According to think-tank High Pay Centre (HPC), by midday on Wednesday 4 January 2017, Britain’s top bosses had earnt more in two and a half days than the average UK worker will make the entire year [1] The data on the day dubbed ‘Fat Cat Wednesday’ illustrated the stark disparity in pay between the UK’s highest paid and the rest of the country. HPC Director Stefan Stern said:
“We hope the government will recognise that further reform to pay practices are needed if this gap is to be closed. “
Addressing the issue Jeremy Corbyn, leader of the Labour Party, set out several proposals for reform. Speaking to BBC Radio 4, Mr Corbyn stated ‘I would like there to be some kind of earnings cap, quite honestly‘ without committing to what the figure for his ‘cap’ would be. This idea was rejected by various commentators, with two of Mr. Corbyn’s former economic advisors stating that the idea was ‘unworkable‘ and ‘made no economic sense.’[2] Another proposal that was better received was a ‘pay ratio limit.’ This is an idea supported by HPC, and Mr Corbyn has stated specifically that those companies awarded government contracts should be subject to a pay ratio limit of 20:1 between the highest and lowest paid workers.[3]
Despite the debate on salary restrictions, it is currently not possible to confirm whether any of Mr Corbyn’s proposals will ever become law. The current spotlight on the issue does however illustrate the need to treat all those working for a company fairly and to be able to justify levels of executive pay.
