Published August 1, 2014
Anna's 45th Editorial
It’s that time of year again, when everybody is talking about everybody else’s salary. “Did you see? Grímur Karl Sæmundsen [CEO of the Blue Lagoon] makes 6.2 million per month [645,000 USD per year],” someone will say. “Wow, Davíð Oddsson [Editor of daily newspaper Morgunblaðið and former Prime Minister and head of the Central Bank] makes 3,3 million per month [345,000 USD per year],” another will say. “Did you see how grossly underrepresented women are amongst the top earners?”
It might sound strange to foreign readers, but Icelanders’ salaries come under scrutiny every July, when income tax data becomes publicly available. A publication called Frjáls Verslun, for instance, has been printing extensive lists of well-known people and their salaries for nearly 20 years now. It’s their annual “Salary issue,” and it reportedly sells like hotcakes.
While it is uncomfortable for some to have their high salaries published, it is also undoubtedly embarrassing for others to have their low salaries made public, and it might have been a case of social justice when newspaper DV published the salary of Gylfi Ægisson, a musician known for his opposition to the Gay Pride parade. “Well Under Average,” the DV headline read. “Gylfi Ægisson, artist and musician, makes 87.078 ISK [9,000 USD per year].”
This is par for the course. What’s more interesting, however, is the fact that the numbers seem to betray a growing income inequality. “The salaries of the top 200 CEOs in the private sector increased on average by 300,000 ISK per month last year, from 2.3 million ISK per month to 2.6 million ISK. This is roughly a 13% increase—while the wage index increased by 5.7% from year to year,” according to Heimur, which publishes the aforementioned Frjáls Verslun. Reading this, I’m reminded of a recent memo published in the July/August issue of Politico magazine, in which American entrepreneur Nick Hanauer warned his “fellow zillionaires” that an uprising was on the horizon.
“No society can sustain this kind of rising inequality,” he wrote, referring to the growing divide between the haves and the have-nots in the States—the gap between the top 1%, who share roughly 20% of the national income, and the bottom 50%, who share just 12%. “In fact, there is no example in human history where wealth accumulated like this and the pitchforks didn’t eventually come out. You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It’s not if, it’s when.”
Here in Iceland the “the pitchforks” actually came, in the form of the Pots and Pans Revolution, after the financial collapse in 2008 when the actions of the top 1% caused the collapse of the economy. In the decade leading up to the crisis, there was a growing class divide, with the top 1% sharing nearly 20% of the national income in 2007, not far off from the 23% share enjoyed by the 1% in the States. “Iceland went from having one of the greatest income equalities amongst Western countries in 1995 to having one of the greatest income inequalities amongst Western countries in 2005-2007,” according to research by Stefán Ólafsson, a professor of sociology at the University of Iceland.
This great income inequality decreased significantly after the crash, with the top 1% enjoying only a 6-7% share of the national income by 2012, bringing us closer, but not quite back to level of equality that prevailed before 1995. This last year, however, it seems Iceland is headed in reverse and, as Heimur notes, “when you look at salary increases amongst CEOs and other top executives at companies, the question arises if everything is returning to the same madness as before.”
But will all of us, the employees, who took low wages after the crash so as not to bankrupt our companies, or even the country, as it was sometimes phrased, sit back this time?