Thursday, 24 November 2011

From riches to riches

It’s a closed shop and a very effective it is.  No, not a trade union but the closed doors of the UK’s Board rooms. 
How effective a closed shop it is, was highlighted this week in the High Pay Commission’s final report titled Cheques with Balances: Why tackling high pay is in the national interest. 
In commenting on the report the chair of the High Pay Commission Deborah Hargreaves said,
There’s a crisis at the top of British business and it is deeply corrosive to our economy. When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality it represents a deep malaise at the very top of our society.
The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society – the top 0.1% -continues to enjoy huge annual increases in pay awards. Everyone, including each of the main political parties, recognises there is a need to tackle top pay. That’s why we are saying there must be an end to the “closed shop” that sets top pay and that pay packages should be clear, open and published to shareholders and the public.
It couldn’t be put better. The country is facing a strike in the public sector over cuts to pensions, working families in Wales are finding themselves in homeless hostels because what they earn isn’t enough to pay the rent and put food on the table and the long term sick are seeing their benefits cut. 

And what of our captain’s of industry? Are they sharing the pain, bearing their share of the burden? Not on your life, they’re all rushing to get their snouts in the trough.The  report points the finger at the bosses. Showing them to be a grabbing self serving lot, voting themselves stratospheric pay increases. 
Redistribution has certainly taken place, but not from the rich to the poor, quite the opposite, wealth flowed upwards to the top 0.1%.  

Coincidently the Office of National Statisitics, yesterday, reported that the gap between the highest and lowest paid had widened considerably. The bottom tenth of earners saw their pay creep up just 0.1% between 2010 and 2011 while the top tenth saw their pay grow 18 times faster. 

With inflation running between 4 and 5 per cent many at the lowest end of the scale saw their pay cut in real terms.

The pay of waiters and waitresses – who are mostly part-time workers – fell 11.2% year-on-year to £5,660. Hairdressers' salaries fell 4.5% to £9,599, while cleaners' remuneration fell 3.4%. This explains why many are not making ends meet and that there is an increase in the number of homeless. 

The industrial unrest we're about to see in the public sector is surely a reflection and consequence of their pay only going up by an average 0.3% last year. It is less than half the increase of that of the private sector.

At the other end of the scale, chief executives and directors of leading organisations saw an average salary of £112,157, a rise of 15%. The salaries of senior corporate managers also saw a hike up with a substantially  increase – up 7.1% year-on-year to £77,679.

Inequality of income is not new, it happened under Labour too. The gap  widening in their term of office as they sucked up to tthe City. But, at least, they could claim that when they were in charge, real wages increased in every income group. 
Now the choice facing many, is no pay or low pay.

The gap between the four nations is also wide. The median salary in London of £27,560  and in Wales is nearly 30 per cent lower at £19,472 and Northern Ireland's £18,494, the lowest-earning region of the UK. Average earnings in Scotland were £20,862.
It is a fact that with less cash in the pockets of ordinary people consumer growth takes a hit. And economic recovery? Well it don't happen.  The rich may get the pleasure of a large wad of cash. But it’s only the poor that can spend in such numbers to get a country's economy moving again. Why is it that politicians never seem to understand this basic fact.

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