This week Theresa May set out plans to tackle what she termed 'the unacceptable face of capitalism' - including corporate greed that has led to Britain becoming so divided. Today, FTSE 100 bosses are paid 129 times as much as their average employee, compared to 47 times as much in 1998.
Unfortunately, her underwhelming package of policies falls far short of anything meaningful.
Decent, well-paid work should be a viable route out of poverty. Yet across the UK more than seven million people from working families live in poverty, struggling to put food on the table and pay bills. Precarious work, low pay and zero-hours contracts all play a part in fuelling this problem. Businesses - held to account by government - need to ensure the value they create is fairly shared with the workers who help to generate it.
Rather than allow workers onto boards to help influence strategic decisions, the new plans only ask businesses to take into account employees' interests. This is a real missed opportunity: robust worker advisory panels - with real power - could be a powerful tool to increase low wages and reduce inequality. Business leaders said the high-level board discussions would be too complex for their employees to understand. Yet 19 European countries already successfully mandate employee representation on boards.
The new plans for companies to publish pay ratios of CEO to average worker add little to information already available. In any case, publication of ratios by itself will not help low-paid workers - without accompanying action, savings on CEO pay could just end up in shareholders' pockets. One solution could be a maximum pay ratio policy - decided by boards - where bosses only earn more if employees do too.To raise standards, companies should be required to develop a mandatory fair work policy in collaboration with workers, which would cover job security, working conditions and fair pay for all employees and those further down the supply chain.
But to really change 'the unacceptable face of capitalism' the government should consider more fundamental reform. It needs to change incentive systems that reward CEOs who keep costs down and profits high through paying low wages, exploiting loopholes in tax laws to avoid paying their fair share, and ignoring the planet's natural limits. It means reforming company law so that directors act in the interests of workers and wider society, not just their shareholders, and implementing tougher, more transparent tax laws to ensure tax is paid in line with economic activity.
The watering-down of the Government's plans reflects the business lobby's clout. But not all companies oppose change. Many recognise that a new way of doing business is long overdue. Unfortunately, the current distorted business model can punish them for doing the right thing.
For example, Unilever, a company that has made significant investments in its social and environmental performance, had to fight off an attempted takeover when its profit margin dropped, and remains under threat. Most companies focus only on growing short-term profits, whatever the true cost to people or the environment. With the pound weak following the Brexit vote, companies that invest in people and sustainability are even more at risk from predatory investors.
If companies are to benefit society, they need to be able to make long-term investments in workers, pay their fair share of taxes and adapt to environmentally-friendly processes without fear of reprisal. It is increasingly apparent that mainstream business and finance is poorly equipped to deal with these challenges.
A different breed of business is showing what is possible, with the right will and backing. Take Café Direct, for example, the UK's fifth-largest coffee brand, which Oxfam and others founded in 1991. It pays coffee farmers a premium and reinvests 50% of profits into communities. It gives farmer representatives two board seats and voluntarily publishes pay ratios - its highest paid worker earns just 4.4 times as much as the lowest-paid.
Instead of tinkering round the edges with limited reform, the UK Government should set out its vision for a genuinely inclusive economy - one where businesses help to lift workers out of poverty, empower women and reduce inequality. Government in many developing countries look at the UK's Corporate Governance laws and codes as an example of best practice - if we get them right, it could also benefit workers in poor countries around the world.Suggest a correction