Shareholders and directors of large companies benefit from significantly higher profits, staff much less | Economy

This is evident from a study by the FNV trade union into the financial results for 2023 of seventy listed companies on the Amsterdam stock exchange. Shell was left out of the study because the company is so large that it would largely determine the results.

The companies’ profits increased, while turnover remained the same. Employees did not benefit from this, the union said. Wages rose by 5 percent last year. “Profits are therefore growing twice as fast as wages,” says Petra Bolster, director of the FNV trade union. The research is a follow-up to an earlier study into the financial results of 49 listed companies. That study last year came to the same conclusion, profits are rising much faster than wages. As a result, employees are getting an increasingly smaller share of the pie.

The winners are the shareholders. In recent years, companies have increasingly paid out more to capital providers. They did this by giving more dividends, a profit distribution, and by purchasing their own shares. As a result, fewer shares are in circulation and earnings per share rise. That is good for the share price. These prices rose by an average of 24 percent last year.

The imbalance between profits and wages is not new. “Between 2019 and 2022, profits already increased by 36 percent. And last year another 11 percent was added,” says Tijmen de Vos, who conducted the research. This means that employees benefit less from economic growth than shareholders. Because shareholders have received 59 percent more payouts since 2019.

In recent years, wage increases have been significant to compensate for high inflation. This repair of purchasing power has still not been achieved everywhere. And De Vos points out that there is no real wage growth, meaning an improvement in purchasing power. “We are not yet back to pre-corona levels.”

However, it is only the employees who only marginally benefit from the rising profits. Remuneration for company directors increased by an average of 22 percent last year, twice as much as profit growth.

The research is limited to listed companies. But according to FNV it is representative of the entire Dutch business community. The profit growth is remarkable, because employers warn that the earning capacity of companies is not going well. Higher wages then threaten to become a millstone around the neck of companies. And that is bad news for employment, because companies perform less well if costs rise too quickly and they can no longer compete.

The previous research was criticized by the business community. Companies pointed out that much of the profit is made abroad. That is not the merit of the Dutch employees, so the profit increase cannot simply be linked to a wage increase for Dutch employees.

But that is not correct, according to De Vos. “The largest increase in profits takes place at companies with a lot of Dutch employment. Companies where more than half of the staff work in the Netherlands saw profits rise the fastest. Companies with less than 10 percent Dutch employment actually saw profits decline.”

Companies must take their social responsibility

Petra Bolster, FNV

The research shows that profit after tax increases more than profit before tax. This means that companies pay less tax on every euro of profit. That’s no good, says Bolster. “Companies must take their social responsibility.”

De Vos points out another point. If profits increase and sales remain the same, costs have decreased. However, this does not translate into lower prices for consumers, but into more profits. Companies did raise prices when inflation rose, but the falling prices are not passed on.

Bolster wants to use the results of the research in collective labor agreement negotiations. “Profits must be distributed fairly.”

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