Monday, 5 December 2016

2 letters on executive pay

Not only has Will Hutton argued in the past that a pay ratio of 20:1 was needed to curb high rates of pay for CEOs in the public sector, he has also written that excessive financial rewards "have nothing to do with performance and everything to do with executives keeping up with each other in a status race (Extravagant executive pay doesn`t reflect performance - it`s all about status,19/04/14). Yet he is now in a taskforce which fails to "back the two remaining flagship ideas" of May`s "corporate governance agenda" (OK, no workers in the boardroom - but May must not be lily-livered about executive pay, 27/11/16).
     Your Business Leader called on May to "stiffen her sinews" and insist that publication of pay ratios, and binding shareholders` votes on pay, become law, but it reveals as much "timidity" as the government. Everyone knows pay at the top is obscenely high, and should take much of the blame for the private sector`s lack of investment in technology and training, and, therefore, for low productivity, but naming and shaming, which is essentially what the ratio publication entails, doesn`t work. Far better for the Leader to have suggested a maximum pay ratio of 20:1.
 Having workers on boards was not "a fight May was never going to win", because at best, it only would have been "window dressing"; the TUC reckons it would take boards to be made up of 33% workers` representatives before their presence could make a real difference. If May wasn`t prepared to fight for workers` representation, there is little chance of her legislating on ratios, especially if respected left-leaning publications are as "lily-livered" on the subject, as she clearly is! Just because Hutton has appeared to have U-turned doesn`t mean your newspaper should follow suit!

The fact that, as Nils Pratley says, "nothing would have to happen as a consequence", shows how May`s proposals for the publication of pay ratios, and indeed for corporate governance reform as a whole, are nothing more than "window dressing" (PM needs to stand firm on pay ratios,29/11/16). Like all Tory prime ministers since Disraeli, May wants to give the impression she is on the side of the workers, whilst doing nothing to upset employers. She backed down in the face of pressure from the CBI, from insisting on worker representation on company boards, despite co-determination having been proved a success in other countries, notably West Germany after the war. 
    Forced publication is just another method to name and shame, a policy which has failed to reduce tax avoidance or paying below the minimum wage, whilst obscene levels of pay for bosses is known to be responsible for the lack of investment in technology and training which leads to low productivity. 
      If she really wanted to help workers,and simultaneously boost the economy as well, May would be planning legislation to restrict the pay ratio to 20:1, prosecuting all CEOs and employers who failed to pay a living wage, and raising the national living wage to £10.

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