Is there no end to rising inequality? Probably not, until the 90% take a stand and push back hard, refusing to take it any more. Reaching that point of real resistance would be helped by the Labour party telling the truth that austerity is not about paying off the deficit – we’ve already suffered enormous pain and hardship and injustice, but the deficit has hardly been cut at all – it’s really about shrinking the State and extending the market into everything, so you’ll only get what the market pays you – £85,000 a week at the top, £285 a week for the 5 million workers paid below the living wage, and next to nothing if you’re one of the 2.5 million unemployed, and actually nothing at all if you’re one of the 860,000 persons currently ‘sanctioned’.
It would be helped if Labour would set out a clear plan as an alternative to austerity, namely public investment in house-building, energy and transport and IT infrastructure, and laying the foundations for a low-carbon economy, getting 1.5 million people off the dole and into work within 2 years and restoring full employment as the central goal of economic policy. But for the moment the increasing figures of obscene inequality, as Income Data Services shows, tell their own story.
The 14% rise in directors’ pay at the UK’s biggest quoted companies is actually the median increase – the half-way point between the biggest and smallest rise. The mean average rise, i.e. the total sum of the increases received divided by the number of persons receiving them, rose by no less than 40%, up from 27% the previous year.
That takes their basic pay to £3.3m a year, or £63,500 a week. But on top of that they also received vested long-term incentive plans (LTIPs) where the median rise in value was a staggering 58%. Against that, average earnings across the economy last year grew by 2.1%, so with inflation at 2.8% they fell in real terms by 0.7%. Welcome to Tory Britain.
Significantly there was no talk this time round about a shareholders’ spring or voting down of remuneration reports. That’s where LTIPs come in handy. They are supposed to provide incentives over typically a 3-year period, and are usually granted in the form of shares and closely tied to shareholder returns.
That’s useful for avoiding media attention because they are less visible to investors than salary increases and bonus payouts. Nearly two-thirds of FTSE directors benefited from an LTIP award last year, and most of them were allocated a large block of shares 3 years ago when the Stock Exchange was at a low ebb. Share prices have since then risen substantially, so they’re now creaming off windfall gains that have little or nothing to do with their own merits. Nice if you know how.
