So How Much are You Worth?

Yesterday there was a daft article in the Independent which repeated three canards relating to pay:

1. No-one in the public sector should earn more than the Prime Minister. Let’s be clear no-one in the public sector does earn more than the Prime Minister. The Government’s own pay adviser had calculated that the PM gets a little under £500,000 as a total remuneration package.

2. That public sector wages cannot possibly be compared with private sector ones although it didn’t really say why not.

3. That it wouldn’t really matter if you reduced top people’s pay because if redistributed it would give us all 3p a week and a packet of Polos!

Well articles like this make my blood boil. Let me be straight – fortunately I am not poor. I earn about 2.5 times the median wage and Erica earns about 1.5 times the median wage. This means that our combined wages are well under £80,000 per annum. We have a good life, good holidays, and live in a lovely house. We have brought our kids up debt free and would not know what to do with more money if it was showered upon us by the birthday fairy.

But it would appear that some people would not get out of bed for such a salary. They can only be persuaded to work if they are paid many, many multiples of that salary and hold out the threat against us all that they would go off to another country with all their talents and skills if their 30 pieces of gold are not paid. Well, as they say, every cloud has a silver lining. I think we should call their bluff and let them go. Why? Well for two reason really:

1. Greedy little oiks like these will not help us create a fairer, more compassionate and better Britain. Instead they fuel greed and force wages upwards as other people at all levels say, “If they can get it why not me?” They are a major cause of wage inflation. This small coterie of spivs reward each other for work that is challenging, enjoyable, stimulating and they want to take off the financial cream as well.

2. Frankly, many of them are not as good as they think. Any comparison with Germany where the private sector is much better than that in the UK shows that German Directors, although well paid, do not earn the King’s ransoms demanded by the FTSE 100 cowboys. In Germany investment is long-term and that’s how management thinks in the UK it is too often short term with immediate returns on investment more important than long term ones.

A few years ago I supported COMPASS when they established a High Pay Commission. I cannot recall what happened to it but if it didn’t complete its work it should be reconvened and set to work looking at real comparisons and working out what to do about them.

Let’s take the C-Ex of a large council. Their job is infinitely more complicated than that of a company of equivalent size. They can be dealing with the needs of children in care one minute and making major investment decisions that will affect their area for years the next. They do it all with a very large board of none execs (we’re called councillors actually) and they do it in public. Almost every consumer of their service is also a shareholder (we call them electors or residents).
Yet in the private sector decisions are made in private; there is no effective scrutiny of their decisions; there are no real shareholder votes and when they don’t like votes that shareholders do take they can ignore them. Skill levels are concentrated around one or two areas of expertise.

Which is the easiest job? Well I’ll leave you to choose. A simpler dilemma would be why should a highly skilled doctor who trained for up to 10 years be paid 10% of the salary of a modestly earning Merchant Banker?
This is not just about money – it’s about morality. Decisions about who gets paid what form a fundamental role in deciding whether our society as a whole works or does not. Opacity in payment methods and targets for supposedly high performing directors and managers have led not to growth but decline.

Frankly it’s all phooey. They pay themselves what they want because no-one in the 3 political parties is prepared to challenge them. If the High Pay Commission didn’t do its business properly let’s get the debate going again:

• What should be the differentials between the highest and lowest paid?
• How do we reward those who make an effort against those who do not?
• How do we balance life saving skills and knowledge against money making skills and knowledge?
• How do we share out more fairly the fruits of our wealth which are only attainable because public and private sectors work together?

In the meantime Nick should stick to his guns. There should be no repeal of the 50p tax rate unless a more effective way of taking cash from the cash guzzlers is found.

About richardkemp

Leader of the Liberal Democrats in Liverpool. Deputy Chair and Lib Dem Spokesperson on the LGA Community Wellbeing Board. Married to the lovely Cllr Erica Kemp CBE with three children and four grandchildren.
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5 Responses to So How Much are You Worth?

  1. Nonconformistradical says:

    “I earn about 2.5 times the median wage and Erica earns about 1.5 times the median wage. This means that our combined wages are well under £80,000 per annum.”

    Not sure about your figures here unless you are referring to take-home pay after tax, NI. I had thought the median UK wage was over £25,000 per annum but that wouldn’t tally with what you say about your combined wages being 4 times the median wage

    Otherwise I agree with what you say.

  2. Paul Saunders says:

    Excellent points made. Agree completely.
    I think median income was about 20k in 2006, probably more by now. The actual answer is not material to the argument.

  3. John Brace says:

    The Lib Dems can hardly be accused of being the party of the poor though, demographically they’re the party of the middle-class.

    Unlike you I’m not earning multiples of the average wage, because I prefer to do things that are good for society (voluntarily) rather than benefit financially from them. I do work full-time, but my salary has been down due to the worldwide recession affecting the business I run.

    I resolved a long time ago not to work in the public sector because I saw what it did to my immediate family and the workplace culture and attitudes.

    My wife was a paramedic until she was attacked by a knife wielding patient, then run over by the ambulance. When she got out of hospital, her employer didn’t want to employ her any more because she had a disability. Eventually after the union kicked up a fuss, she was paid 12 months salary and told to go away (not even offered a desk job).

    My father (a magistrate’s court clerk) and union rep was retired on “medical grounds” well before the age he should’ve retired, partly again due to an unsympathetic employer and workplace that saw union reps as a thorn in their side.

    My mother was also employed by the public sector (NHS) but (again) got forced out her job on health grounds.

    My brother was working as an NHS physiotherapist, but left to New Zealand as a result of staff reductions due the way NHS finances have been mismanaged by the people on “silly salaries” who when they get found out get an ever better paid job elsewhere.

    The public sector is hardly the long term career it used to be. That’s why I resolved a long time ago be employed in it and the nearest I came was holding elected public office for two one-year terms.

    As to whether people are worth what they are paid, in many case they’re not. Yet when you have a society that equates cost to quality the society has its priorities wrong.

    The fat cats are partly paid a lot because as in the above cases they are in the position (company director, Chief Exec etc) where they could be fired on a whim (or asked to resign) or prosecuted. The increased pay partly because of increased risk.

    However life for most of the country is not like it is for Mr and Mrs. Kemp. In the area I live in the casework has changed from road safety and flytipping to complex cases involving bailiffs and until this country starts to learn to work together with each other and a bit of tolerance things will get worse before they get better.

    Locally here on Wirral, I think the highest paid employee of Wirral Council gets ~£130,000 . Yet there are people dying early needlessly because of poverty. So who caused this predicament and what can be done to fix it? Why is it that the poor suffer because of the mistakes of the rich? Is an egalitarian society just wishful thinking?

  4. John Brace says:

    Well the median has dropped since the last year statistics are available for. Also there are significant variations by region, gender and other factors.

    Across the whole of the UK I’d estimate the median income at £16,400/year (but it’ll be lower in Merseyside), based on an IFS study which which guesses that it’s back to 2004/2005 levels.

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