A few weeks ago I heard a news item on Radio 4’s Today programme regarding the corrosive affect on society of executive pay and one of the guests said, “there is no such thing as being paid too much, or too little for that matter”. The first part of her assertion is, in my view, incorrect and we need to implement a cap; the second part of her assertion is callous but progress is being made, albeit too slowly.
We have seen the introduction of the minimum wage and the idea of a living wage, which would be higher than the minimum wage, has been gaining some exposure but few, if any, implementations. The idea of a maximum wage does not seem to be under consideration although a pseudo maximum wage has gained a little coverage via a maximum earnings ratio between the highest and lowest paid in an organisation. I have seen mentioned earnings ratios of 10:1 (e.g. the lowest paid person receives £20,000 per year so the highest paid person receives no more than £200,000 per year) and 7:1. I believe both of these ratios are far too high. Imagine such ratios being applied to chocolate: for every one chocolate you are allowed, I, as a chocolate connoisseur, may have 10 (or seven) – you would not think that to be fair.
Having said that, there is no denying a maximum earnings ratio would be a step forward because the lowest paid would benefit from the desire of the highest paid for more money. There are organisations – New Internationalist and Corporate Watch for example – that have an equal pay policy. This should be one of our pay justice goals.
To achieve pay justice, we need to implement:
- a living wage – a higher figure than the minimum wage and applicable to all organisations;
- a maximum wage – again, applicable to all organisations and starting at an amount equal to four times the living wage but to be reviewed on an on-going basis and revised downwards if need be (following such a review, the maximum wage would never be revised upwards); and
- an equal pay policy – this would be an amount, per organisation, at least equal to the living wage but no higher than the maximum wage.
Please note that I make no gender or age distinctions – there is no need to make such distinctions because we are all people.
I acknowledge the argument that some roles require more studying etc., therefore, should receive greater pay but my view is that such roles make a greater, or more direct, positive contribution to society and that in itself is a reward (as is the accumulation of knowledge and the acquirement of skills).
I liken the roles in an organisation to the components of a wind-up watch: some components are larger and/or seen more than others but all are required to make the watch work; and so it is for an organisation.