Health crisis: "exceptional" benefits for "a handful of companies"

Audio 04:15

Among the companies expected to make windfall profits this year are the four big US companies Google, Amazon, Facebook and Apple.

AFP / Denis Charlet

By: David Baché

10 mins

The coronavirus crisis has mainly benefited shareholders, believes a report published Thursday, September 10 by the NGO Oxfam: whether they have made significant profits or whether they themselves have suffered losses due to the health crisis, multinationals have this year made the choice to pay their shareholders more dividends than ever before.

The employees are the big losers, as well as the companies themselves, whose activities are sometimes directly threatened by this short-term strategy.


Quentin Parinello is in charge of tax justice and inequality issues at Oxfam France.


: In your last report, you show that a handful of multinationals recorded enormous profits during the health crisis linked to the coronavirus, profits higher even than their usual performances ...

Quentin Parinello: 

We show that thirty-two companies are expected to make around 109 billion dollars in windfall profits compared to their performance in recent years.

They are mainly American companies, so we find the Gafam (Google, Apple, Facebook, Amazon and Microsoft, Editor's note) but also companies like Walmart (mass distribution, USA, Editor's note), Nestlé (agri-food, Switzerland, Editor's note) , Merck (chemicals, Germany, NDLR) or Procter & Gamble (beauty and hygiene products, USA, NDLR).

And what did these groups do with these windfall profits?

Did they reinvest them in their activities?

No, the majority of these windfall profits should go to their shareholders.

It is estimated that they will return around 90% of these windfall profits to their shareholders.

And this policy is not trivial: it exacerbates inequalities.

In particular, it helps fuel the fortunes of rich billionaires.

The report calculated that the richest 25 billionaires in the world saw their wealth increase by $ 255 billion during the crisis.

To give you a very specific example, Jeff Bezos could, with the profits he made only during the crisis, pay a bonus of 105,000 dollars to all of his Amazon employees - there are approximately 875,000 employees. .

And he would still be as rich as before the coronavirus pandemic.

It is therefore a model that does not take the long term into account.

In the end, it is an economic model that is not sustainable since it favors short-termism.

These companies favor the redistribution of their profits to shareholders to the detriment of long-term investment, better sharing of wealth with their employees, and a transformation of their economic model to adapt to planetary limits and in the face of climate change.

Your report also sheds light on another phenomenon: companies which have had, for their part, half-mast results because of the coronavirus, still decide to pay large dividends to their shareholders.

Dividends far greater than their profits, and which are therefore paid at a loss!

Yes, it is ultimately the other side of what is called a two-tier economy.

With on the one hand, a handful of companies making exceptional profits and on the other hand companies which, to remain competitive, pay dividends to their shareholders at all costs, despite sluggish results.

There are French companies, but also European, Indian, Brazilian or South African.

And very often, these companies will dip into their reserves to be able to maintain dividends to their shareholders.

We have in particular the cases of Toyota, a Japanese company which distributed 200% of its profits made during the crisis, or of BASF, a German company which distributed 400% of its profits.

It is a global phenomenon, which does not exist only in France.

And these companies are not only pursuing this policy during the crisis, it is a long-term policy of placing the interests of the shareholder before that of the company.

It was shown last June in a report published in France that a quarter of CAC 40 companies paid more dividends than they had made profits over the past ten years!

This means that these companies draw on their reserves to pay their shareholders, and this is done to the detriment of a better sharing of wealth and to the detriment of an investment, in particular to transform their economic model and deal with climate change.

And this is obviously not just a French disease, it exists everywhere!

In particular, the report documented the example of three large private hospital groups in South Africa which, in the four years preceding the crisis, paid 163% of their profits to their shareholders.

And during the crisis, these private hospitals did not have enough means to pay for medical supplies to their staff!

So it is a very short-term view of the economy that ultimately threatens even the viability of these companies in the long term.

So, faced with these practices, what do you suggest?

There are two responses, an emergency response and a long-term response.

The emergency response is to condition all public aid to businesses as part of the recovery plan, because we cannot afford to restart the economy as before.

We must learn the lessons of the 2008 crisis, and condition aid to companies so that they take advantage of it to transform their economic model, so that they take advantage of it to reduce wage differentials and pay employees at their fair value.

The long-term response is the in-depth transformation of this economic model: to stop putting the shareholder before the company because that has serious consequences on the environment and on inequalities.

This observation, Oxfam is not the only organization to do so.

There is for example the European Commission which published a report last month which was alarmed by the economic short-termism and which said: over the last twenty-five years, European companies have quadrupled the share of their income. dedicated to shareholders, and this is a problem for the viability of companies.

So the European Commission also calls for reforming the economic model of companies and to stop with economic short-termism.


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