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Top pay restraint starts at home - but must include the private sector

Equality campaign One Society has issued an excellent response to reports of high wages earned by quango and union chiefs. There is no excuse for some labour leaders, in particular, to be earning six-figure sums. But the real rot remains in the private sector, where bonuses and top salaries continue to spiral while the rest of us are promised an age of austerity.

What One Society don't say, however, is that the TaxPayers' Alliance is targetting unions for one reason: to undermine opposition to public sector cuts and the increased inequality those cuts will bring. Why else has the TPA suddenly extended its remit to look beyond public spending? And now that unions are fair game, surely it's time for the TPA to come clean on its own opaque finances?

One Society Media Release: 2 July 2010

Pay restraint starts at home, but must include private sector

  • The links between health and pay inequalities
  • Top pay in every sector out of balance
  • Pay transparency is not enough; need to introduce wage ratios
  • Call for trade union leaders to back wage ratios within their own unions and for wider economy

Responding to the release of data on top pay within quangos, Malcolm Clark, campaign director of One Society, said:

“On a day when a report finds the life expectancy gap between rich and poor widening, we are confronted with yet more stories of high salaries for the few. The rewards – both financial and health-wise – of the past decade’s economic growth have disproportionately gone to those already at the top. And we fear this entrenched inequality is set to continue.”

“Those with the broadest shoulders are not bearing the broadest burden of reducing the deficit. Instead, these people had the broadest smiles after the Budget; having avoided a significant Capital Gains Tax rise or other measures beyond what was already in place from previous Budgets. Whereas, the impact of benefit changes, the VAT rise, cuts and rising unemployment will be felt much more keenly lower down the income scale. That balance needs to be redressed.”

“Where the Government and the Tax Payers’ Alliance are correct is in thinking that good practice should start at home – within the public sector, quangos and employee representation bodies (including the unions). Increased pay transparency is not going to make much difference on its own though.”

“What will is introducing wage ratios, where top pay is capped at a maximum multiple of the salary of the lowest paid employees. For the unions, wage ratios have the added advantage of focusing attention on the lowest as well as the highest earnings within an organisation: giving momentum to bring low wages up whilst stemming runaway pay at the top.”

“The Greater London Assembly has set the standard for others to follow: committing not just to a 1:20 wage ratio; but to lowering that over-time to 1:10 (as well as paying the London Living Wage as a minimum salary). That lower figure is already within easy reach for trade unions, and could be used as a starting point for going further, including within the workplaces of their members. We will shortly be calling on the candidates for General Secretary of Unite union to back such a move.”

“However, the Tax Payers’ Alliance and others should worry more about the salaries of private sector contractors and consultants whose inflated pay drains valuable money out of the public sector. Precisely as the government’s Fair Pay Review acknowledges in its terms of reference: ‘distortions and market failures in private sector pay create pressure for unfair pay multiples in the public sector’. Only once we have transparent and fair pay – including wage ratios – in the private sector will real change (and savings) in the public sector be possible.”

Posted by Other TPA at 01:41pm on 2 July 2010
Tags: Inequality,Private sector,Public sector

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