Introductory letter to The Big Pay Debate from High Pay Centre director Deborah Hargreaves.
Who gets paid what is at the heart of the debate about fairness and a more moral capitalism. The financial crisis has turned an already emotive issue into one that invokes deep-seated passions. What we are paid can create an important sense of self-worth as well as visceral feelings of bitterness.
Since 1979, remuneration for those at the top of our biggest companies has gone up sharply. This has been accompanied by a squeeze on wages. Pay for FTSE 100 bosses has more than trebled in the past decade from £1.5 million to £4.8 million or 185 times the average salary. During the same period, average weekly wages have risen by 51 per cent, barely keeping up with price increases: the retail prices index is up 45 per cent.
Share-based pay has driven up remuneration for top bosses as investors argue that stock awards align managers’ incentives with their own. However, this has made executive pay incredibly complex and hard to understand. The High Pay Centre is sceptical about the effectiveness of this so-called performance-related pay.
Corporate leaders have successfully argued that there is a global market for their talent and they need to be paid accordingly. At the same time, globalisation has meant those lower down the income scale are competing with poorly paid workers on other continents.
If the minimum wage had risen at the same pace as executive pay since its introduction in 1999, it would now be £19 instead of £6.19, according to the TUC.
The gap between top pay and everyone else on the income scale has opened into a wide chasm as the top 1 per cent and even 0.1 per cent has accelerated away from the rest. This has exacerbated inequality in Britain with taxpayers spending £4bn on in-work transfers to support low pay.
This does not have to be the case. There is strong evidence to suggest that businesses with lower pay gaps work better. The economy would also receive a boost if those further down the income scale had more spending power.
As part of The Big Pay Debate, we want to discuss what is fair pay at all levels. We need to harness as many voices as possible to discuss solutions to the disparity between executive pay and salaries further down the income distribution.
The High Pay Centre will be working with a range of partners to enable as many different bodies, from across the political spectrum, to get involved in the debate and to influence decision-making on issues of executive remuneration and corporate governance. A full list of our partners can be found on the Big Pay Debate homepage - www.highpaycentre.org
To develop this conversation and to bring forward new ideas and new thinking to pay issues, The High Pay Centre will be holding a series of events and carrying out a programme of projects and research to accompany them. See the events and publications pages of The High Pay Centre website for full details - www.highpaycentre.org
The Big Pay Debate will be highly interactive and we encourage people to get involved with the debate in a number of ways:
- Respond to the polls on The Big Pay Debate homepage
- Leave comments on The Big Pay Debate message boards
- Attend debates and discussions
- Join the Big Pay Debate on Twitter using the hashtag #bigpaydebate @highpaycentre
Alternatively email email@example.com or see the website for more information.