High end salaries have been back in the news recently. Yesterday there was the overwhelming endorsement by the Swiss – of all people – of a tough package to crack down on unmerited rewards at the top . This contrasts with two votes for the super-rich given by our own Government. First, Downing Street made it clear that it is very relaxed with RBS handing over £600 million in bonuses despite the bank being publicly owned and massively loss making. Second, ministers and the London Mayor have been venting their fury at EU proposals to limit any single banker’s bonus to the value of their – presumably generous - full year salary.
These debates should be placed in context. It seems that the respite after the credit crunch both in the rate of increase in rewards to the highest paid and the consequent growth in the gap between them and the rest of us was very short lived. Once again, highest salaries are rising fastest. Meanwhile, average wages are falling faster and for longer than at any time in living memory. As no one seems able to justify this state of affairs in terms of just rewards, the argument made against the EU’s proposals was a kind of resigned utilitarianism: ‘if these people insist on being paid these salaries we better do it too or the best of them will emigrate to Singapore’.
A few weeks ago, together with Patricia Kaszynska FRSA, I posted a series of pieces critiquing the idea of social mobility as it is unthinkingly advocated by many politicians and most media commentators. Lifting a few talented people out of disadvantaged communities (even if we knew how to do it) makes the communities left behind even less able to turn themselves round. Furthermore, this form of meritocracy does nothing to address underlying levels of inequality and it provides cover for the existing elite who are able to conflate the society they advocate (in which the best get to the top) with the one we have (where most at the top, and their offspring, are there as much because of privilege as merit).
If we truly want meritocracy the best route is greater equality as this reduces the gaps between the rungs of the ladder going up and makes it less terrifying for some people to come down (necessary to achieve greater relative social mobility).
The debate over top people’s pay is a kind of mirror image of that on social mobility. Just as we can be dismayed that it is so hard for poor children to get ahead, so we are encouraged to be angry when it is shown that a rich person doesn’t deserve their reward. What much less often gets discussed is whether anyone at all should be paid a salary beyond the wildest dreams or ordinary folk.
I am well paid; probably in the top 1 or 2% of earners in what is still, in international terms, a rich country (although rapidly becoming less so). I am not in a position to be pious. Not do I see myself as a class warrior. But I find it hard to understand why anyone thinks they are worth more than, say, £500,000 a year. Even this figure means the person's remuneration is equivalent to five inner city GPs, twenty class room teachers or thirty care assistants.
Some would argue that such rewards are deserved by entrepreneurs who have built their own business. I am tempted to ask how committed an owner is to business growth if they are willing to take more than half a million a year out of the company to pay for a second yacht. Some people pocket £500,000 a year due to ‘unearned income' but it is the first word of that phrase that should be focussed upon.
We are in the midst of economic stagnation and public sector cuts, real wages are falling for most workers and the financial services sector continues, in many important regards, not to provide a service. That in these circumstances it still falls to those critical of inflated top wages to prove they are not deserved rather than falling to the rich to show they are worth it (as will now be more often the case in Switzerland) shows how very little assumptions in our country have changed in the last five years.
It is clear that coronavirus is exposing longstanding inequalities. Work needs to be done to combat the Covid-19 pandemic - but also the racism pandemic.