Swedish minister: Public sector pay shouldn’t be benchmarked to private sector

Peter Norman is Sweden’s financial markets minister. He is reforming Sweden’s state pension schemes, known as the AP funds; cutting five funds into three. Despite a background in financial services, he is against benchmarking public sector pay to that of the private sector: FT reported on Monday:

Adding insult to injury for those working at the AP funds, whose jobs are now at risk, Mr Norman also wants to cut the salaries of those who will remain at the three buffer funds drastically.

He believes their salaries should not be benchmarked against private sector companies but against other public authorities, such as the central bank, where pay is far less generous. He does not buy the argument that this will result in a “brain drain”.

“Take SMHI, which delivers the [Swedish] weather forecasts,” he says. “Surely there is a weatherman in the US who is considered the best in the world and who earns an astronomical salary, but that doesn’t mean someone at SMHI should earn the same. We need discipline.” *

Benchmarking salaries in this way would cut the pay for AP staff in half, according to those inside the funds. “It is a tough pill to swallow,” says Mr Norman, who has spoken out against excessive pay in the financial industry frequently.