Tuesday, November 30, 2010

 

Huge pay Gap is a Ticking Time Bomb

Chris Riddell of The Observer is my favourite cartoonist by a mile so I hope he won't mind me blagging his brilliant creation last Sunday. But the article of greatest interest to me was by Danny Dorling from Sheffield University. He takes a look at the growing wage inequality, pointing out that we have not always had such a huge gap between the rich and poor over the last century.

In 1918 the richest 1% earned 19% of all income- that was around 19 times the average wage at that time. But future decades saw a gradual decline as income differences lessened slowly but surely. So in 1935 the percentage was 14%, by 1950, 12%, 1960 to 9%, 1970, 7% and by 1980, 6%. After taxes this figure was a mere 4%. This evening out had occurred without any intervention; as Dorling suggests, this ‘process towards a more equal society seemed inexorable, an almost natural consequence of an advanced democracy.’ Indeed this equalisation seemed itself part of the post-war political consensus: inequality was undesirable and was to be reduced.

But all this changed after 1979. It was not just Thatcher’s fault, as the examples of huge private sector pay had crossed the Atlantic, as did the economic philosophy which underpinned it. By 1983 the top 1% was receiving 7%, by 1992 it was 10%, by 1997 12%, by 2003 13% and 2005 16%. Quite possibly now the figure is back up to 18%. All the progress since the end of World War I- about 60 years- had been virtually reversed in half that time.

But while the averages are shocking, particular examples are hugely more so. While police officers earned ££7,358 in 1980, by 2009 this had increased to £38, 744. Not so surprising you think, but look at ther average salary of a FTSE CEO, from £85, 000 to a thumping £4.9million, 200 times the average take-home pay. On top of this we have Bart Hecht of Reckitt Benckiser who gets £96.2 million a year (nearly 4000 times the average wage). Moreover we hear that the bankers' who started the global meltdown are now receiving their bgonuses on a 'business as usual' basis.

Opinion p[olls show trhat only 1% of Britons think such pay is justified. British people are fairly tolerant, complacent, even placid people compared with some but I genuinely feel this sense of outrage at differential and unjustifiable rewards awarded to often less than brilliant top executives, will well up and extract a condign price some time in the future.

Comments:
you might like to take a gander at a post http://burningourmoney.blogspot.com/2010/12/thats-not-fair.html which might (though I won't hold my breath) put you on the right track.

Mind how you go
 
David
Not sure there is any point in arguing with you as we clearly occupy different moral universes. You seem to think that a salary of £96.2m is Ok because the markets have said so. I think such huge differentials are obscene and socially harmful. So predictably, big salary apologist5s like you and your ilk scream 'politics of envy' whenever anyone so much as whispers such hugw pay gaps might just be a trad, er unjust. But such a concept seems alien to you and your right-wing head-banger associates.

Your blogger friend says Hutton bangs on about the private sector. Of course he does cos it's the private sector which DRIVES salaries in the public sector.

But, as I say, little point in arguing with those whose mind is clearly closed to any moral argument though contrive to claim they have a monopoly of it nevertheless
 
Moral universes ? What they ?

Do try to keep a sense of perspective.

Attempting to identify someone as a "Right wing headbanger" & thereby insult is SO 1990's.

You don't see me using such phrases as the Loony Left, when describing the busted socialist flush do you ?

Mind how you go
 
Very hard to argue that free people and the free companies that they own should be allowed to enter into contracts with employees at a rate of their choosing. Unless of course you don't want to live in a free country...
 
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