In November last year, the UK government published a Green Paper on corporate governance. This is not the sexiest of topics, but it did set alight the passions of the Equality Trust (established by Richard Wilkinson and Kate Pickett, authors of The Spirit Level: Why More Equal Societies Almost Always Do Better). The trust has published a report claiming that CEOs earn around 386 times more than the national living wage.
So are the ‘fat cats’ getting fatter while the rest of us are just about managing? Wilkinson and Pickett certainly think so. Low pay (and its corollary, ‘excessive pay’) is very much of the moment in policymaking circles. We might call it the politics of incomes. From minimum wages and living wages to universal basic income and the recent u-turn on taxing the self-employed, we’ve never been more obsessed with what people do and don’t get paid. Indeed, this week, Labour leader Jeremy Corbyn tried to overcome his poor poll ratings by pledging a £10-an-hour minimum wage.
No longer does the minimum wage spark controversy about the impact it might have on jobs. The national living wage is now regarded as right and socially responsible. Advocates of a universal basic income (UBI) have been emboldened by the acceptance of these previous schemes. In Scotland, Glasgow and Fife are now considering implementing a UBI. The Netherlands, Canada, India and Finland are piloting it, too.
But not all proposed income schemes have been so popular. In January, in the course of a single day, Corbyn infamously backtracked from calling for a ‘maximum wage’ to making a vague demand for restrictions on high executive pay, implementing higher top-rate taxes, and enforcing caps on pay differentials in firms. He couldn’t even claim these ideas as his own. Before she became prime minister, Theresa May advocated the publication of firm’s pay differentials and other pay-fairness measures.
There are all sorts of problems with these income-based utopias. Critics argue that the government is already effectively subsidising poorly performing businesses through benefit payments to underpaid workers, and that the introduction of a UBI would do little to fix this problem. As a recent Guardian editorial said, if set too low, UBI could also act as a subsidy to low-paying employers. But if set too high, it would be a disincentive to work (and would encourage the notion – especially among young people – that poorly paid work is beneath them).