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Britain’s pay: from £28m 8 weeks into a job to £0 a week on zero hours contracts

UNEQUAL PAYSome of Ed Miliband’s most popular announcements have been his pledge to abolish non-dom status and to hunt down aggressive tax abusers , not only making them pay up what is owed, but also a fine of an equal amount on top. He would be even more popular if he found a formula to deal with the grotesque excesses of corporate pay at the top.

This trend has finally hit the fan with the saga of Helge Lund. He was hired from the Norwegian Statoil to turn round the oil company BG Group. Under this deal he was paid up to £14 million a year, 10 times more than his pay at Statoil at a company with revenues of just a fifth of the Norwegian group’s. That made him the highest paid chief executive of an oil company in Europe, with a one-way upward ratchet linked to the share price. That extravagance by itself is grotesquely excessive. But he hadn’t been in the job 8 weeks when Shell made a takeover bid, and the BG Group share price shot up. As a result Lund could be in line for a payout of no less than £28 millions.

This is of course an exceptional case, but it is nevertheless symptomatic of the way that unregulated capitalism operates in the top layers of its functionaries. A minuscule clique at the top fixes the deal, and the lottery of the market does the rest. The distribution of rewards, set at an enormous scale, has next to nothing to do with merit or competence, but largely due to the fall of the dice in a system driven by the vagaries of extraneous market forces.

The extreme arbitrariness of such a casino system of remuneration cries out for reform, as the public is now demanding. What should be done? First, the independent High Pay Commission should be asked to undertake a comparative survey of top executive remuneration in a range of sectors, based on the various elements that contribute to a fair and justifiable reward system, together with the weighting that should be allotted to each factor.

The survey should also take account in its decisions of a representative sample of public opinion. That would then provide a guideline for a reasonable and acceptable system of top pay against which any individual allocation should be measured.

Where any such individual pay award does not broadly accord with such a framework, then it should be referred for confirmation/ modification/ rejection by a vote of shareholders and separately by a vote of the workforce. Awareness of such an underlying system should steadily bring top corporate pay (and consequentially also corporate pay below top levels) into a range acceptable to public opinion, but in egregious cases like Helge Lund there would be a fall-back corrective to halt the random arbitrariness of the market lottery.

One Comment

  1. Robert says:

    Getting rid of Non Doms and upping the Min wage to less then a living wage in five years time , the bedroom tax all these are because are nice little gifts to get voters.

    The issue over the bedroom tax labour could not even be bothered to vote against it.

    Non doms why did Miliband not moan about them when he was in power.

    The Tories are now back being the Tories and today we have a labour party telling us they are heading back to the center ground. New labour land.

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