Category Archives: Equality

Equality can co-exist with pay inequality

A recent report by The High Pay Commission covered extensively by The Guardian Newspaper, claims that should current income disparities between top earners and the rest continue to grow we will reach a level of income inequality comparable to Victorian Britain.

Since the global financial crisis of 2008 stories of high executive pay particularly amongst top bank bosses have littered national media coverage. This coverage has been justified when it has come to light that some top bank chiefs have received £millions in bonuses despite requiring taxpayers money to bail them out of a financial catastrophe their institutions behaviour created.

The objection laid out above in respect to Bank chiefs is that their remuneration – apart from being grossly excessive – is made all the more un-justifiable considering that their bank has under-performed, or had to require a huge Government-backed bail-out just to stay in business.

Stark income inequalities are bad because they create social anxieties which can lead to higher instances of drug abuse, and increase levels of mental health problems. When you work tirelessly every day in a demanding job which rewards you with an annual income comparable to the average salary (£23,952 for full-time employees) yet your top executives earn 145 times that, you are bound to feel slightly undervalued. Work by Richard Wilkinson and Kate Pickett in their book The Spirit Level published in 2009 showed how societies with huge disparities in income between the top and bottom earners invariably suffer from higher levels of violent crime, drug abuse, and instance of mental health problems.

But what should be the focus for tackling income inequality? Should we level-up or level-down? In other words, should we increase the pay of the bottom and middle income earners or should we cut the pay of the top executives. I argue we should do both. A fairer distribution of pay should start with the quite substantial increase in pay of the lowest income earners in our society. To London’s credit it has pioneered a move towards this with the introduction of the idea in 2000, thanks largely to the tireless campaigning of London Citizens, of the London Living Wage. This recognised that the National Minimum Wage is not enough to live on within a modern city where the cost of living is comparably higher to other parts of the UK. But more than that, the Campaign has recognised the need to tack levels of income to the actual cost of living.

In addition to increases in pay for the lowest and middle income earners, a substantial cut in the pay of top executives should be made so their pay does not grossly out way that of the entire workforce they represent. Of course pay should be linked to good performance and levels of responsibility attached to particular roles but this should never excuse instances highlighted in the High Pay Commissions report where top execs on average earn 145 times that of individuals on earning the average wage. Exactly how many times top execs should earn in comparison to the average wage would be arbitrary for me to say here. But certainly I am advocating a pursuit of equality where disparities in pay can still exist, but the disparities must be ‘responsible’ and must be ‘tasteful’.

According to The High Pay Commission it won’t be until 2030 that income inequality will reach a level comparable to Victorian Britain. And that’s only if projected disparities continue to grow. The question is whether we should be levelling-up or levelling down? Should we be curbing the excessive pay of top executives or redistributing pay to lower and middle income earners as a way of closing the pay gap. I argue for the latter.

Ask your MP to sign EDM 1775 acknowledging the Equality Trusts findings that greater income differences directly correlate to increased levels of social problems.

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