How much should the best paid be paid?
The chief executive of a company should be paid more than the average member of staff, right? But how much more? Twice? Five times? 10 times? 100 times?
When I was Head of Research at the Communication Workers Union (CWU), one of my international colleagues was Philip Jennings, General Secretary of Union Network International (UNI) to which the CWU is affiliated. This week, Philip was speaking at the World Economic Forum in Davos.
The union leader said that, in the 1970s, US chief executives were paid 30 or 40 times the wage of the average worker, but by 2008 they took home 319 times more than the average American. He suggested that executive salaries should be capped at 20 times the pay of the average worker.
If applied to Britain – where the average wage is just over £25,000 a year – the 20 to 1 rule would mean no executive could earn more than £500,000 a year. The Prime Minister’s current salary is £132,923 (ministerial entitlement), in addition to a salary of £64,766 as a Member of Parliament.
Further information on the speech and its coverage here.