Christine Lagarde makes a poor central banker, ECB staff say 

FRANKFURT — On the global stage, European Central Bank President Christine Lagarde still exudes the air of an international rockstar of finance, but back home her records just won’t sell. 

Most participants in a trade union survey of ECB staff, seen by POLITICO, said they don’t think she’s the right person to head the ECB now, with 50.6 percent of respondents ranking her overall performance in the first half of her eight-year term as “very poor” or “poor.”

That’s a stark contrast to the glowing reports her predecessors Mario Draghi and Jean-Claude Trichet received in similar surveys at the end of their mandates. Less then one in 10 ranked Draghi “very poor” or “poor,” while 55 percent rated his performance “very good” or “outstanding.” Only 14.5 percent of respondents ranked Trichet as “very poor” or “poor.”

Comments in the survey, which included responses from 1,159 of the ECB’s roughly 4,500 staff, point to widespread unhappiness about her wading too deeply into politics and using the ECB to boost her personal agenda, which hasn’t helped the central bank’s reputation.

“Mario Draghi was there for the ECB while the ECB seems to be there for Christine Lagarde,” one staff member wrote. Several respondents suggested that the former French finance minister wanted to use the bank as a springboard back into politics.

An ECB spokesperson described the survey as flawed. “The President and the Board are fully focused on their mandate and have implemented policies to respond to unprecedented events in recent years such as the pandemic and wars,” she said.

Lack of focus

Only 38 percent of respondents backed the monetary policy decisions taken under Lagarde, with the rest split between those who disapproved and those who didn’t express a view. By contrast, Draghi enjoyed 64 percent approval at the end of his term.

In Lagarde’s defense, she has faced some formidable challenges, including a global pandemic and a war in Europe that combined to generate a historic surge in inflation across the globe. 

Worryingly, more than half of the survey participants said they were concerned that the ECB will not be able to deliver the return to price stability that it has promised. At 2.9 percent in December, eurozone inflation is well off its 10.6 percent peak but remains significantly above the 2 percent target. Further progress toward that goal is widely expected to slow this year.

In this environment, the ECB should focus on its primary mandate of bringing down inflation, staff said.

“The ECB has been focusing on topics beyond its mandate in a period where inflation was at the highest level in the EU history,” one staff member said. In addition to frequent interventions on topics like gender equality, several cited the ECB’s decision to take sides in the armed conflict between Israel and Hamas as a case in point, while others alleged excessive travel for purposes unrelated to the ECB’s core business.  

Despite the broad unhappiness, there was clear support for Lagarde in some areas. A majority backed her decision to include environmental protection in the ECB’s mandate, one of the defining initiatives of her presidency.

According to the ECB the survey “includes topics for which the Executive Board or Governing Council rather than solely the President is responsible and that are not within IPSO’s remit, and it seems that it could be filled in multiple times by the same person.” Ipso has recognized this as a possible flaw, however, the current survey was conducted using the same method and tool as the survey conducted at the end of Draghi’s presidency.

The ECB said it gets staff feedback through regular surveys which are done in line with professional standards, and that these typically draw about 3,000 responses.

La banque, c’est moi

Lagarde may not be too surprised to have scored worse on monetary policy than Draghi, who is credited with single-handedly saving the euro. But what she may find shocking is that she also scored much worse than Draghi and Trichet on internal matters, including her flagship issues of fostering diversity and inclusive decision-making.

Both her predecessors also received bad marks for their handling of internal affairs, but staff were scathing about Lagarde, with almost three-quarters expressing unhappiness about her approach to management. Some of that was mundane grumbling over things like hot desking, restrictions on working from home and, ahem, pay rises that don’t keep up with inflation. But other claims went much further.

“Christine Lagarde is generally reported as being an autocratic leader who does not necessarily act according to the values she proclaims,” IPSO said in its summary of the comments compiled in a report. It highlighted unhappiness at perceived double standards, for example in claims that staff are encouraged to speak up but are then rebuked if they openly share concerns.

Other complaints range from excessive workload to stress and a lack of transparency in the recruitment process. Concern at ‘nationality clusters’ within the bank has risen on her watch, although the report indicated some confidence this might now be improving.

Strikingly, neither male nor female staff are happy with Lagarde’s wider diversity efforts, both sexes clearly preferring the policies of her predecessor, who first introduced gender targets. While most agreed with them when Draghi raised the issue, Lagarde’s implementation of them is perceived as “adversarial and discriminatory,” the report said.

“Gender topics have divided staff severely,” one respondent observed.

Male approval of Lagarde’s diversity policies fell slightly more than female approval, suggesting a degree of bias, but female approval was down a remarkable 17 percentage points from Draghi’s time. More than half of participants said they “disagree” or “strongly disagree” with Lagarde’s approach.

Losing trust 

Nor is the dissatisfaction limited to the boss’s performance. The survey also showed that trust in the six-member executive board was either non-existent or very low among 59 percent of respondents. This represents a sharp fall from an already-high 40 percent reported in a separate survey just one year ago.

An anecdote about executive board member Frank Elderson included in the report hints at why: After the launch of the survey, Elderson called the IPSO board to his office. “He challenged our legitimacy to ask questions regarding the personal performance of the President, as well as the asking of an assessment of the monetary policy side,” the report said. 

An email sent to staff in response, signed by all six executive board members, seen by POLITICO, raised the same points while emphasizing a commitment to engage. “Please be assured that the Executive Board is highly attentive to issues of concern to our colleagues,” the email said. “We will continue to enter into dialogue with you and your representatives, and work on improvements wherever feasible.”

Updated with ECB Executive Board’s response to staff.