Latest Inequality News
——————————————————- April 2013 —————————————————————-
Will Hutton wrote about the relationship between wealth, inequality and trust in The Guardian, saying ‘To have riches, however obtained…is the only game in town’.
As rumours gathered pace that the Government are considering scrapping the minimum wage, The Independent argued that if the Government really wants to ‘make work pay’ it should focus on ensuring the minimum wage is enforced. Meanwhile The Telegraph’s Jeremy Warner provided the economic case for increasing the minimum wage.
Skills Minister Matthew Hancock MP gave a speech at a Resolution Foundation event on how the Conservatives are “best placed to tackle low pay”.
Alan Milburn, the Government’s own advisor, criticised the Coalition’s approach to measuring child poverty and defended the relative child poverty measure.
The Association of Teachers and Lecturers passed a resolution to oppose the Government’s plans to scrap the national pay structure and introduce performance related pay.
UKIP proposed introducing a flat 25% rate of income tax with a personal allowance of £13,000.
An Observer editorial highlighted concerns that, with prices rising twice as fast as wages, the Budget 2013 threatened to “cut the poor adrift”.
With comments from Kate Pickett, The Times revealed the neighbourhoods in Britain with the biggest wealth gap.
The TUC reported that, with the cost of living ‘away from home’ at £1,000 per month in London, internships in the city are now unavailable to young people who do not come from affluent backgrounds. Meanwhile Demos’ David Goodhart asked whether too much stress on social mobility has demeaned ordinary jobs, and finds out how low-skilled work can be made to seem more attractive on BBC Radio 4.
It was revealed that food stamps will compensate for the Social Fund in many local authorities.
Thousands of Londoners face the growing threat of food poverty, according to figures from the Trussell Trust.
A group of highly regarded academics submitted a letter to The Guardian warning that the poorest tenth of households will lose 38% of their income in real terms as a result of Government reforms.
James Plunkett explained what the OBR’s Economic and Fiscal Outlook report means for our wages.
An Oxfam GB blog wondered how to make sure people working on low incomes actually benefit from being taken out of income tax.
The Daily Express ran with the headline ‘Poor households bear brunt of £16m payouts to gas bosses as we freeze’.
B&Q staff secured at least a Living Wage for their lowest-paid staff, meanwhile the BBC will include a ‘Living Wage clause’ in all invitations to tender taken up by contractors providing catering, cleaning and property management services.
Professor Richard Frank told Barack Obama, ‘It is poverty policy that matters in mental health’.
Brian Groom of The Financial Times explored whether falling real wages are having a negative impact on productivity.
After Iain Duncan Smith proclaimed he could live on £53 per week, Mark Pack’s analysis showed that the richer you are, the more likely you are to think you could do it.
The Daily Mail reported that bosses’ pay has gone up 16% while workers get 1% rise.
The Financial Times reported that in 2018 the public sector’s share of the workforce will fall to its lowest level since the welfare state’s inception in the 1940s. This does not bode well for income equality given that pay disparities are much greater in the private sector.
The Independent’s James Moore looked at efforts to clamp down on the perks and pay-offs many executives receive.
The Financial Times investigated reports that very high wages in the private sector keep talent away from the public sector.
Despite the company receiving a £30million fine last year, the Prudential’s CEO landed a bonus of £7million. Standard Life’s CEO earned £5million last year while the CEO of outsourcing firm Capita took home around £8.5million. Meanwhile Anthony Salz’s report on Barclay’s warned that the bank must lower warped pay levels to end ‘entitlement culture’ and improve transparency.
At the height of AGM season UK companies have sharply reduced their use of incentive pay plans that require shareholder approval in order to take effect, according to analysis by Manifest. Simon Bowers summarises the ‘likely flashpoints’ in executive pay.
BG Group’s top executives gave up their bonuses after a plunge in share prices at the end of last year.
The Times warned that around £5bn of high earners’ money may be moved into the new financial year to avoid the 50p tax rate.
And finally, a survey claimed that the UK is now divided into seven social classes. Where do you fit in?
—————————————————— March 2013 ————————————————————–
Ed Miliband offered “a choice between two different visions of our economy. The Conservative vision of a race to the bottom in wages and skills, rewarding those at the very top but leaving everyone else squeezed as never before. Or the One Nation Labour vision.”
Danny Alexander announced that companies will have to sign a declaration that they have not fallen foul of wide-ranging tax avoidance rules in the past 10 years before bidding for government contracts worth £2m or more.
Obama called for the minimum wage to be increased to $9 saying “For businesses across the country, it would mean customers with more money in their pockets. And a whole lot of folks out there would probably need less help from government. In fact, working folks shouldn’t have to wait year after year for the minimum wage to go up while CEO pay has never been higher. So here’s an idea that Governor Romney and I actually agreed on last year – let’s tie the minimum wage to the cost of living, so that it finally becomes a wage you can live on.”
As AGM season kicked of BP chief Bob Dudley was awarded £2.6m annual bonus; despite a profits slump and Lloyds’ CEO is set to receive £1.4million bonus despite their £500m annual loss; Volkswagensought to head off a debate about boardroom pay by limiting bonuses for its top executives; Man Group scrapped bonuses for its top executives; 19 Santander staff were paid over £1million last year. John Lewis revealed all their staff will receive a 17% bonus this year – up on last year’s bonus, and equivalent to nine weeks’ pay.
Meanwhile Barclays were criticised for announcing £38.5million worth of bonuses to its staff on Budget day.
- Barking & Dagenham council introduced a minimum wage of £9 p/hour for direct workforce and agency staff – the highest minimum wage for a council.
- Salford Council staff said the Living Wage has been “life changing”.
Senior academics warned that altering the official definition of child poverty risks deliberately downplaying the importance of money.
The EU moved to cap bankers’ bonuses at twice their salary and to subject banks to a strict transparency regime, but saw resistance from the UK Government and a Swiss referendum voted in favour of tough controls on rewards for senior managers.
A legal decision in the European court of justice could protect staff rights to collective terms even after they’ve left a council
Almost two-thirds of London bankers think they were underpaid last year and half believe they have been treated unfairly.
The Financial Times reported research which showed that migration has a very slight impact on wage levels.
Simon Walker, director-general of the Institute of Directors, said the behaviour of some banks was “harming the whole of British business by focusing only on their own short-term self-interest”.
PWC said most people gained little from personal allowance changes because other, more regressive taxes rose instead.
The ONS said real incomes will fall as wages remain stagnant and inflation rises.
Finally, The Equality Trust launched the A41 Photography project. Explore the consequences of inequality through photography. It will be showing from 27 February to 6 May at The Public in West Bromwich.
——————————————————– February 2013 —————————————————————-
Ed Miliband used his speech at the 2013 Fabian Society Conference to promote the living wage.
Christine Lagardehad encouraging words at the World Economic Forum, “Now all of us have a better understanding that a more equal distribution of income allows for more economic stability, more sustained economic growth, and healthier societies with stronger bonds of cohesion and trust.”
One Society hosted an event with Bright Blue at which Skills Minister Matt Hancock said the Conservatives must become the “party of the low-paid”.
The Times revealed that, despite a forecast loss for Lloyds banking group, their CEO Antonio Horta-Osorio is set for a bonus of up to £4million. Meanwhile The Guardian reported that the top 1,500 bank staff in the UK earned an average of £1million each in 2011. Goldman Sachs bonuses will still average £250,000 eachbut Barclay’s boss Jenkins waived his £2.75million bonus.
An official US report found that Americans are ‘sicker and die younger’ than peers in comparable countries and suggested that income inequality may be a contributing factor.
Two councils went the extra mile with the Living Wage this month: Aberdeen City Council introduced a Living Wage and pledged to make a back-dated payment to its staff; while Brent Council are looking into requiring contractors to pay the Living Wage.
The Government published its National Minimum Wage Compliance and Enforcement report.
Ferdinand Mountwrote in the Evening Standard that the Living Wage can help lift wages at the bottom and prevent the state from having to top up low pay. Amol Rajan, said the Living Wage is an idea whose time has come for the Tories.
We blogged about how the introduction of a Living Wage must be met with a desire to tackle top pay too.
A fantastic infographic from Oxfam showed just how much £5.2billion of dodged tax could pay for to alleviate poverty in the UK.
——————————————————– January 2013 —————————————————————-
The National Assembly for Wales introduced Living Wage for externally contracted staff saying “The Assembly Commission is of the view that a Living Wage should be a basic human right”.
Nick Clegg said that everyone has the right to campaign for fair pay after it emerged that a Westminster cleaner lost £400 a month after asking for a Living Wage.
Teresa Pearce MP tabled a Westminster Hall debate on the Living Wage in which some MPs supported the idea while others called for the minimum wage to be scrapped.
Ed Balls said that Osborne had set out a false choice between strivers in work and shirkers out of work and on benefit, saying 60% of families hit by the tax and benefit changes set out in the chancellor’s autumn statement last week were in work.
A great new infographic from Danny Dorling and Benjamin Henning maps the super-rich in the UK.
There are signs that the Cabinet Office and Ministry of Justice may follow the Department for Work and Pensions in introducing a living wage.
High pay in the media was highlighted by excessive pay outs to BBC staff.
The Independent’s John Rentoul argued that the rich are in fact bearing the greatest burden of the cuts. His argument was rejected by Stewart Lansley and the New Statesman also questioned the figures.
As energy prices rise, British Gas CEO Phil Bentley is set for a £13million pay off – enough to pay an average family’s gas bill for almost ten thousand years. Meanwhile in the US it emerged that the MacDonalds CEO earned 580 times the lowest wage.
Laurent, Schlumberger, a prominent figure in the French protestant church made waves with an article in which he denounced the “violence” income inequality has caused.
Finally, as Nick Clegg and David Cameron “re-launch” the Coalition, revisit our Half Term Report on the Coalition Government and Income Inequality.
——————————————————-December 2012 ————————————————————–
Eric Pickles announced measures to make it easier to dismiss “highly paid but incompetent” council bosses.
- Councils who agreed to pay their staff a Living Wage this month included Derby, Edinburgh City Council, Carlisle Council and Wigan Council.
- There are also hopes that Canary Wharf would become the UK’s first ‘Living Wage Zone’, meanwhile the Catholic Church committed to Living Wage.
- Cllr Stephen Knight says it is time for Liberal Democrats to embrace the Living Wage.
Ed Balls said that the dichotomy of ‘strivers’ in work and ‘shirkers’ out of work and on benefit was a false one. 60 per cent of families hit by the tax and benefit changes set out in the chancellor’s autumn statement last week were in work, he said.
Graham Hogg explained how councils can lead the way on fair pay and why it’s time for an ‘equal pay kitemark’.
The Times reported that an unexpected rise in inflation could see low-income households feel a cut in real wages of up to 15 per cent from 2008 to 2020.
CPAG’s Alison Garnham commented on why changing the way in which we measure child poverty is a distraction from the real problem.
An Equality Trust infographic featured in the Daily Mail’s article about how 80 per cent of Britain’s ‘elite’ went to fee-paying schools.
Xstrata chairman Sir John Bond will resign once a merger with Glencore is completed after shareholders voted against his proposed £140million retention pay.
Vince Cable promoted ‘better alignment of pay and performance’ and backed a review of executive pay as the Government responded to the Kay Review.
Robert Skidelsky explained why income inequality is killing capitalism in the Guardian.
Joseph Rowntree Foundation’s Julia Unwin said that tackling poverty and inequality must be at the heart of any plan for economic growth in the North of England.
Economists are now describing the UK labour market as an ‘hourglass’ shape, where jobs are being created at the top and bottom of the skills scale, while those in the middle tier are losing out.
The Mirror reports that identical NHS jobs are paying 50 per cent less in the North than the South of England.
Robin Chater, Secretary-General of the Federation of European Employers, says low wages are keeping UK unemployment levels down.
The Bank of England’s Andy Haldane said bankers’ wages are still too high.
Jim McCormick wrote in The Scotsman newspaper about an up-coming Joseph Rowntree Foundation report that will show the odds of escaping poverty when moving into work are only a little better than 50:50.
…and finally, the Guardian published a ‘Wages Map of Britain’. How does your area compare?
——————————————————- November 2012 ————————————————————-
The Trussell Trust announced that a record number of people received emergency food from UK food banks in the last six months
Nick Clegg: speaking to BBC R5 listeners “I start from a very simple principle that when we’re all having to make sacrifices… you ask people at the top and then you work down. You don’t ask people at the bottom and then work up.”
Paul Tucker, the Bank of England’s deputy governor called for a new review into bankers’ pay, arguing that bonuses should be paid in subordinated debt.
The Financial Times’ Sam Brittan says falling real wage levels are pricing workers into jobs and keeping unemployment low.
Research by the FT showed workers in their twenties now have a worse standard of living than those in their eighties.
Living Wage Week:
KPMG said around five million people in the UK are currently paid less than the Living Wage.
- Ed Miliband suggested his party would name and shame employers who paid below the Living Wage.
Boris Johnson said central government should adopt the Living Wage for its lowest paid staff.
More councils are adopting or looking to adopt living wage including York, Sheffield, Cambridge(who will urge local firms to pay LW) Lambeth and Oxford. Meanwhile over half of Scottish councils now pay Living Wage.
Finally, Citizens UK and the Living Wage Foundation release a full list of all accredited Living Wage employers.
Yahoo has appointed a Google executive as its next chief operating officer, paying him a pay package worth about $58m (£36m) over four years. Meanwhile Rebekah Brooks’ News International received a severance deal worth about £7m.
Two interns received payouts of more than £2,250 after demanding to be given a wage for over seven months’ work
Nicola Sturgeon, Scotland’s deputy first minister has announced a £33m welfare fund to help the country’s most vulnerable people
——————————————————— October 2012 —————————————————————
Our report on local authority pay was covered by national, local and sector press with the LGA welcoming the report and Minister Brandon Lewis responding. The Guardian’s David Walker also pondered the report and asked whether local authorities are really doing all they can on fair pay.
Lib Dem Party Conference
- Before conference season kicked off, Nick Clegg said the government should “start at the top” by making the richest pay more tax.
- At conference, the Liberal Democrats voted overwhelmingly against regional and local pay bargaining in the public sector and voted in favour of the motion on “Tackling inequality at its roots”.
Labour Party Conference
- Ed Miliband said, “With the gap between rich and poor growing wider and wider, we just can’t succeed as a country” in his speech to conference. Earlier he attacked the idea that growing income inequality boosts the economy, saying “the opposite is true”.
- Fair Pensions’ Matthew Butcher said the Labour Party is right to tackle poverty pay but corporations must do the same.
Conservative Party Conference
- David Cameron said the Government is “trying to tackle the root causes of poverty” but does not mention low incomes in his list on BBC Radio 4′s Today programme.
- Meanwhile Policy Exchange’s Neil O’Brien wrote that the Conservative Party are still seen as the party of the rich.
Frances O’Grady, incoming TUC General Secretary, argued that the squeeze on low and middle incomes and excessive pay at the top are holding back the economy and quoted our £18.89 per hour National Minimum Wage briefing.
The Times revealed Wonga bosses will land a share of £18million as demand for pay-day loans rockets. Meanwhile Ryanair’s boss, Michael O’Leary says he is underpaid on £1million per year as he works at least “50 times harder” than average staff.
Werner Wennig, an influential Deutsche Bank board member called for pay cap on corporate bonuses, fuelling debate on pay reform while Morgan Stanley Chief Executive, James Gorman said top bankers are still over-paid.
The revelation that the BBC pays high earning staff through contracts to minimize tax liability kicked off wider debate about the proliferation of similar public sector pay schemes.
Sonia Sodha argues that predistribution requires a redistribution of economic power on the Progress website.
- South Ayrshire Council introduce a Living Wage supplement for its staff
- Tories in Trafford town hall back Manchester’s Living Wage
- Preston announced it will pay a living wage to all directly employed staff
- City of York Council’s Fairness Commission released its recommendations which included developing and implementing a Living Wage policy.
Islington Council Fairness Commission release report on their first year’s progress.
The States of Guernsey government increased its minimum wage as the previous level meant workers had to rely on state benefits.
Polly Toynbee said public and private sector outsourced workers in the public and private sector should be valued, not underpaid and George Monbiot wrote that, as inequality and social mobility worsen, “the myth of the self-made man [sic] becomes ever more potent”.
The Financial Times‘ John Kay explained why a sense of fairness must drive the determination of pay at both ends of the spectrum.
Finally, Save the Children’s Justin Forsyth wrote in the Telegraph that even if you question the internationally agreed measure of poverty, you cannot deny that real and disturbing hardship is growing in our country.
—————————————————— September 2012 ————————————————————
Simon Hughes said that wealth inequality is “impeding growth” and “creating a sense of inequality”, explaining “What we shouldn’t be doing is rewarding people who have inherited their wealth and sitting on it”.
German finance minister Wolfgang Schaeuble called for action on top bankers’ bonuses saying “Immediate cash bonuses for top bank executives should not exceed their fixed pay. And why not give a large quorum of shareholders the last say on setting these executives’ long-term variable pay as soon as it exceeds a given level?”
Ferdinand Mount on inequality: “We old Thatcherites used to think that the minimum wage was the work of the Devil and would create mass unemployment … it turned out not to be the case”.
Nick Clegg demanded an emergency tax on Britain’s wealthiest to avoid a breakdown in social cohesion.
- Brent Council aim to bring in London Living Wage for its direct employees
- The Labour Party are considering encouraging employers to pay the Living Wage in its policy plans
- New Green Party Leader Natalie Bennett considers minimum ’living wage’ of 50% of average national income
- Midlothian Council commits to paying the Living Wage to lowest paid staff at cost of just £53,000 per year
- John Park MSP launches a Living Wage Bill in Holyrood to extend Scottish Government Living Wage rules to private contractors
- Swansea Council is to introduce a ‘living wage’ which will boost the pay packets of up to 3,000 of its lowest paid employees
The Guardian reports that councils are beginning to fund food banks to plug holes in welfare state.
The Financial Times reported that votes against remuneration boards barely rose despite talk of ‘shareholder spring’.
The Government may encourage tax-free ’mini-jobs’ which critics warn will tie workers to low wages.
Barclays appointed Antony Jenkins at new Chief Executive with a total pay package worth up to £8.6million.
EU curbs on bonus deferrals and claw backs are likely to be imposed on a wider range of hedge funds than first thought.
Unite’s Len McCluskey has called for a £1 per hour increase in the minimum wage to help the poor and boost the economy as Brendan Barber says “The gap between the very top and everyone else was a key cause of the recession”.
British farmers’ family incomes continue to struggle under pressure from supermarkets.
As an Incomes Data Services report showed FTSE 100 chief executive pay rising five times as much as that of everyone else others say top pay is showing signs of ‘“cooling off”’.
Musa Okwonga ponders the excesses of footballers’ wages which rocketed by 1508 per cent between 1992-2010.
And finally…see how income inequality enrages monkeys too!
——————————————————— August 2012 —————————————————————
The Kay review advised the scrapping of executive cash bonuses and publishing of quarterly results.
The European Parliament pushed tough proposals that would introduce a fixed ratio between bankers’ pay and bonuses. It appears concessions may be made.
Caerphilly Council implemented a living wage. The measure will “cost” £500,000 per year – money gained from under-spends and savings elsewhere.
Shareholders protest Aveva paydeal but Vodafone investors backed a pay increase for one of the UK’s best paid CEOs. Barclays handed almost £9m to Jerry del Missier, the banker who left following the Libor scandal.
Over 150 Whitehall custodial staff delivered letters to eight cabinet ministers asking for a London living wage.
Dairy Farmers blockaded supermarkets in protest against the low cut they get of profits from milk, and the low pay resulting from it. The margin supermarkets took on a pint of milk was 2p on a 30p pint 10 years ago, it’s now up to 10p.
Barclays appoint new Chairman David Walker. He has a track record of criticising excessive to pay.
——————————————————— July 2012 —————————————————————
Give shareholders binding votes on pay policy and exit payments, so they can hold companies to account and prevent rewards for failure.
Boost transparency so that what people are paid is easily understood and the link between pay and performance is clearly drawn.
Ensure that reform has a lasting impact by empowering business and investors to maintain recent activism.
BIS released a new consultation: Directors’ pay: consultation on revised remuneration reporting regulations.
Prior to the EU finance ministers’ meeting the Financial Times reported that Chancellor George Osborne was preparing to fight for bankers’ bonuses.
Investment Managers’ Association boss said “Expectations about earnings within the financial sector are wildly out of line with most other sectors of the economy – and that’s a cultural issue,”
New TUC General Secretary Frances O’Grady calls on banks to include low-paid staff on remuneration panels to help curb top-pay.
For an overview of CEO pay deals in the private sector and the ‘shareholder spring’, see the High Pay Centre twitter feed (@HighPayCentre)
St Andrews University blamed inequalities in society for low intake of deprived students. Their principle said: “The issue isn’t one of highly selective universities not having an interest in attracting kids from deprived backgrounds, it’s quite the reverse. The problem is that so few kids from deprived backgrounds meet our entry requirements. We go to enormous pains to try to attract them.”
The Archbishop of York Dr John Sentamu wrote about the importance of tackling poverty AND social inequality – arguing it isn’t a choice between the two.
The NUS National Executive Council voted to back a 10:1 pay ratio campaign on campuses across the country.
Iain Duncan Smith announced he is to publish a green paper looking at a range of new non-income indicators of poverty.
An article in the Spectator shows that unless some crucial details are sorted out in Government policy it looks like work still won’t pay.
Following the release of the ONS Wealth and Assets Survey the TUC reported that the top 10% are now more than 500 times wealthier than the bottom 10% in the UK.
——————————————————— June 2012 —————————————————————
There was high-profile debate about the extent to which social mobility can be increased if income inequality is not reduced:
Kate Pickett and Richard Wilkinson argued Nick Clegg cannot ignore income inequality if he is serious about social mobility (date), and Ed Miliband said in a speech that “I firmly believe that inequality and social mobility are linked. But we have a Government that refuses to see it” (21May).
Nick Clegg responded by saying “reducing inequality is a good and laudable aim. But unfortunately it’s not the straightforward route to social mobility that its proponents suggest” (22 May). However, Clegg’s analysis and evidence were strongly disputed by a number of academic experts, one of which (Gary Solon) claimed to have been ‘misquoted and misrepresented’; another (Miles Corak) reacted with further analysis and policy recommendations. Later, Alan Milburn wrote in the New Statesman that “The more child poverty you have, the less social mobility you’re going to get.”
UNICEF’s Child Poverty Report Card 2012 showed that even though the UK missed its own targets to reduce child poverty to 1.7 million children in 2010, it UK still had one of the largest reductions in child poverty after Government intervention. A Centre for Social Justice (CSJ) report Rethinking Child Poverty argued that the current measure for child poverty is inadequate (and argued against the relative poverty measure). UNICEF and the CSJ debated the issue on BBC Radio 4. The Children’s Society welcomed the reduction in child poverty up to 2009 but warned of a slide backwards. Similarly, the Archbishop of York wrote in the Yorkshire Post about the importance of tackling poverty and social inequality – it is not a choice between the two.
Top pay remained a major news story, with controversy over pay at companies including Gulf Keystone, Xstrata and Glencore. However, some such as Nils Pratley doubted that the “shareholder spring” represents significant sustainable change, and PIRC data showed that investors did not challenge banks over top pay in 2011.
Pay consultants were also accused of conflict of interest and ratcheting up top pay : Almost 70% of remuneration consultants behind bumper executive pay packages earn fees from extra services to same firms.
Investment banks globally have increased salaries by 37% over four years to retain staff and bypass regulation, burdening the sector with higher fixed costs.
More employers moved towards paying a Living Wage, including Holiday Inn, HSBC, Whitbread PLC (who urged the industry to “join the conversation”) and Birmingham City Council. One Society wrote on how paying a Living Wage can be good for business, taxpayers and jobs.
The idea that inequality is bad for business is gaining ground in the US, with a book on the subject published by Nobel Prize winner Joseph Stiglitz, and John Stoehr writing that the evidence suggests investments in infrastructure would boost the economy.
At the OECD forum ministers promised to “tackle increasing inequalities through ‘making work pay’ approaches, support for low-income households, financial inclusion, as well as investment in people and jobs”. The OECD also warned that Britain faces a further 18 months of pain.
The FT reports that after tax, the UK’s richest 1% now have 9% of all income, compared with 3% in 1977.
The Archbishop of Canterbury says “the gulf between top and bottom of the economic ladder has grown and is growing, that’s not something we really tackled.”
France’s president Hollande vows that highest state salary must not exceed 20 times the lowest pay.
——————————————————— May 2012 —————————————————————
Shareholders around the country started defeating pay package deals in what was dubbed the ‘Shareholder Spring’.
- Citigroup shareholders voted against top executives pay hikes.
- Investors challenged executive pay at William Hill, Unilever and Centrica.
- Aviva boss Andrew Moss stepped down after losing a shareholder vote on his pay.
- Sly Bailey of Trinity Mirror was also forced to stand down.
- UK Shareholders Association said the government should rein in salaries at RBS and Lloyds before selling any of its stakes in them.
- A coalition of pension funds and asset managers, include Europe’s biggest fund manager, who together control more than £1.5 trillion of investments, hits out at “disproportionate” rises in bonuses and calls for companies to “claw back” unwarranted payouts.
NHS organisations are now required to report top-to-median pay ratios, joining Local Authorities. Universities are not.
Vince Cable’s plans to moderate top pay are reported to be under attack. See our blog piece on the subject.
Chuka Umunna, brought forward a proposed change to the Financial Services Bill that would require asset managers and institutional investors to say whether they have voted for executives’ pay packets.
Cardinal Keith O’Brien accused David Cameron of ‘immoral’ behaviour and favouring rich saying the Prime Minister should consider his moral obligation to the poor.
The Asian Development Bank said the widening rich-poor divide threatens to undermine the region’s growth and stability. Its Chief Economist Changyong Rhee wrote: “A divided and unequal nation cannot prosper. Rising inequality can lead to instability and poor political choices, as governments facing populist demands opt to curry favour – for example, with inefficient subsidies on fuel or food – rather than promoting long-term sustainable growth.”
Legal & General became one of the first companies to provide all-inclusive figures for each senior manager’s remuneration.
The Sunday Times Rich List shows the fortunes of Britain’s wealthiest people rise to have been at record levels last year.
Two foodbank centres a week are opening in UK to give food parcels to working families struggling to cope according to the Trussell Trust.
Whitehall cleaners handed a letter to Iain Duncan Smith saying they are underpaid and asking for London living wage.
——————————————————— April 2012 —————————————————————
Lib Dem Spring conference:
Nick Clegg, called for the introduction of a ”tycoon tax” targeting millionaires who employ ”an army of lawyers and accountants” to reduce their bills. Vince Cable continued the theme saying “as Liberal Democrats in government we must confront the old-fashioned, backward-looking, negative thinking which says that all government needs to do to generate growth is to cut workers’ rights, slash taxes on the rich and stroke fat cats until they purr with pleasure.”
SNP Spring conference:
Alex Salmond committed his party to the living wage saying “I can announce today that every SNP led council elected in May will also introduce the living wage. Thousands more of our lowest paid workers will receive fair pay and fair play the SNP, putting more money in their pockets, boosting local economies as we build towards a Scotland that is a living wage nation.”
Ed Miliband has confirmed Labour is considering a legally binding London living wage. He also said he will campaign on a theme of “fairness in tough times”, focusing on fair wages, the NHS and crime. Labour also says if it wins control of Edinburgh in May’s elections, it will introduce a 1:12 pay ratio in the council.
Obama continues to see income inequality as a key electoral touchstone saying “The income of the top 1 percent has grown by more than 275 percent over the last few decades, to an average of $1.3 million a year. But prosperity sure didn’t trickle down.”
BIS launches a new consultation, Executive Pay: Consultation on Enhanced Shareholder Voting Rights (Closing date: 27 Apr 2012)
The CBI attacked Vince Cable’s plan to give investors control of executive pay saying the proposal risks turning shareholders into ‘micro-managers’ while the IoD supported the move. The TUC argued that shareholders were not a sufficient answer.
Barclays chief Bob Diamond takes home £17m in pay, shares and perks and pays out £30m in shares to eight directors, GlaxoSmithKline pays its CEO £6.7m (and says this ought to rise), the CEO of Pearson received cash and share awards worth £9.6m last year. Former Reckitt boss Bart Becht in line for £45m in future share awards, taking his total remuneration to over £200m in less than six years. Standard Life CEO pay rose 30 per cent last year (to £2.5m), as the group’s share price fell and investment banking boss of 82% taxpayer owned RBS, which has cut 34,000 jobs since 2008, pocketed £4.76m from share sales.
Meanwhile former Lloyds CEO Eric Daniels and three of his former colleagues were stripped of £2.2m of bonuses and big investors in Trinity mirror said that cuts to for CEO Sly Bailey’s and other director’s remuneration packages did not go far enough – forcing a 60% cut in bonuses.
Economist Michael Kumhof argues that, unless countries reduce income disparities the next financial collapse is inevitable
Christine Lagarde, IMF Managing Director calls on China to reduce inequality saying; “more equal societies are able to achieve greater economic stability and lasting growth”. Angel Gurría, OECD Secretary-General continued the theme, saying: “Inequality should be at the centre of our attention for economic, social and political reasons. Above all, inequality threatens social mobility… countries with high inequality essentially reinforce the vicious cycle of poverty.”
Colin Melvin, CEO of Hermes Equity Ownership Services argues that top pay should rise no more than average employee’s pay as an investor initiative on executive pay is launched.
EU lawmaker Othmar Karas called for cap on banker pay, saying bonuses should be capped at no more than twice basic pay and bankers should be forced to hand back “golden hellos” if they fail to perform.
The minimum wage increased by just 11p (well below inflation) with the rate for 18 to 20-year-olds frozen at £4.98 and at £3.68 for 16 to 17-year-olds
The new London Living Wage will now be announced every November.
——————————————————— March 2012 —————————————————————
Vince Cable proposed introducing “earn-back”, in which executives could lose up to 30% of basic pay if they don’t meet requirements, such as increasing company value. Lloyds became the first British bank to practice this.
Cable is also reported to have been persuaded to freeze the level of National Minimum Wage for 18-20 year olds. The TUC argued that there is no evidence that the Minimum Wage suppressed recruitment.
Alex Salmond announced the Living wage as central to SNP policy saying “I can announce today that every SNP led council elected in May will also introduce the living wage. Thousands more of our lowest paid workers will receive fair pay and fair play with the SNP. Putting more money in their pockets, boosting local economies as we build towards a Scotland that is a Living Wage nation.”
Francis Maude and Danny Alexander called for tighter control of public sector pay saying: “This is not about getting rid of performance pay. It is about making sure that performance pay is there for genuine excellence and not just run-of-the-mill performance.”
A London Assembly motion, proposed by Darren Johnson AM and agreed by Assembly Members urges the Mayor to endorse a ‘Fair Pay Mark’ for organisations that commit to reducing or limiting the difference between their highest and lowest paid staff – and ensure City Hall leads by example.
Sir Mike Darrington, former CEO of Greggs attacked excessive remuneration saying “The quantum of executive pay is excessive and must be reduced … if the current packages were halved, senior executives and bankers would still be overpaid”. Economist Roger Bootle echoed this, saying excessive remuneration is a market failure – unfair and bad for business.
Workfare made the headlines, with Sainsburys Waterstones and TX Maxx starting the flood of companies pulling out of the government’s unpaid work experience scheme. The government made changes to the scheme in response to this pressure.
Not-or-profit organisations gradually start to introducing paid internships: recent examples include the Fabian society and FairPensions
UNISON and NUS launch Living Wage campaign in education. A toolkit for colleges, universities and students can be found at http://alivingwage.co.uk/ . St Asaph’s has become the first diocese of the Church in Wales to pay a Living Wage to all directly employed staff.
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.
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’.
——————————————————— January 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.
————————————————–—- December 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.
———————————————————– October 2011 ————————————————————–
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.
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.
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’.
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.
————————————————————– July 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”).