Highly-paid bosses are harming the economy, says Bank of England bigwig
This image is from 2014, so the gap is probably much wider now.
Particularly interesting here is the part relating to “social capital” – trust and relationships in society.
Trust between bosses and employees is at an all-time low – not helped by Conservative Government policies that trample on workers and try to reduce their rights and remuneration. Look at the junior doctors’ strike for an example.
Mr Haldane is saying the direct result of this is harm to the economy, and we can see that this is true.
Why would any worker want to provide a high-quality product for an employer who is ripping them off?
And if they lose their job, why would the next worker want to provide a high-quality product for an employer who is paying them less than the last worker (because they can)?
The Tory attitude is that pay can be depressed to whatever level the market will still support – but Mr Haldane’s evidence shows that the market isn’t supporting such behaviour.
Look at the evidence of the last few years: We’ve had the slowest economic recovery in the UK’s history, and that’s largely because employers haven’t valued their workforce.
Excessive pay for top bosses is holding back economic growth in Britain, the chief economist of the Bank of England, Andy Haldane, has warned, in a significant intervention in the debate about executive remuneration in the UK’s biggest companies.
Mr Haldane, who has earned a reputation as one of the central bank’s most radical minds, highlighted in a speech in Westminster the fact that FTSE 100 bosses are now paid 150 times [as much as] the average UK worker.
This large and growing remuneration gap, Mr Haldane said, “drive[s] a wedge between management and employees…that in turn erodes social capital. A company, like a country, whose physical and social capital is being eroded is one whose wealth-creation capacity is being impaired.”
Social capital refers to trust and relationships in a society and Mr Haldane argued this matters “every bit as much to wealth and well-being” as financial capital such as stocks and shares and other such assets.
So far in 2016 there have been major pay revolts by shareholders at the oil giant BP, the mining group Anglo-American and the engineering company Weir, all over the level and structure of proposed remuneration packages to chief executives. A focal point of protest next month is expected to be the annual general meeting of the advertising conglomerate WPP where the annual pay of its chief executive and founder Sir Martin Sorrell is expected to soar to £70m.
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I seem to recall that a few years before the 2010 election, the extremely weird character Oliver Letwin, in one of his loud-mouthed rants actually said the workforce should be afraid of their employers and of losing their jobs. The Tories are deliberately creating such an unpleasant and extremely nasty working environment. Again, I believe it goes back to their strange hankering for a return to 18th and 19th century conditions which they appear to see a some sort of golden age.
American Alan Greenspan said it back in 1997.
If the workers are more insecure, that’s very healthy for the society, because if workers are insecure they won’t ask for wages, they won’t go on strike, they won’t call for benefits; they’ll serve the masters gladly and passively. And that’s optimal for corporations.
It’s what the Tories are aiming for.
Yup.
Greenspan is easily disproved, of course: Workers form a large part of society. If they are insecure, then society is insecure.
He meant it was healthy for the rich.