Tackling pay inequality

When the boss of Tesco is paid 900 times as much as the average till assistant there is still much to be done to tackle inequality, says Alison Johnstone.

As I headed into parliament on the number 27 bus his week, it struck me that whether it’s bankers or bus bosses the issue of high pay and inequality hasn’t gone away. Oxfam reports the wealthiest households are almost 300 times better off than the poorest.

For all its social justice rhetoric, the current Scottish Government is pretty weak on this issue. Occasionally, John Swinney writes a polite letter to CEOs of public bodies suggesting they might like to refuse a bonus and, unsurprisingly, not all comply. We hear that if we don’t offer top dollar we won’t get the best man –
and it is usually a man – but it’s hard to find examples of organisations where standards have suffered because senior managers have left for more lucrative
offers. Indeed, there’s an argument that if you offer megabucks you encourage the risk-taking that results in failure.

We should insist on publicly-owned organisations committing to wage ratios so we know there isn’t a disproportionate difference between those in the boardroom and those on the frontline. In the United States, Congress has directed the authorities to require companies to disclose these ratios. For example, Starbucks’ CEO gets $28m while the average barista gets just $25,000.

Here in Britain, the average ratio has shot up. Ten years ago chief executives earned 47 times the average wage; these days it’s 128 times. Tesco’s boss is paid 900 times as much as the average till assistant. Publicly-owned Scottish Water’s another good example. A frontline operative can expect wages of £14,000 a year yet the chief executive is on almost quarter of a million pounds.

Even without considering ratios there is the issue of low pay. There are still too many jobs going that pay more than the minimum wage but less than the Living Wage. We should use procurement rules to ensure any firms receiving public funds pay the Living Wage.

Pay across organisations should reflect what we value as a society. Will the government have the courage to wade in? I certainly hope so.

This blog was first published as a Platform piece in the Edinburgh Evening News 22 June 2013