The CBI’s Director-General, Howard Davies, has said a national minimum wage would not solve poverty and income inequality. Instead Family Credit would concentrate help on the poorest one tenth of families, 85% of whom have no one in formal employment. The CBI view, put forward at a conference on July 18, is that a national minimum wage of £4.10 per hour would add 1.5% to the national wage bill, equal to £4.5 billion.
Speaking at the same conference, Harriet Harman MP, Labour’s employment spokesperson, reaffirmed the commitment to a minimum wage, saying more than 1 million workers are paid less than £2.50 per hour. Subsidies from the tax payer for low paid staff through the benefits system was wrong, although she hinted that young workers might be excluded. Labour says a commission of employers and unions on low pay would set the rate after the election.
In a survey by MORI for the NUCPS, the civil service union, three quarters of all people support the introduction of a minimum wage, including 62% of Conservative supporters. 57% say the rate should be around £4.00 per hour. MORI interviewed a representative sample of 1,984 adults in June. Contact CBI on 0171 379 7400 or Simon Braunholtz, MORI, on 0171 222 0232
HIGH EXECUTIVE SALARIES
The Greenbury Committee, appointed by the CBI to make recommendations on the pay of senior executives, reported on July 17. Among the recommendations were:
a code of best practice on setting and disclosure rates of pay, enforced by the Stock Exchange on listed companies;
privatised utilities to “review comprehensively” their remuneration arrangements;
time limits on share options schemes, and the gains to be taxed as income not capital gain.
Timed to coincide with publication, the government announced an immediate change in taxation of share options, only to discover that many low paid staff with schemes to involve and incentivise them would be hit harder than the so-called ‘fat cats’ of the board room. Contact Gee Publishing on 0345 573113
HOUSEHOLDS BELOW AVERAGE INCOME
The Households Below Average Income statistical analysis, published by the Department of Social Security on June 2, shows a threefold increase since 1979 in the proportion of people receiving half the average income after housing payments, with the unemployed rather than pensioners now among the worst off. 59% of the 1979 population was below average income, but this has risen to 63% in 1992/93, widening the gap between rich and poor. Contact HMSO Publication Centre on 0171 873 9090
WORKS COUNCILS GROW
Despite the UK government’s opt out, the European Union plan for consultative works councils has been taken up by 60 companies in Europe. Padraig Flynn, the European Union commissioner for social policy, made the announcement on July 13 during a speech in Brussels and emphasised the significance of work councils to European social policy and the future of the European Union. He stressed that there is no evidence that consultation with workers leads to loss of competitiveness and said that no companies had omitted their UK workers from pan-European consultation. Contact Angel Carro, European Commission London Office, on 0171 973 1971
Comment
It is surely a sign of uncertain political times when a Conservative government tries to restrict private sector pay (even if through a committee of the corporate great and good) while the CBI argues for higher public spending through Family Credit to help the low paid. The theory used to be that higher pay through lower taxation incentivised people and companies should take on directly more social responsibilities as the state cut expenditure and withdrew.
Surely the inclusive company, working for long term success, will involve and incentivise, not just a few, but all its staff. Such a company will not jeopardise the sense of common corporate purpose by paying some far in excess, and others well below, broadly accepted standards. Executive pay is seen as an issue about corporate governance. Is it not time to go beyond the narrow issues raised by Cadbury I or Greenbury, and examine the whole agenda of staff motivation? The Cadbury II committee should study the RSA Tomorrow’s Company report – and act. Otherwise the politicians will go on meddling.
COMMENTS