Tag Archives: financial crisis

Presidents and Paupers II: How much do CEE presidents earn?

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?

gasparovic_basescu

The rich and the poor

For this post I collected data on presidential salaries including lump sums that are paid on a monthly basis without being designated for a specific function. The numbers presented below are however exclusive of benefits such as housing, allowances for hiring personal staff, use of cars/planes etc. The former type of benefits varies greatly between countries and these benefits are very difficult to compare (especially when one also includes allowances for spouses). However, one can say that in general those presidents who earn more also receive more additional benefits. Unfortunately, this does not apply to pensions. All data – except salary of Czech president Zeman – relates to the last quarter of 2012.

presidential salaries & average income_bar chart_newThe bar chart shows that in absolute terms Slovak president Ivan Gasparovic is the top earner among the Central and East European presidents. With currently € 9,172 per month Gasparovic receives almost six times more than his Romanian counterpart Traian Basescu (who earns a meagre € 1,529). Even though the differences in the national gross average monthly income are not as large, they are still visible. Slovenia is front-runner with € 1,546 while Bulgaria trails behind with less than a quarter (€ 384). The average presidential monthly salary is € 5,118, the gross average monthly income in Central and Eastern Europe is € 776.

Presidential salaries in perspective

When setting presidential salaries in perspective, the national average income is obviously the best reference value. When ranking presidential salaries as % of the national average income the order changes (although only the Slovenian and the Bulgarian president jump several places). Front-runner is once again Slovak president Ivan Gasparovic who earns 1167% of the national average income (although he now has to share the first place with Lithuania’s Dalia Grybauskaite) and Romanian president Basescu, too, remains in his [last] place with his salary being only 335% of the national average income. Although in fourth place in the absolute ranking, Slovenian president Borut Pahor is now in the second last place – his otherwise upper-midrange salary (€ 5,419) is only 3.51 times more than the national average. On the other hand, while Bulgarian president Plevneliev’s € 2,356 is less than half of his counterparts’ average income, it is still 614% of what his fellow citizens earn. On average, CEE presidents earn 667% of the national gross average income.

Presidential salaries as % of national average income_newBoth bar charts do not necessarily suggest that a higher presidential salary is a function of a higher national gross average salary. Nevertheless, the scatter plot below shows that there is still a weak positive correlation (R=0.4187) between presidential salaries and the average income of their voters. Slovenia is the clear outlier – even before the 17% salary cut, the president earned considerably less than one could have expected from the national gross average income.

presidential salaries_scatterplot_new

What about power and elections?

Another interesting point of comparison for presidential salaries are presidents’ actual powers and their mode of election. To start with the latter: popularly elected presidents earn more than their indirectly elected counterparts. While the popularly elected heads of state in CEE earned € 5,375 (680% of the national average income), indirectly elected presidents earned € 4,519 (608% of the national average). Of course, there are only three indirectly elected presidents in the sample and the average would have looked a little different half a year ago when Vaclav Klaus was still the (indirectly elected) Czech president and earned up to €12,715 a month.

Looking a the relation between presidents’ powers and their salary, there is no obvious direction. The correlation between the adjusted presidential salary (as % of national gross average income) and the score on Metcalf’s (2000) revised measurement scheme is only R=0.15.

presidential salaries and powers_new

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This post first appeared on presidentialactivism.com on 19 July 2013.

Presidents and Paupers I: How much do Western European presidents earn?

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?

Austrian president Heinz Fischer is the highest paid president in Western Europe (if you do not count the Chairman of the Swiss Confederate Presidency) | photo by GuentherZ via wikimedia commons

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).

Western european presidents_absolute annual salary_presidentialactivism.com_

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.

Western european presidents_relative annual salary

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.

Western european presidents_scatterplot

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.

***Sources (click on the country names)***
*AustriaFinlandFranceGermanyGreeceIcelandIrelandItalyMaltaPortugalSwitzerland*

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This post first appeared on presidentialactivism.com on 1 August 2013.