I now write on law and regulation facing the pensions sector for Professional Pensions and this portfolio will no longer be updated. Please read all my new articles on the Professional Pensions website.
Switzerland are to vote in a referendum on whether to cap pay ratios in organisations at 12:1. This is in addition to previously passed legislation that reduces the number of bonuses granted to senior executives. What we see here is nothing less than a sensible progressive policy.
Instigated by the Swiss Young Socialists, the referendum is a direct result of a petition that gained the support of over 100,000 people. This tremendous declaration of public agreement demonstrates widespread satisfaction with what is increasingly becoming the acceptable status quo: greedy capitalist executives taking more than their fair share. In this sense, Switzerland is leading the way in effectively challenging a system that allows a greedy few to get more, more, more. This is not an unreasonable or unfeasible demand. As Europeans continue to be stifled by austerity measures, we should continue to seek opportunities to garner funds that will help our Government’s to make it easier for people to live.
The situation seems even less nonsensical when you put it in terms of statistics. To introduce a pay ratio of 12:1 in the UK would be to set a maximum salary of around £148,000. That’s hardly on the brink of an austere budget. Currently, it’s more than the Prime Minister’s base salary – if the person who, arguably, has the hardest job in the country can only be paid £140,000, it makes no sense that people who do less difficult and liable jobs earn so much more. I’d welcome some reasoning as to why CEOs and footballers can earn eight-figure salaries. Furthermore, what does that money pay for?
Additionally, the maximum wage would be in comparison to a worker paid only the minimum wage of £6.31, for 37.5 hours work a week. It’s now widely believed that, in a society where the rate of inflation increases faster than wages, this wage is no longer enough for people to get by healthily or comfortably. What we must see introduced is a living wage: a wage that fluctuates with the economy, so that no person is ever stuck on a wage that becomes more and more difficult to support a life with. When you live in a society where people are no longer able to afford the bare basics, it seems ludicrous that some people would be outraged at the idea that they might only earn ten times more than their lowest-paid measly employee.
However, the situation looks even worse when you look at what the money can afford, rather than just the pay ratios. For example, the Vice-Chancellor of the University of Birmingham earns around £372,000 this year, along with some other ‘perks’ that come with the job. That’s only a meagre £7000 a week; incidentally, enough in a month to pay off the cost of a three-year degree course (even with the increased £9000 fees that he recommended were introduced). But to add salt to the wound, in two weeks the Vice-Chancellor earns more money than his lowest-paid employee does in a year.
It is for this reason that what Switzerland is doing is highly commendable. If this is how much someone earning less than half a million a year can afford, imagine what the CEOs can pay for on a daily basis. We must tackle this deeply unfair equality and find some way for that money to be put to a better use, like increasing the wages of the lowest-paid.
The Government’s defeat in the House of Commons over taking military action in Syria demonstrates a rare circumstance where the public are listened to by the MPs and widespread unwillingness to create another situation we are still overseeing in Iraq and Afghanistan.
Today’s recall of parliament reveals Cameron and Obama’s deep want for imminent attacks in Syria, in response to the alleged use of chemical attacks by the Assad regime on its citizens in recent times.
The crisis in Syria continues to worsen and any improvement to the situation seems an all too distant possibility.