Jeremy Corbyn's proposal that bosses' pay should be no more than 20 times the wage of the lowest-paid worker in the company is a good one. The salaries of top bosses have reached grotesque levels as a multiple of average pay. For example the average pay of the CEO's of the FTSE100 companies has gone up from 47 times average wage in the 1990s to around 180 times today. The disparity in income will be even more shocking if the multiples are related to the minimum wage.
The reaction to Corbyn's proposal by the bosses has been hostile. The Guardian quotes Oliver Parry, the head of corporate governance at the Institute of Directors thus:
"Politicians simply do not know the right level of pay for the heads of multinational companies, and no successful economy operates with this level of intervention by government,"
A year ago I wrote an article on The Huffington Post in which I presented the case for government intervention in bosses' pay as follows:
"A company is a joint enterprise, and for it to be successful all its employees need to feel valued and justly rewarded. Such a disparity in income sends the wrong message to the many people who are working hard to make the company successful. It will lead to dissatisfaction and low morale amongst the workforce, and will eventually negatively impact the success of the company. A good boss will not accept such an obscene disparity in income between himself and his employees.
If the wages paid by a company to its poorest employees are so low that it requires the state to top up their wages to provide them with the basics of life, then inflated salaries paid to the bosses are effectively being subsidized by the taxes we pay. It is a transfer of wealth from the many to the very few at the top. How can that be right? Where is the free-market in such practices?
If the income distribution is more equitable, the subsidy by the state to the low paid will be reduced, leaving more money for the government to spend on the NHS, infrastructure, police etc., things that are necessary for a civilized, functioning society.
Surely, then, that gives our elected government the right to enact laws and regulations to fix maximum salaries of bosses as a multiple of the lowest wage in that particular company. This will incentivize the bosses to increase the pay of their poorest employees to increase their own pay."
Fairness and justice are the pillars on which successful, happy societies are built. The present system that siphons so much wealth to the top 1% to the impoverishment of the rest is not fair, nor just. Failure to take action will result in the whole of society becoming poorer. Jeremy Corbyn is spot on; salaries of company bosses should be no more than 20 times the wage of its lowest-paid worker.