This Tory-dominated coalition government clearly thinks there is nothing wrong with CEOs and City-types getting paid obscene amounts of money, whilst the real "wealth creators" often earn so little, their pay has to be subsidised by the taxpayer. Of course, to appease their wider range of supporters Tories and Lib Dems, compliant in all things Cameron, had to devise a policy which, whilst giving the appearance of creating the means for controlling pay, was nothing of the sort. Giving shareholders binding votes on pay, coupled with a touch of transparency, has had no effect whatsoever; the pay gap between bosses of the country`s biggest firms and their employees has tripled over the past 15 years, with FTSE 100 CEOs receiving in total renumeration 143 times that of the average employee in their firms. Is it any wonder that in a recent equality league table, Britain was 28th out of 34 developed nations?
Labour has developed promising policies on raising the minimum wage but there is clearly room for action at the other end of the pay scale!
Some of the figures are so disgusting, they beggar belief; for example at Compass Group, which employs many cooks, cleaners and security staff, and where the average pay is £13,000, the boss received £5.5m last year, 418 times more than this staff! When compared with average earnings generally, the top 100 executives earn 174 times more! Increases have been huge in recent years, not because of the chief executives` improved performance, but, as the director of the High Pay Centre, Deborah Hargreaves, says, "because they are able to get away with it". Primark workers and customers will be interested to learn that whilst average pay is £14,500, the CEO pocketed 361 times more, £5.3m, whilst over at Whitbread the pay gap amounted to 415 times.
This, of course, is scandalous, and Labour policy-makers should be wary of ignoring the situation; effective action would have universal support. A number of initiatives have been suggested, and there is certainly room for some radical thinking. Having worker representation on companies` renumeration committees had the desired effect in Germany for over fifty years, so the policy of co-determination needs to be considered, as does perhaps, a cap on the pay ratio, as in John Lewis where it is 75:1? However, the determination such companies show in avoiding tax and evading bonus regulations suggest other ideas are needed.
What about merging the High and Low Pay Commissions into a Fair Pay Commission, which would include trade union representatives? If there is a set ratio, any company found to be exceeding it to be barred from government contracts; this might well include G4S, the company which botched its Olympic security contract, but still makes millions from government work. Can you believe that when G4S joined the FTSE 100 in 2007, it paid its workers so little, it dragged the average pay down from £31,00 to £27,000?
On the other hand, companies which met the set ratio, and paid at least a living wage to all employees could be rewarded with a Fair Pay logo to be used in their publicity and advertising.(A Fair Tax one, if correct corporation tax paid!) That sort of encouragement for "responsible, non-predatory capitalism" is well in line with current Labour thinking. What isn`t is to attack predatory capitalists with higher taxation, along Piketty lines, whilst de-bunking the Laffer curve myth at the same time, but a Labour government, with a mandate from the voters, could justify such action later, if the inequality gap continued to increase.
Tackling excessive and exhorbitant pay would not only be popular, it would also send out the message to the electorate that Miliband`s Labour is on their side, different from the other parties, and intent on creating a fairer, more just society.