Companies such as Shell, Unilever and Ahold Delhaize made billions in profits last year. The multinationals mainly benefited from the higher prices. And that while consumers are suffering from the more expensive groceries and the high energy bill. Meanwhile, wages are lagging and workers are seeing their purchasing power evaporate.
An analysis by the trade union FNV shows that there is a big difference between the profit increase at the ten largest Dutch listed companies and the increase in their personnel costs.
Profits rose by an average of 14.5 percent more than wages between 2019 and 2022, the union concludes. “The research confirms our view that an increasing share goes to shareholders and a smaller share goes to workers,” says FNV chairman Tuur Elzinga.
The trade union conducted research into the financial results of ten non-financial listed companies with the largest employment in the Netherlands. These include KPN, Heineken and Randstad. It shows that their profits increased by 29.4 percent between 2019 and 2022, while sales increased by 21.9 percent. In the same period, personnel costs only increased by 15 percent.
“If rising profits led to higher wages, that would be great, but unfortunately we now see that the money flows out of the company to shareholders the same year. As a result, it is gone when the collective labor agreement negotiations start,” says Elzinga.
This outflow to shareholders seems to be one of the main reasons why wages have lagged earnings in recent decades. The ratio is becoming increasingly skewed, says the FNV chairman. “Especially important in this study is that this holds up even in times of crisis: pandemic, war, inflation, nothing seems to break profits. While our supporters can no longer pay their bills and are forced to strike.”
Shareholders own a company
So it seems that the mega profits are not going to the employees. “But it’s not that simple, it’s pure sentiment,” says stock market analyst Corné van Zeijl. “The funny thing is: what will the employee do, for example, if a certain listed company loses billions? Will they also lose wages?”
Van Zeijl further emphasizes that the shareholders own the company in this case. “And that means that they profit when a profit is made, but also lose out when there is a loss. It is not the case that extra money has to be given to the employees per se. If the butcher around the corner makes a big profit, it doesn’t happen automatically.”
‘Profit mainly used to invest and grow further’
According to Joost Schmets of the Vereniging van Effectenbezitters (VEB), it is not self-evident that the billions in profits will disappear into the pockets of the shareholders. “That is certainly not the case. They prefer to see the profit used to invest, so that the company can continue to grow.”
Schmets also says that multinationals also use the profits to strengthen their reserves or repay debts. “That way they get more meat on their bones.”
There is also the possibility that the money will be used for a merger or acquisition to further grow. “And if there is really too much money left over, a dividend is paid to shareholders, which is a percentage of the profit.”
‘Position of shareholders stronger’
Wim Dubbink, professor of business ethics at Tilburg University, sees that the position of shareholders has become stronger in recent decades. “Due to the internationalization of financial markets, companies can easily threaten to leave somewhere and move to another country. Governments are very sensitive to that argument, so taxes for companies are low,” he says. “In addition, shareholders are increasingly seen as owners, with the concept of ownership being explained in a one-dimensional way. An owner has all rights.”
But that does not mean that shareholders always fill their pockets when a company makes a profit. VEB spokesman Schmets cites navigation company TomTom as an example. “That company has indicated that the profit will be used to replenish the reserves. So no dividend will be paid and that will not make you popular as a company.”
‘Citizens got what they voted for’
Schmets goes on to say that shareholders benefit from a company doing well. “And that also means that they find it important that the employees are well taken care of.”
Professor Dubbink argues that most citizens got exactly what they voted for. “In recent decades, we have increasingly voted for political parties that support neoliberal capitalism. The result is a neoliberal society,” he says. “And countries that do oppose this, such as France, we always look at it with some pity. Do the French still not want to work until they are 67? Do they not understand that this is an unsustainable model?”