The 2015 Mission
14 February 2014
Ed Miliband delivered the Hugo Young Memorial Lecture this week on the issue that we will hear a lot about over the coming months until the General Election – inequality
“It offends people’s basic sense of fairness, “ he said, “ when the gaps between those at the top and everyone else just keep getting bigger regardless of contribution.
“It holds our economies back when the wages of the majority are squeezed and it weakens our societies when the gaps between the rungs on the ladder of opportunity get wider and wider.
“Our nations are less likely to succeed when they lack that vital sense of common life, as they always must when the very richest live in one world and everyone else a very different one. “
An example of this alternative world that the rich live in which Ed Miliband refers to has been in full view this week when Barclay’s bank announced that their profits were down, but that there would be bigger bonuses for Barclay’s top staff while 7,000 of Barclays UK employees faced redundancy.
The bonus pool that the top earners received bonuses from rose to £2.4 billion.
The majority of grassroots campaigns on reducing income inequality are quite properly organised through organisations such as trade unions and around concepts such as the Minimum Wage and the Living Wage.
So it may come as a pleasant surprise to learn that the are like-minded campaigns working at the top end of the pay scale also seeking to close the income gap.
One is the High Pay Centre.
It describes itself as “ an independent non-party think tank established to monitor pay at the top of the income distribution and set out a road map towards better business and economic success.”
Its recent analysis - The High Cost of High Pay - of 2,000 workplaces looked at “pay ratios” that is, how the pay of the highest-paid member of an organisation compared with the pay of the lowest-paid.
It found that , on average ,
*Workplaces where those at the top earn 10 times as much as those on lowest pay will encounter industrial action at least once a year. Those workplaces with lower gaps in pay differentials do not
*Workplaces where those at the top are paid 8 times more than junior staff are paid report at least one case a year of work-related illness. Workplaces that have pay differentials of 5 or less do not report any.
*Organisations with average pay ratios of 7:1 between the highest and the lowest paid suffer the highest turnover of staff.
The High Pay Centre didn’t mince its words in its pronouncement on its findings:
“High executive pay is not only frequently unmerited but has a huge hidden impact on the rest of the organisation and society as a whole.
“Whether it’s through staff turnover, sickness, low morale or industrial action, big pay gaps undermine employees’ loyalty to the company and their managers.
“Employers suffer lost productivity, have to pay more sick pay and legal and recruitment costs as staff left feeling the financial and emotional strain are driven even further into the ground.”
A previous campaign that had been working at the top was the High Pay Commission which published a report two years ago - Cheques With Balances: Why Tackling High Pay Is In The National Interest.
Labour backed its recommendations which called for greater openness in decisions on pay, an end to the culture of financial rewards for the unsuccessful, the publication of pay-ratios , representatives of employees to become members of committee that set the pay of those at the top, and investors and pension fund managers made to reveal how they voted on these pay packages.
The High Pay Commission described the 4,000 per cent in the pay of top-layer executives over the past 30 years as “ stratospheric” , and criticised this flow of wealth to the richest 0.1 per cent of the population.
As austerity cuts continue to flow through the lives of the least well-off , Tory pleas that “we are all in this together” ring hollow.
When banks declare billions of pounds in bonuses for top staff , most people see banks working not for the greater good of society but for an elite who are already richly rewarded.
As the gap between the rich and the rest of society has widened , the social cohesion that holds the society together has been strained, and three forms of inequality rise – in income, in opportunity and in power.
We will hear a lot about inequality over the coming months until the General Election because at the Hugo Young lecture, Ed Miliband, declared :
“Tackling inequality in income, opportunity and power.
"That will be Labour’s mission in 2015.”
High Pay Centre
Cheques With Balances: Why Tackling High Pay Is In The National Interest
Ed Miliband : Hugo Young Memorial Lecture speech