The pay gap between the City elite and ordinary workers threatens a return to the disparities of Victorian England, the widely-anticipated report by the High Pay Commission reported this week.
The report, Cheques and Balances: Why Tackling High Pay is in the National Interest, drawn up by Compass and financed by the Joseph Rowntree Charitable Trust, can be found at http://highpaycommission.co.uk/wp-content/uploads/2011/11/HPC_final_report_WEB.pdf
It predicts that within the next decade FTSE100 bosses – average pay £4.2 million – will earn at least 215 times that of the average worker.
The huge pay packets given to top bosses – currently 145 times the average workers’ wages after increases of 5,000 per cent since the 1980s compared to 300 per cent for average workers are already having a “corrosive” effect on the economy, says the report.
“The public is rapidly running out of patience with a system that allows those at the top to enrich themselves while everyone else struggle to make ends meet”, says the report.
The report, which took a year of research to compile, calls for an end to what it says is a “rigged” system in which bosses on remuneration panels look after each other and disguise the full extent of their rewards in foot-notes in annual reports.
It advocates a system of flat, transparent salaries with a clamp down on “extras” such as bonuses, special share options and other incentive plans which should become the exception rather than the rule.
It also asks why 80 per cent of bosses continue to get bonuses, which appear to be unrelated to company performance, in the depths of a recession.
One of the social distortions caused by such huge rewards in the City, says the report, is how the prospect of such generous rewards attracts the best graduates away from what it deems more socially important activities such as medicine and teaching.
TUC general secretary Brendan Barber said the spiralling inequality is “morally repulsive” and that those receiving such largesse think “austerity is just for the little people”
The commission sets out 12 recommendations including the following key ones:
? End the “closed shop” on pay decisions and be more transparent.
? Put employees on remuneration committees.
? Publish the top 10 executive pay packages outside the boardroom.
? Oblige companies to publish the pay ratio between the highest paid executive and the company median, not average
? Require companies to reveal total pay earned by the board members.
