Creating Fairer Pay at Work

In the 1970’s the average pay of a CEO in the UK was no more than 30 times that of the average worker in his / her organisation.

In 2017 it was 144 times higher and in the USA it was 300 times

As I wrote in a previous post: ‘the winners of globalisation did not compensate the losers. Rather neoliberal globalisation brought an unabated increase in inequality. Almost all the gains went to those at the top, whilst real disposable household incomes declined in all English regions apart from London from 2003 onwards. From 2004 the wages of the bottom half of society began stagnating, and for the bottom third they fell.

In the three years after 2010, British workers suffered the fourth worst fall in wages out of 27 EU nations – an average fall of 5.5%. Whilst according to Sunday Times 2014 Rich List the fortune of the wealthiest 1000 Britons had doubled in just five years.

This has created a society in which the majority feel that their stake in society has been diminished and that they are viewed with disdain by the successful elite. A corrosive cocktail.

If we are to create a society in which everyone regardless of status can gain esteem and personal recognition from work, then we need to address this issue.

My suggestion is that governments by law demand that companies and organisations report annually not only their CEO’s pay but also the total payroll cost of all their employees, including all people who work for their organisation as contractors. (Many of them might well have originally been employees but were contracted out so that their pay, terms and conditions could be diminished in order to boost the short-term profitability of the company which would then flow through to increased pay for the CEO).

Governments should also introduce tax arrangements for CEOs and other senior managers on a graduated sliding scale based on the % of the gap between the CEO’s TOTAL remuneration and that of the average worker.

As an example, to illustrate the principle rather than suggesting what should be the final figures.

If a CEO’s salary is 40 times that of the average worker his tax rate should be at his / her current rate.

If a CEO’s salary is 150 times that of the average worker, the income above 40 times that of the average worker’s salary should be taxed at 95%

The leadership teams of organisations then have an incentive to increase the pay of their entire workforce not just themselves.