You can always trust Britain’s pampered corporate bosses to express their greed at the most inauspicious moments, but to do so when Osborne is set for the most inequality-expanding budget in living memory at the expense of the poor is insensitive even by their standards. The heads of Britain’s biggest companies already make more in a day than a worker on the minimum wage in a year. Yet now they’re demanding 20-30% increases in their basic pay because the EU has placed a cap on bonuses at 200% of the basic salary. They also object to bonuses being withheld for longer periods (3 or 5 years) as a check that the bonus was properly earned and not just a device for topping up basic pay.
In the late 1990s the average FTSE-100 CEO took home about £1m (£19,230 a week). Now, less than two decades later, it is 5 times that level (£96,154 a week). At roughly £20,000 every working day, that is one-and-a-half times what an employee working 40 hours a week on the minimum wage earns in a year. It’s not as though the uplift on top pay can be justified on any capitalist metric. Between 2000-13 bonus payments at the top 350 UK listed companies increased at twice the rate of earnings per share and company profits. For CEOs’ long-term investment plans the rationale is even weaker. Only a quarter of the annual change in pay to executives could be attributed to a rise in earnings per share or total shareholder return in any year in the decade to 2013.
Yet in that same decade average wages are still 6% lower at the end than at the beginning. The budget is now set to exacerbate this unjustifiable chasm still further. The big cuts in working tax credits will hit millions of the lowest paid workers in poverty. Britain already has the highest proportion of low-paid workers (i.e. about a fifth earning less than two-thirds of median earnings, which is the OECD definition of low pay) of any advanced industrial nation (including Japan, Australia and Germany) except the US. Osborne wants, he says, to increase low pay, not by making employers pay the living wage, but by cutting their taxes. But a fifth of them earn so little that they don’t pay tax now anyway, and even if they did, cutting tax levels at the base benefits the high-paid much more than the low-paid.
Yet another gratuitous and provocative giveaway to the very rich will be Osborne’s raising the inheritance tax threshold to £1 million – a tax break limited to to just the 6% richest families in Britain. And another kick in the face for low-paid workers in poverty is the report by the Competition and Markets Authority that the Big Six energy companies have not been colluding to drive up profits, so there is no case to break them up. And thus it goes on and on.