is why it is good to set presidents’ gross annual income into perspective. As mentioned above, I use the respective country’s GDP per capita from 2012 as a point for comparison.
There is a lot of change of positions when comparing absolute and relative gross annual income. While the Maltese presidents is still the lowest paid democratically elected head of state in Europe with 350% of the GDP per capita, previous front-runner Switzerland is with 606% of the GDP/capita only 12 percentage points above the Western European average. Greek president Karolos Papoulisas – in absolute earnings rather on the lower end of the spectrum – now finds himself in third position as his annual gross salary is more than eight times more than the GDP per capita (and this even though his salary had already been halved last year – more on this below). The top-earners in relative terms are by far the presidents of Italy and Austria. Their gross annual salary amounts to almost nine times more than the nominal GDP per capita.
The correlation between GDP per capita and presidential salaries is surprisingly high (R=0.8) and Switzerland is the only real outlier. The plot also shows that Finnish president Niinistö earned less than one could have expected from the GDP per capita – even before his salary cut.
The crisis and its consequences
The crisis has certainly taken its toll on presidential salaries in Western Europe as several presidents experienced a pay cut or voluntarily cut their own salary. French president Hollande cut his salary by 30%, Irish president Higgins voluntarily waived 23.5% of his salary, Finnish president Niinistö waived 20%. In Greece, parliament cut the president’s salary by 50% (and abolished a €6,240/month representational allowance) after president Papoulias had suggested it. Papoulias had previously already waived his salary for a whole year as well as his right to a 13th and 14th monthly salary. Cypriot president (who could not be included in this ranking because of missing data) also waived his additional monthly salaries and cut his salary by 25% after his predecessor had already seen a 20% salary cut.
On the other hand, German president Gauck and Austrian president Fischer recently saw an increase in their income. In 2012, Gauck’s gross yearly income went up from €199,000 to €217,000 while Fischer receives has a modest €411 more in his bank account every month since the beginning of this year (this increase also applies to his two additional monthly salaries so that overall the gross yearly income went up by €5,754). At least in the case of Germany, this increase should not be seen too controversial. The president’s earnings are still rather average (see also scatter plot above) and had not been increased for almost a decade (furthermore, the salary is indirectly tied to the income of federal clerks).
Powers and mode of election
With relation to presidential powers and the mode of presidential election, the results contrast those from Eastern Europe. Nevertheless, the absolute results depend on whether Switzerland is included or not. Directly elected presidents have a gross yearly income of €183,355 (573% of the GDP per capita), while indirectly elected presidents (Switzerland included) earn €202,061 (664%) and thus more in absolute and relative terms. However, if one excludes Switzerland (which might be sensible due to the exceptionalism of the Swiss collegiate presidency) the gross yearly income is only €160,511 (703% of GDP per capita) which in absolute numbers is less but significantly more in relative terms.
When it comes to the relationship between presidential powers (measures taken from Siaroff 2003) and presidential income the correlation is R=0.0002 and thus non-existent.
This post first appeared on presidentialactivism.com on 1 August 2013.