French companies are paying over two-thirds of their profits to shareholders, investing just 5% in workers, according to new research by social analysis thinktank Basic and the French branch of Oxfam.
France is topping the international league when it comes to pay-outs to shareholders, claims the report, and the trend is growing. Whereas a decade ago companies paid out less than a third of profits in dividends, today it is more than two-thirds. If shareholder rewards had stayed at their 2009 level and the money put into raising salaries, each employee would be earning €2,000 more a year.
The top 40 businesses quoted on the Paris stock exchange, the CAC 40, paid out the equivalent of 67.5% of their profits to shareholders, leaving 27% for investment and just 5.3% for their employees, the report finds. And even some loss-making companies still pay out dividends.
In 2018, the CAC 40 announced record profits of over €93 billion. But much of the money went into shareholders’ pockets rather than benefitting the French economy through reinvestment.
French company profits have been on the increase since 2011. Yet investment has yet to return to 2010 levels. And CAC 40 companies have 20% more subsidiaries in tax havens than in 2008.
Furthermore, CEOs’ salaries have soared since 2009 to 119 times their employees’ average pay, with 54.5% of CEOs’ income linked to company share prices, giving them a vested interest in keeping shareholders happy. Consequently, the gap between CEO and average pay has widened, reaching a ratio of 1:119 in 2016.
The report’s authors hope the findings will reignite the debate about social inequality.