The Guardian has reported the latest stage in the ongoing attempt by Theresa May to increase UK corporate transparency on pay by just a smidgeon, saying:
Companies that are publicly listed in the UK will be obliged to publish the pay ratio between their chief executive and their average British worker under government plans.
There are problems with this proposal.
First, by no means all British quoted companies are British based. The growing national focus in the regulation of multinational corporations is indicative of a mindset unable to comprehend reality.
Second, whilst the data will be a curiosity it has little more value than that because it is just one ratio amongst many that could be of use.
Third, without more general data it will be hard to know what the ratio implies.
What, of course, is needed is the pay data we enjoyed more than thirty years ago when data was supplied by number of employees in pay bands of £10,000 (I could accept a widening over £100,000 to, say, £25,000). Delivering this by gender would also be important. I am not, as yet, suggesting it by country, and if I did might only do so for those employing more than five per cent of the workforce.
Do this and the dynamic changes. There is real data to work with. Accountability, rather than tittle-tattle, is fuelled and the focus is on the pay of the majority and not that of the boss, meaning the issue of pay for everyone and not just an elite was then subject to scrutiny.
This would create real change. No wonder it was got rid of by the Tories in the 80s. I sincerely hope it can be revived.
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To expect any real radical reform of corporate law / practise from a UK Conservative government is unrealistic. It will only do the minimum necessary for its survival, without upsetting its core support and donor base. The concept of democracy in the workplace simply isn’t in its DNA.
“The concept of democracy in the workplace simply isn’t in its DNA.”
Nor is much in the way of reciprocity which makes you wonder what actually went on in the household where Theresa May was a child given her father was a vicar and the Church of England supposedly big on reciprocity!
It should be extended to cover charities in my view. There are some rather naughty boys gaming the not-for-profit system to give themselves spectacular pay awards, including Housing Associations, the Royal Opera House and the private schools where these cheeky rascals usually started out.
Perhaps it would be helpful to include data for hourly rate of pay (or alternatively: total hours worked), again in bands.
So a company would produce a table with 3 columns: annual pay, hourly pay (or: hours worked), number of employees.
Without that data, a company might have many employees in the £0-10K and £10-20K bands, but it would be unclear how much of that was due to low pay, how much to part-time employees.
And what on earth is “the average worker”? That can be spun all sorts of ways.
CEO on 1million, 99 workers on 11k, average wage is (1million+11k)/2=505k, so the CEO pay ratio is just 2!
or average wage=2million/100=20k, pay ratio=50?
or average wage=11k the wage most workers are on, so pay ratio=99?
Precisely
Games will be played