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A FUNNY thing happened on the way to the market. Under pressure from public opinion, the chief managers of the Dutch ABN Amro Bank cancelled plans this week to give themselves a pay rise of €100 000 per year (about R1.3m).
Now, ABN Amro is not just another bank. It is not only one of the biggest in the country; it is also fully owned by the state and was nationalised during the banking crisis which started in 2008 to prevent it from crashing.
As such, a law was passed in parliament to prohibit managers from getting huge bonuses, one of the reasons contributing to the crisis in the first place. To compensate, managers were permitted a higher salary, which then amounted to €700 000 (more than R9m) per year.
Since 2011, the managers have renounced pay rises – until last week. They had worked very hard, it was announced, and the rise was in recognition of this.
It elicited a public storm of protest. As part of the strategy to pull the bank together, thousands of employees were laid off and those who were allowed to stay on, had to agree to forgo pay rises.
It is clear that the bank managers totally misunderstood the public mood in this fairly egalitarian country. And, politics being what it is, political parties weighed in as well. Have the bankers learnt absolutely nothing from the big crisis, irate parliamentarians wanted to know.
When Minister of Finance Jeroen Dijsselbloem also postponed the promised privatisation of the bank as a punitive measure, ABN Amro caved in. The pay increases were annulled.
No need to pit capital against labour
Nevertheless, this episode gave rise to a new chapter in the public debate about economic systems. What direction should things take? Liberals support a limited state role (resulting in rich bankers looking out only for number one); socialists want a large state role (resulting in curtailed economic growth).
In this cacophony, the daily newspaper De Volkskrant published an article about a remarkable company which may illuminate a completely different approach. It is about Breman Installation Group, a concern with 38 enterprises in the Netherlands and 5 in Germany, employing about 1 500 people. The company specialises in installing central heating, toilets and bathrooms, and electrotechnics and solar panels.
Breman was one of the very few employers in Europe which managed not to lay off a single worker since the start of the crisis in 2008. You get a hint of their philosophy when you learn that their headquarters are located in the town of Genemuiden, deep in the Dutch Protestant Bible belt.
A cursory glance at Wikipedia shows that the town is strictly Calvinist, and this also shows in Breman's publications about itself on the internet.
According to Breman's web page, the concern was started in 1925 by Tijmen Breman as a bicycle repair shop. His five sons took it over in 1953 and expanded into all sorts of installation activities. In 1971 the oldest son, Reind, reformed the whole business management approach.
His basic point of departure was to reject the typical capitalist and socialist paradigm of capital and labour sitting on opposite sides of the table. While the five Breman brothers are the sole shareholders, the workers' representatives have equal say in the running of the company.
Furthermore, whenever the company shows a profit a large part is paid out to the workers, so that they share in the benefits. In good years, another portion of the profit is paid into a sort of war chest, to be kept for meagre times.
It was this war chest which enabled Bremans to prevent a single worker from being laid off. In other words, expertise and loyalty was preserved – and now that times are improving again, the company is in a better position than many of its competitors.
Risco Balkenende, chief manager of Bremans, told De Volkskrant: “Reind tried to overcome the antithesis between capital and labour.
"He wanted the possessor of capital and the worker not opposite each other, but next to each other. The provider of capital gets interest, the worker gets a salary, and if we share responsibility, we also share the profit, he thought. Why should the possessor have all say and not those who work with the possession?”
A better way of doing business
Reind Breman himself is quoted thus: “Capitalism fails, because it causes bad conduct. Just the shareholder counts. The real value of a company – the people who work there and their happiness, the care for those who cannot work – does not simply disappear.”
The Bremans approach is openly based on Christian social thought, as one might expect from its location in a strict Calvinist town where faith counts for a great deal. Of course, that philosophical background might not excite everybody, but even divorced from its religious roots there is much to say for the approach itself.
One thing which unbridled capitalism and communism have in common is that they both see the individual worker as an economic unit, instead of as an unique human being. There is nothing wrong with chasing profit; without it, a company goes bankrupt and nobody has a job.
The trick is to think further than your nose. It is not simply a question of how to maximise profits in the coming financial year, but how to keep on making money 20 years down the line.
A healthy company does not resemble ABN Amro, which is clearly led by people who think only of their own wallets. It is those kind of people who caused the 2008 crisis in the first place.
It would be a worthwhile exercise if Bremans Installation Group's approach could be studied widely.
* Leopold Scholtz is an independent political analyst who lives in Europe. Views expressed are his own.
