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These German CEOs earn the biggest salaries compared to their workers

The CEO of HeidelbergCement earns 190 times the salary of his average employee - and he's not even the highest earning boss in Germany.

Published: 4 April 2017 11:43 CEST
These German CEOs earn the biggest salaries compared to their workers
Bernd Scheifele, CEO of HeidelbergCement. Photo: DPA

In 2016, CEOs at Germany’s biggest companies earned on average 93 times as much as regular employees, according to an analysis published by business newspaper Handelsblatt on Tuesday.

Bernd Scheifele, CEO of HeidelbergCement, was the boss with the most unequal relationship to his workers. Earning €8.4 million a year, Scheifele pocketed 190 times the average salary at the company, which stood at €44,300.

But the cement chief was far from the highest earner among the 30 leading companies on the DAX stock exchange. That prize went to Bill McDermott, CEO of software developer SAP, who raked in €14.3 million last year.

Nonetheless, due to the fact that employees at SAP earn well – on average €121,500 – the New York-born businessman “only” earned 118 times the wage of his average employee.

One salary discrepancy which is likely to stick in the craw of the average worker is that of Matthias Müller, CEO of Volkswagen since the dieselgate scandal erupted in 2015. Müller earned €10.1 million in 2016 – 170 times the average salary at the company, and the second highest discrepancy behind Scheifele.

The car manufacturer announced plans to axe 30,000 employees in 2016 in an attempt to restructure after it was caught deceiving US regulators on the nitrogen oxide emissions of its diesel engines.

In February VW pledged to cap its CEO's salary below €10 million.

SEE ALSO: These are the German regions where the economy is really booming

At the opposite end of the list is the boss of another tarnished German brand.

Deutsche Bank CEO John Cryan did not take a bonus payment to his salary of €4.7 million in 2016 and thereby earned 39 times the average income at the financial giant.

Deutsche Bank is engaged in a long struggle to free itself from thousands of legal cases worldwide relating to its past conduct, and in December agreed a $7.2-billion deal with the US Department of Justice relating to mortgage-backed securities trading in the run-up to the financial crisis.

At the same time, the bank is attempting a massive restructuring that will see it shift focus from global financial markets to traditional banking for businesses and households in Germany.

Trade unions have reacted angrily to the news that CEOs are still earning so much in relation to workers.

A joint statement published last week by employee committees from Siemens, BMW, Volkswagen, Daimlaer and other major firms said that “the relationship between employer and employee is out of kilter.”

The statement pointed out that CEO salaries had risen from an average of €5 million to €6.4 million in a decade, despite one of the biggest financial crises in decades.

Jörg Hofmann, head of the IG Metall union, told Handelsblatt that “practical regulations are urgently needed.”

Experience shows that “effective upper limits on salaries are only enforced when employee committees have a strong voice,” he added.

CEO salaries are likely to become a theme of September's national election.

The Social Democrats (SPD) are calling for a legal ratio of employer to employee salaries to be agreed upon with employer federations and unions.

With AFP

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Reader Question: Can I have a freelance side gig as an employee in Germany?

Going freelance in Germany - or even starting a side hustle - can be a rewarding and exciting challenge. But it can come with its own bureaucratic challenges. What are the rules around having a freelance gig if you already have a job?

Published: 30 April 2024 10:06 CEST
Updated: 30 April 2024 15:52 CEST
Reader Question: Can I have a freelance side gig as an employee in Germany?

Whether it’s to try out freelancing or simply to earn a bit of extra money, many people in Germany may have thought about trying out a side gig – or a nebenberufliche Tätigkeit – while they still have a job. It might be an especially attractive option for part-time workers looking to try out a new project as well.

Germany generally allows this, provided that your employment contract doesn’t prohibit it explicitly.

That’s why the first thing you should do if you’re thinking about starting a side hustle is to read your employment contract.

At first, you’re looking to see if side gigs are explicitly prohibited. If there’s no explicit mention of it being prohibited, the next thing to look for is whether you need to seek the company’s permission – possibly through their HR department – to take up your side gig. If you do, this will be explicitly spelled out in your contract.

Once you do that, you need to check and see whether your side gig falls under the Trade Act (Gewerbeordnung). If it does, you will have to apply for the corresponding business license. If it doesn’t, you can be classed as a Freiberufler – or freelancer – and won’t need a special licence to start your business.

You’ll need to do some homework on what kind of business you are – and you’ll need to register with the tax office. Photo: picture alliance/dpa/dpa-tmn | Benjamin Nolte

However in both cases, you will still have to register with your local tax office (Finanzamt). 

In Germany, some professions will require you to have a Befähigungsnachweis – “certificate of competence” – proving you have expertise in your area and are appropriately accredited. These include regulated trades like working as a financial advisor or real estate agent.

Other trades, like marketing services and hospitality, won’t need such a certificate, but you might still be classed as a Gewerbe – which brings some different rules with it. Those who belong to the so-called “new self-employed”, such as artists, writers and journalists, are Freiberufler and don’t need a trade licence.

READ ALSO: Everything you need to know about becoming a freelancer in Germany

Do I need extra insurance?

For your job as an employee, you already will have the necessary health, care and pension insurance – with your contributions from your income there getting taken off your payslip.

If you have a side gig, you remain insured through your main job and don’t need to take out additional insurance. Your contributions – based on the income from your main job – will remain the same.

This changes if your side hustle becomes your main hustle – measured by your working hours. As long as the number of working hours you spend on your side hustle amount to less than your main job, you don’t need extra insurance.

In most cases, having a side hustle in Germany won’t impact your health insurance eligibility or contributions. Photo: thirdman /Pexels

The exception to this is if you take on an employee who works more hours than a mini-jobber. Hiring a mini-jobber is still fine.

If your side hustle does become your main hustle and you’re publicly insured, you need to advise your Krankenkasse.

KSK: How creative freelancers can pay less for German health insurance

What income tax do I have to pay?

First up, Germany has a tax class basically designed for second jobs. It’s called Tax Class 6 and it exists alongside your other tax class. That means that the income from your main job will be taxed according to the rules of one of five different tax classes. Which one you belong to in this case depends on family variables like your marital status or whether you’re a single parent.

Tax class 6, however, doesn’t take any of these variables into account and exists only for your side income. As such, your main employment income will never be taxed according to tax class 6 and your side income won’t receive the breaks and credits that your main income will if you normally belong to a tax class that gives you any advantages.

Tax class 6 will apply to any income you earn on your side hustle above €538 a month. Anything you earn up to this amount though is exempt from additional tax.

It’s important to note that if you do earn more than the monthly €538 minimum on your side hustle and thus have income subject to Tax class 6, you’ll need to file a tax return.

EXPLAINED: What German tax class are you in?

Do I have to charge VAT?

If your side hustle is earning you €22,000 a year or less, you can class yourself as a “small firm” or Kleinunternehmer – and you don’t need to charge VAT on your invoices. This is also the case if you earn above this amount but your income is earned abroad or from foreign clients. 

If you earn above that amount and work with German clients, then you will need to charge VAT and submit VAT returns to the Finanzamt. There can be advantages in doing this though, as it’s through these returns that you can get VAT back that you spend on legitimate business expenses.

EXPLAINED: What are the best bank accounts in Germany for freelancers?

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