Wednesday, 20 January 2016

Fat cat days

The fact that it now takes only 22 hours for FTSE 100 bosses to "pocket more than the average yearly salary" is a national disgrace (Morning Star, 06/01/16). It is not only morally wrong, adding to the huge inequality in our society, the 7th richest in the world, but with only six other countries in the OECD having more inequality in terms of income, but it is economically unwise to over-pay these professional managers, who owe their positions to having climbed the greasy pole. This can be seen to be especially true when one considers not only how many British companies do their utmost to avoid paying the correct amount of corporation tax, despite its extremely low rate, but how many fail to pay a living wage to their employees; in August, 2015, only a quarter of FTSE 100 companies were living wage accredited! The economy is in dire need of an increase in demand for its products, without the buyers having to resort to more borrowing.
      Furthermore, the Chartered Institute of Personnel and Development recently provided results of its research, showing that high pay for chief executives demotivates the rest of the workforce, which then is reflected in productivity levels. This is hardly surprising when the High Pay Centre`s research shows that CEOs are being paid 183 times more than their average employee, compared with 47 times in 1998.
      Of course, as the High Pay Centre suggests, workers need "to be represented on the company renumeration committees"; such consultative capitalism, or co-determination as it became known, was imposed on the Federal Republic of Germany by the west after the second world war, with remarkable results for the German economy. In the meantime, a government not in cahoots with the City, would pass legislation to ensure the pay ratio between the CEO and the median employee was published, as the Securities and Exchange Commission has ruled in the USA. Further legislation would then be needed to limit the ratio to around 70% maximum, and also to increase substantially the income tax rate for the obscenely paid.
     Being "intensely relaxed" about people getting filthy rich isn`t always the best move, economically or politically!


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