Latest News
Vince Cable announced “four fronts” to tackle the issue of excessive executive pay (greater transparency; more shareholder power; reform of remuneration committees; best practice led by the business and investor community). These are necessary, but insufficient we argue in our briefing on his announcement here.
Chukka Umunna also takes on executive pay ‘Why is this ballooning pay such a problem? For three reasons: it is a bad for the companies themselves; it is bad for our economy overall; and, yes, it is bad for our society.’
Nick Clegg railed against irresponsible capitalism, saying “it cannot be right that, for example, for most people, on average, wages are falling, by around 3% a year, yet executive pay is rising – on average, by 13%. Over the last 25 years, top Chief Exec pay has shot up by 1200%. That is a gross imbalance, with wealth and influence hoarded among the few. It’s socially destabilising. Morally, it cannot be justified. And it’s bad for the economy too.”
Labour called an opposition day debate on responsibility and reform for British banks
Lord Turner, chairman of the Financial Services Authority says that excessive executive pay and bonuses are “not good for society”.
We argue in the Guardian, that we need to be paying less attention to high pay
My Fair London launches a petition challenging Mayoral candidates to reduce income inequality
The evidence linking inequality with economic instability strengthens, as attention focuses on Stuart Lansley’s new book “The Cost of Inequality: Three Decades of the Super-Rich and the Economy”. Also see the ex Chief Economic Adviser to the US Vice President explaining why inequality suppresses growth.
Bonus season begins with RBS boss Stephen Hester getting just under £1m. The London bank bonus pool is expected to top £4.2 billion
Investors turn up the pressure on pay, for example Cairn Energy was forced to drop plans to give their chairman £2.5m in free share options, large fund managers warned Barclays they will not accept lavish payouts to senior bankers and a shareholder rebellion over top pay took place at Trinity Mirror.
Morgan Stanley boss James Gorman’s three-point life plan to anyone complaining caps on bonuses: “Read the newspaper, number one, … number two: if you put your compensation in a one-year context to define your overall level of happiness, you have a problem which is much bigger than the job. And number three: If you’re really unhappy, just leave. I mean, life’s too short.”
City insider Lord Dykes warns of the explosive political cocktail about the relentless growth of the unequal society, while Deutsche Bank CEO Josef Akermannpoints out that if income inequality keeps increasing ‘we may have a social time-bomb ticking’.
——————————————————— 10/01/2012 —————————————————————
David Cameron promised new powers for shareholders on executive pay, saying: “Let’s empower the shareholders by having a straight, shareholder vote on top pay packages. We’ve got to deal with the merry-go-round where there’s too many cases of remuneration committee members, sitting on each other’s boards, patting each other’s backs, and handing out each other’s pay rises. We need to get to grips with that.”Our take on Cameron’s announcements is here.
Nick Clegg renewed the Lib Dem’s call for ‘restraint and new transparency and accountability on unacceptable excess in executive pay’ saying, “It’s Liberal Democrats who’ve led the debate on clamping down on bankers’ bonuses and we must be just as tough this year in the bonus season that’s coming up as we were last year, if not more so.”
Chuka Umunna, Shadow Business Secretary, said Labour would demand reform of pay packages to include just one salary and one bonus, require the publication of a pay ratio league table, put an employee representative on the remuneration committee of every company, require investors and pension fund managers to disclose how they voted on remuneration decisions and wants companies to publish the ratio of average salaries of employees to executive pay.
Jenny Jones launches a campaign to make London a Fair Pay City, starting with a 10:1 maximum pay ratio for employees of organisations within the GLA group.
Reverend Jesse Jackson visited Occupy LSX, urging political, community and business leaders not to risk an “explosion” which could see more social unrest and civil disobedience. He said: “Those protests, they are like canaries in the mine. They are warning us that there is gas below down in the mine.”
Evidence grows that the supposed benefit to taxpayers of sub-Living Wage pay is illusory.
Bankers consider taking legal action to protect their bonuses.
All contractors supplying Tower Hamlets and Southwark councils with services are now required to pay their staff the London Living Wage. However, Kensington and Chelsea council refuse it to their own staff.
Our article arguing that to end inequality without redistribution of wealth, we should pay a living wage.
—————————————————–—- 10/12/2011 —————————————————————
Ed Miliband declared “inequality did not just have bad consequences for our society; it had real consequences for our economy as well.”
Nick Clegg announced that the government is to publish new proposals to curb “unjustified and irresponsible” pay rewards in the private sector. This could involve widening the membership of remuneration committees to include workers.
Vince Cable sympathised with the Occupy protests saying they “reflect a feeling that a small number of people have done extraordinarily well in the crisis, often undeservedly, and large numbers of other people who’ve played no part in causing the crisis have been hurt by it.”
Mervyn King tells bankers to cut their bonuses saying, “If earnings are insufficient to build capital levels further, banks should limit distributions.”
Obama declares that economic inequality “hurts us all” and “distorts our democracy”.
The Treasury says it is looking at proposals to make senior executives in up to 15 of the country’s biggest banks and institutions disclose their pay.
Investor trade body UKSIF calls for disclosure of corporate pay ratios.
Ed Miliband: “Many of those who earn the most, exercise great power, enjoy enormous privilege – in the City and elsewhere – do so with values that are out of kilter with almost everyone else.” and “let us tell the top CEOs that, if they are unwilling to justify their rewards to an employee on the committee that decides salary packages, they will not get it.”
David Cameron: “I think the Archbishop of Canterbury speaks, frankly, for the whole country when he says that it is unacceptable in a time of difficulty when people at the top of our society are not showing signs of responsibility. It is this Government who are consulting on proper measures to make sure we get transparency in terms of boardroom pay, proper accountability and more power for shareholders.”
The Archbishop of Canterbury: “There is still a powerful sense around – fair or not – of a whole society paying for the errors and irresponsibility of bankers; of messages not getting through; of impatience with a return to ’business as usual’ – represented by still soaring bonuses and little visible change in banking practices.”
The Archbishop of York: “If [CEOs] have a responsibility to their staff, it is hard to imagine a more powerful way of telling some people that they are of little value than to pay them one-third of one percent of your own salary”. (in an article which used material from One Society)
- (London) City Hall staff earning between £18,000 and £25,000 are to receive a 4% pay rise following a year-long, cross-party campaign by the London Assembly.
- Islington became the first London borough to promise a maximum 10:1 pay ratio between top and bottom-paid paid employees.
- Whitehall lawyers suggest employers are breaking the law by offering unpaid internships and not following national minimum wage rules.
- Investors are staging record numbers of pay revolts with shareholders of 15 FTSE 100 firms protesting already this year – up from seven in 2010.
- A new Australian law rules that if 25% of shareholders reject two consecutive remuneration reports, a resolution is automatically put to dump the board, and it will pass if supported by 50 per cent of votes.
- Richard Wilkinson’s TED talk on ‘how economic inequality harms societies’ nears half a million views.
- 71% of 11-18 year-olds say inequality was either mostly or partly to blame for the riots this year.
———————————————————–14/10/2011————————————————————–
BIS has launched its Executive remuneration discussion paper, published in conjunction with a consultation on narrative reporting. The response form can be foundhere- deadline 25th November.
Progress on high wages in the public sector: the number of civil servants and quango officials earning more than £150,000 has been cut by 15 per cent over the past year.
Warren Buffet called for higher taxes on the super rich, whilst in France 16 CEOs argued for a ‘special contribution’ from the biggest earners. A week later 50 Germans formed a group to form a “tax me harder” movementand Italian boss of Ferrari said it was only right that he ‘stump up more cash’.
New regulations are to be introduced in October, to give directly hired agency workers the same basic employment rights as permanent employees, but only after they have worked 12 weeks.
Debate raged over the causes of the riots:
London is the most unequal city in the Western world with the richest 10% possessing as much wealth as the poorest.
Peter Oborne on how both the top and bottom of society have become detached from the rest.
Lynsey Hanley on the polarisation between rich and poor areas.
And ourselves on “smash and grab” morality.
A YouGov poll shows that most Conservative voters, as well as the vast majority of the publicoverall, favour the introduction of an annual ‘mansion tax’ and oppose scrapping the 50% tax rate.
Islington Fairness Commission has released it’s 19 recommendations on reducing inequality, whilst York’s Fairness Commission has begun a series of public meetings.
CONFERENCE SEASON
Liberal Democrats
Vince Cable announced that whilst ‘there is absolutely nothing wrong with generous rewards for those who build up successful businesses and create wealth and jobs’, there is a problem with ‘executive pay which, in many cases, has lost any connection with the value of shares, let alone average employee pay’. Nick Clegg continued to focus on social mobility.
Labour
Ed Miliband declared ‘living standards have been squeezed by runaway rewards at the top’, and said that ‘The people at the top taking unjustified rewards isn’t just bad for our economy. It sends a message throughout our society about what values are OK. He stated that ‘every pay committee should have an employee on the board’.
Conservatives
Ian Duncan Smith condemned Labour for spending “vast sums” whilst making the gap between rich and poor worse, naming the Conservatives as “the party of the poor“.
One Society is currently engaging with a range of decision-makers and influencers, focusing on fair pay and social mobility. Our latest policy document (‘Policies for the good company’) is available here.
————————————————————–29/07/2011 —————————————————————-
Several Local authorities are moving towards implementing a Living Wage for staff and contractors (some of these are also examining pay inequality policies). Recent examples include Newcastle City Council’s creation of a Living Wage Panel; Dumfries and Galloway Council joining five other Scottish Councils who have taken the decision to introduce a ‘living wage’ (July 15); Plans announced to introduce Living Wage to Brighton & Hove (July 21).
Prompted by the Hutton Review of Fair Pay in the Public Sector, the BBC reduced the pay of its senior management team by £2.1m or 43% (July 9). The responses of government departments to Hutton’s recommendations are expected any time now.
Vince Cable has announced that this month he will “launch a consultation on changes to company reporting that will propose tougher provisions on disclosure of executive pay and its link to company performance”. The Hutton Review of Fair Pay advocated that listed companies should report on the ratio of CEO pay to employees’ pay, a proposal supported by organisations including One Society, but there are indications that Cable may have “doubts about such a move” (July 27). (This reflects a growing political focus on pay inequality, including Ed Miliband’s speech in which he stated that “companies should publish the ratio of the pay of its top earner compared to its average employee”, shareholders should “exercise their responsibilities to scrutinise top pay” and “having an employee on the committee that decides top pay is the right thing to do”).
