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Living standards lowest for a decade as new bonus bonanza for bosses takes off

class inequalityThe Institute for Fiscal Studies study Living Standards, Poverty and Inequality in the UK: 2013 just issued reveals that living standards fell to their lowest for a decade after average real incomes, which had already fallen 4% since the 2008-9 crash, fell a further 3% last year alone.

At the same time Incomes Data Services has recorded that company directors have awarded themselves bonus increases of nearly 50%. Workers’ pay increases have been below 2% on average (as against the RPI rise of 3.3%), while senior directors and board members have seen fit to give themselves an 18% rise. As a result bonus packages for top managers has now soared back again to 38% of salary.

The inequality gap has opened up again dramatically. The median total remuneration of FTSE-100 chief executives rose last year 8% to £3.7 million, or £71,000 a week, or £1,900 per hour for a 37.5 hour week. The top level goes to the chief exec of Burberry on £17 million, which works out at £325,000 a week. Peter Sands, disgraced chief of Standard Chartered Bank, who had to plead guilty in the US to Libor rate-rigging, nevertheless walks away with £9.3 million, enough to wipe away his guilt with £179,000 a week.

These are staggering sums, and display an utterly callous indifference to the plight of their work staff on whom they depend who have been forced to endure a real terms pay cut for the 4th year running. What makes the injustice even more stinging is that the bosses have got these enormous pay rises, not because they’ve suddenly become more productive, but because quantitative easing (£375bn of it), by boosting share prices, has been printing money for chief executives. Capitalism certainly looks after its own.

Why on earth doesn’t Labour proclaim a determined commitment to tax the super-rich (i.e. the 0.1% in the population with incomes in excess of £150,000 a week) in the manner that the state of the country in this crisis of austerity demands?

The richest 1,000 of them, just 0.003% of the population, have got richer by £35bn in this last year alone according to the Sunday Times Rich List, and by no less than £190bn over the last 4 years. Capital gains tax should be raised to the 40% level that prevailed under Thatcher, but even at its current 28% rate it would still raise over £50bn if applied to their ill-gotten gains over this last 4 year period. That could kickstart the economy at no increase in public borrowing at all (which has always been Osborne’s constant jibe, though Labour never refutes his canard). For once the hyper-rich could be made, kicking and screaming, to act in the national interest.

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