Turbocharged. Unlike the euro economy. Photographer: Jin Lee/Bloomberg
Turbocharged. Unlike the euro economy. Photographer: Jin Lee/Bloomberg

How successfully is the European Central Bank's policy of curtailing borrowing costs filtering into the broader economy? A dig into the numbers for German automaker BMW AG suggests not so well -- and that bodes ill for efforts to engineer a consumer-led recovery in the euro area.

BMW this week borrowed 1 billion euros ($1.32 billion) for four years in the bond market, on which it will pay an annual interest rate of just 0.5 percent. Across all of its debts, BMW pays a weighted average coupon of 2.76 percent, down from almost 4 percent two years ago, according to data compiled by Bloomberg. So who has benefitted most from the cheap money the ECB has bestowed upon the region?

Income Inequality

Not potential employees who fancy working for BMW, that's for sure. Since 2004, BMW has added just 5,000 workers, an increase of not much more than 4 percent in a decade:

Nor are the earnings of those who are employed rising by much. The pace of annual salary increases in Germany has averaged about 2.3 percent each quarter in the past decade, and that's before accounting for an average inflation rate of 1.6 percent in the same period. No wonder the Bundesbank has bemoaned the lack of wage growth.

What BMW has done very successfully, though, is to squeeze more out of its workforce. The company's sales per employee have grown by a staggering 64 percent since 2004:

So it shouldn’t come as any surprise that the biggest winners from the monetary backdrop in which BMW is operating are its shareholders, who've seen the company's market value soar by a stratospheric 149 percent in the same period:

There's no suggestion that BMW is doing anything wrong. Making more revenue for every worker on the payroll should be the aim of every company. And in an era of almost free money, it makes sense to extend your repayment dates as far into the future as you can, at the cheapest interest rates investors are willing to offer.

The numbers, though, reinforce at least part of the income-inequality argument made by Thomas Piketty in his bestseller "Capital in the Twenty-First Century." They also highlight how hard the ECB's job is, when most of the benefits of its accommodative policies seem to be accruing to capital, rather than labor.

To contact the author of this article: Mark Gilbert at magilbert@bloomberg.net.

To contact the editor responsible for this article: Marc Champion at mchampion7@bloomberg.net.