Standards & Guidance
TUC head calls for national debate on top pay
TUC general secretary, Brendan Barber,
called for a national debate in the UK about the growing gap between the highest
paid executives and other employees, in his New Year message.
The trade union body revealed that for every £100 earned
by a top company director in 2000 they now earn £205, while ordinary employees
have had a £6 increase in every £100 they earned six years ago after allowing
for inflation. Pay for those at the top is increasing 17 times faster than
average pay, according to the TUC.
Barber did not just single out the directors of publicly
listed companies as being part of this trend. He said that bonuses in the City
totalled almost £9bn at the end of 2006. This would have been enough, Barber
said, to have given everyone at work in Britain a Christmas bonus of more than
£350.
He said that this pay gap could not be ignored because it
impacted on the rest of us. In London, for example, high pay in the City and in
the boardrooms fed inflation in the property market. An overheated housing
market could influence the discussions at the Bank of England which could
lead to higher interest rates, Barber said.
The TUC is also concerned that damage to society is being
caused because these people are divorced from the rest of the population. At the
same time that their pay is rising the TUC estimates that one if five of the
workforce could be described as vulnerable workers who live with work insecurity
and low wages.
Barber said that the start of any solution to this
inequality was a national debate about how big rewards for the top
directors should be. He added that as savers in pension funds that own shares in
these companies ordinary people did have influence and this needed to be used
far more.
Separately, a
paper from
The Work Foundation think-tank,
claimed to show that a FTSE 100 chief executive was at no more risk of being
sacked or made redundant than the average UK worker and therefore the large pay
rises were not justified.
Average FTSE 100 chief executive pay packages rose by 28%,
according to the research, in the year to July 2006 against average wage
increases across the whole economy of 4% and inflation of 2.8%. In this period
chief executive turnover was 14% while average staff turnover was 18.3%. Nick
Isles, the author of the paper, called the growing pay inequality a perversion
of market principles.
Jeremy Warner, in
The Independent, suggested that growing inequality in pay is an unstoppable
reality and one of the unfortunate consequences of a global market in skills is
that it has a tendency to level up at the top but down at the bottom. The only
action governments can take to counter this is to provide decent standards of
employment protection, training and education for people to allow people to
aspire to be at the top, Warner said.
Links
TUC
The Work Foundation
The Risk Myth: CEO's and Labour Market Risk
The Independent
January, 2007 |
