Daily View: Fair pay review
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Commentators discuss the Hutton Fair Pay Review which recommends that no public-sector executive should earn more than 20 times the salary of the lowest-paid employee.
that the real pay inequalities are in the private sector so the rule would have little effect:
"In short, why bother? Yes, yes, it's a time of austerity. People facing real hardship at the bottom are much more likely to trash Nick Clegg's windows if they don't believe that people at the top have suffered any ill-effects. And yet... capping a pay ratio at twice what it typically is at the moment doesn't feel like a very satisfying solution, does it? I can't hear anybody's pips squeaking."
The Institute for Public Policy Research's that tackling private-sector pay inequalities will be tricky:
"Public support has waned for a solution based on the tax-benefit system, and even policymakers on the Left believe they may have reached the limits of redistribution by stealth. Luckily the final report - due to be published next March - promises recommendations that are will be applicable in the private sector as well as the public. In the meantime, the interim report has made it difficult for the government to rally against high executive pay in the public sector without acknowledging the problem in the private sector. Let's hope the public can expect some policy meat to address their concerns."
that a pay ratio is inherently flawed:
"The implementation of an arbitrary ratio could lead to an increase in outsourcing of the lowest paid jobs to increase the bottom wage used to define the ratio, it could lead to wage inflation- pushing up top wages in companies where the current ratio is lower (it is typical for top public sector managers to earn around 10 to12 times those of their lowest paid staff) and it could also lead to an increase in payments by stealth, i.e. increase in intangible benefits but still paid for by the taxpayer."
Author of Pay Check: Are Top Earners Really Worth It? [subscription required] that the focus should be on tackling "irrational" pay:
"This year the chief executives of FTSE 100 companies earned 88 times the average pay of full-time workers, almost double the differential (47 times) only a decade ago. This pay inflation has been justified on the basis that the recipients possess, like Rooney, a supremely rare talent. And high-flyers in the public sector warn that, unless they receive at least a decent proportion of what their counterparts earn in the corporate world, they will up sticks and join them, leaving us all utterly bereft.
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"It is this self-serving talent argument, not the nebulous idea of 'unfairness', that must be rebutted if we are to reduce the amount that we pay through our taxes to public sector executives, and out of our pensions and other investments to plc bosses."
The cowardice behind the recommendation:
"Its bottom line is that, as a rule, the best-paid individuals in the public sector should normally receive no more than 20 times more than the lowest paid employees. Anything more than that, and the organisation should have to justify its decision. Coincidence or not, the multiple of 20 is what David Cameron broached at the outset. So it is not unreasonable to ask whether a review was needed at all. Might a simple political decision have sufficed?"
of the proposal, complete with a theory as to why Will Hutton produced a "turkey":
"Possibly Hutton was distracted in his task by the insolvency of the Work Foundation, which he ran for the best part of a decade. It went belly-up because of enormous unfunded pension liabilities. At least his work there gave Hutton some insight into high salaries - he was reportedly picking up a salary of £180,000 a year from this charitable foundation. Perhaps it should have been called the Nice Work If You Can Get It Foundation."
