Responding to a question from Luke Hildyard of the High Pay Centre think tank, Capita CEO Paul Pindar said the company would be ‘very happy’ to publish the ratio, showing the total pay of their highest paid employee as a multiple of the lowest earner.

Interest in pay ratios has grown in recent years, following revelations that the average FTSE 100 Chief Executive now earns 185 times the average worker, up from 15 times in 1979.*  In America, measures requiring all companies to publish the pay ratio between their highest and median earners are currently being developed.  At their AGM yesterday, Centrica said their highest paid employee was paid 63 times their lowest paid employee – though this figure is based on CEO Sam Laidlaw’s £950,000 basic salary and does not include bonuses that raised his take-home pay to almost £5 million. Barclays Bank also told their AGM they would look into their pay ratio.

Deborah Hargreaves, Director of the High Pay Centre, said: ‘Research shows that a big pay gap between the highest and lowest earners within a company is damaging to employee morale and productivity, so reducing pay ratios isn’t just a question of social justice. It’s also good business sense. We welcome Capita’s commitment to transparency on pay ratios and will watch their progress with interest.’

Main responsibilities

Organise all aspects of High Pay Centre events, including small scale seminars, and much larger public events
Work with the director to design and implement an events programme
Work with the director to fundraise for the events programme
Carry out administrative tasks including managing databases, the company account, payroll, invoicing and contracts

Person Specification

Experience

Working in an office/administration environment (Minimum 1 year's experience)  (Essential)
Working in an events environment (Essential)
Working in a media environment (Desirable)
Working in a marketing/fundraising environment (Desirable)

Skills

Strong ICT skills – knowledge of website management, mass mail, social media (Essential)
Excellent telephone manner – confident, clear and professional (Essential)
Strong planning and organisational skills – excellent time management, ability to prioritise (Essential)
Excellent and personable face-to-face communication (Essential)
Good written communication skills (Essential)
Ability to build working relationships with key stakeholders including funders and sponsors (Essential)

Knowledge

Knowledge of and interest in current affairs/policy issues (Essential)

Qualifications

Degree level preferably in arts or social sciences (Desirable)

Personal

Able to work independently and unsupervised as well as part of a team (Essential)
Hands on approach (Essential)
High attention to detail (Essential)
Flexible approach (Essential)
Ability to proactively react to the unforeseen (Essential)
Ability to work to immoveable deadlines and under pressure (Essential)
Confident and conscientious (Essential)
Pragmatic approach – good problem solving skills and longer-term planning (Essential)

Closing date: 9am on 10th June 2013
Interviews will be held during the week commencing 17th June 2013.

To apply please submit a CV and a covering letter of no more than 500 words by email including the names and contact details of two references.

Infographics provided by Simon Briscoe at Data Design Studios

Please find slides from the event available to download below.

The role has become a more prominent one and chairmen who used to take it on for the honour, are now demanding more money. Their pay has gone up, but largely because CEOs have had such big increases in recent years and pulled pay for the rest of the board up behind them.

The highest-paid chairman in the FTSE 100 is John Peace at Standard Chartered bank who took home £1.1m last year, he was followed by Marcus Agius at Barclays on £750,000 who has now left and Philip Hampton at RBS. Carl-Henric Svanberg at BP also earned £750,000 - all four of these top chairmen have had to deal with huge reputational issues in the past couple of years, probably occupying more than the average 50 days a year spent by the chairs of big companies on their jobs.

Chairs are seldom remunerated in shares and few hold stakes in the companies over which they preside. This is something that is beginning to change, but runs up against the corporate governance code's test of independence.

While one of the chairman's most important roles is to be able to ask the CEO to leave and to lead the search for a successor, they rank succession planning low in their list of priorities. In the MM&K/Directorbank survey of chairs and non-execs, remuneration and succession planning were given the lowest priority with strategy given the highest. 

Ken Brotherston, executive chairman of Directorbank, said the dynamic between chairman and CEO was most important in the effectiveness of a board. A very strong CEO can deter non-execs from challenging him or her. 

In the survey of attitudes in the boardroom, a majority of non-execs agreed (slightly worryingly) that "winning is more important than ethics." However, they also felt that non-execs should influence morality in the boardroom.

Some of the non-execs in the audience stressed the need to dig deep into the company, to meet people that are not on the board and to visit plants and factories un-supervised. They also highlighted the need for board information to be presented in an accessible way.

Theresa Wallis, who is chairman of Lidco, that makes cardiac sensors, pointed to the difference between large, FTSE 100 firms and smaller companies where non-execs are much more hands-on. "Boards really work well when they are all pulling together," she said.

Although when a company is on a roll, it is extremely difficult for a non-exec to challenge it. The RBS board, for example, was unanimously behind the ABN Amro takeover.

Lord Wolfson has said that his share award made three years ago, is now worth a lot more than he expected and so he is giving it to staff instead of keeping it for himself.

He won’t go short though, his package rose by 13% to £4.6m last year.

His move comes as pressure is building on top executives who are receiving multi-million pound packages when their own staff are seeing pay barely keeping pace with inflation.

Top company bosses received £4.8m last year which is 185 times the average salary. While they are often enjoying annual rises of more than 10% in their packages, much of the rest of the workforce has seen wages frozen.

The head of the Institute of Directors, Simon Walker, caused a stir this week when he said at a High Pay Centre debate that it was “mad” for members of boy-band One Direction to be paid £5m each last year. 

But at least we can see what One Direction are doing for their money. Company bosses are often paid as much when their companies are doing badly.

In fact, Walker recognised as much; he said it was not the G20 protests or the Occupy movement that had caused the most damage to the reputation of business, but the “greed of those who demand and secure rewards for failure in far too many of our large corporations.” 

Excessive share awards loosely linked to company performance have driven bosses’ pay to extraordinary heights in recent years.

However, these complex schemes are beginning to be questioned by leading shareholders. Robert Talbut, an influential shareholder, told the same debate on Monday that “encouraging people to achieve lottery pay-outs is not in the interests of business success.”

Next shares have performed extremely well over the past three years which is why Wolfson’s award is now worth more than he thought. He has decided to hand it to employees this year, but there is nothing to stop him keeping it next time round.

This is why the structure of pay for top bosses must be overhauled along with the way it is set. Share awards for performance need to be scaled back, if not abolished altogether. They are too complex and do not appear to motivate executives properly.

At the same time, we need to see employees elected to boards and remuneration committees to break up the cosy club of directors who set each others’ pay. This is the only way to turn Wolfson’s gift into more than a one-off gesture.

Deborah Hargreaves is founding director of the High Pay Centre

There are three features of the contemporary scene in the UK which are particularly striking and represent a big difference from a generation ago.  First, we have moved from highly regulated to much more flexible labour markets, at least in the private sector (and the contracted out parts of the public sector).  There are islands of collective bargaining but supply and demand now have a bigger influence and government regulation is minimal except for the minimum wage.

Second, the globalisation of trade, capital flows and some categories of labour migration – within the EU Single Market and more generally for these with rare skills have had a big influence on labour markets.  There is much academic controversy over how these different factors have played out but it seems reasonable to conclude that the effect of globalisation on the wages of the less skilled and mobile of the indigenous population in some countries have driven them down relatively and perhaps, in some countries (like the USA) absolutely, contributing to a widening inequality of (pretax) income.  In addition those who have some perceived uniqueness derived from star quality or brand, and who are footloose, can now earn vast monopoly rents in global markets: entertainers, footballers, top managers and bankers.

The third factor is the financial crisis which, in the UK has cut output and incomes in a way and with a severity not experienced in previous downturns.  Overall wages have fallen in real terms; median wages have fallen by 8.5% since 2009.  In 2012, nominal wages and salaries rose by around 1.3% overall, when consumer inflation rose 2.7%, a real cut of almost 1.5%, perhaps the main reason for weak demand and the ‘double dip’ recession.  The 2013 budget predicts that real wages will fall again (2.2% earning growth; 2.9% expected inflation).

These cuts in real earnings have affected the public as well as private sector with a nominal pay freeze for most employees and a 1% increase for lower paid workers.

The impact of falling real wages has had several consequences, some more obvious than others. The fall in wages has been accompanied by a rise in employment, which is what classical economics would predict. The causality is debateable and various factors were operating but the general propensity is reinforced by anecdotal evidence of employees adopting flexible labour practises, and pay cuts, and also moving into ‘second choice’ jobs rather than remain unemployed.

There is a counter view, basically Keynsianism, that cuts in real wages depress consumption and demand and thereby cause unemployment. Unemployment is a lagging indicator and it remains to be seen if labour demand now starts to weaken after a period of rising employment.

These factors also have a bearing on the impact of the minimum wage. The economic analysis has tended to suggest that over the whole period of the National Minimum Wage there was an imbalance of power between employers and workers and so some employers in 1999 were exploiting their workers and paying them less that they were worth.

In addressing this exploitation the National Minimum Wage was able to raise wages – pay has increased more at the bottom end than at the median – and not have an adverse effect on employment. However, since around 2007 the judgement is that the degree of exploitation has been removed and the classical  inverse relationship re-established between the level of (and increases in) the minimum wage and employment, for low paid workers in general and young people in particular.

These factors have to be set along side the impact on the supply of labour, the willingness to work. Low paid workers face a complex range of incentives and disincentives from in work and out of work benefits and tax. The coalition policy of substantially lifting the tax threshold is a positive incentive to work which is concentrated on the low paid.  And other things being equal, an increase in the minimum wage is also an incentive to work, and work longer hours.

The balance of these factors is best addressed not politically but on the basis of independent judgement and advice, which is the role of the Low Pay Commission. Ever since the last government legislated for a national minimum wage, Ministers have been advised by the Commission and have agreed its advice on the basic rate. I propose to follow the precedent established by my predecessors. The recommendation this year is for the minimum wage to rise 1.9%, in line with earnings and more than out of work benefits (1%).

We are also accepting the Commission’s recommendation of a 1% increase for young workers, recognising the higher unemployment rates amongst young people.

We have made a small departure from the Commissions recommendation in respect of apprentices. We have decided that they should receive the same increase as young people, rather than the zero increase recommended by the Commission.

The Commission is concerned that there is widespread non enforcement of the apprentice rate. I am more concerned about the broader policy objective of making apprenticeship an attractive career option for young people and don’t believe that could be achieved by treating apprentices less favourably than any other group.  It is important that both the apprentice rate and the youth rates reflect the value we place on creating positive incentives to work, and it is therefore right to ensure that minimum wage rates keep pace with increases in benefits.

Nonetheless we entirely accept the recommendation of the Commission that we should focus on enforcement; and not just for apprentices. There are lots of abuses of the minimum wage. There is the cash economy of unrecorded wages (which can include tax evasion or benefit abuse too.) Some restauranteurs make assumptions about tips which may or may not be valid. Other employers make deductions for uniforms or benefits in kind (like transport or housing). Sections of the community who are desperate for work (having lost benefit entitlement) are particularly vulnerable.

I am absolutely clear that employers must pay their staff at least the minimum wage. This is why we are stepping up our compliance action, particularly for apprentices. We are working across Whitehall on a series of tough new measures to ensure we tackle the non compliance issue across the board.  HMRC will continue to play a crucial role in enforcing payment of the minimum wage.

Our package for apprentices approaches non-compliance from a number of different angles. It includes educating employers and apprentices, requiring Training Providers to make employers and apprentices aware of their rights and responsibilities with regards to pay; targeted communication and enforcement, and exploring legislative and non-legislative options to name employers who break minimum wage law.

Of course, in strengthening our enforcement of employers’ obligations to pay at least the minimum wage to apprentices, we must clearly distinguish between that and the position on work experience, as part of education and training courses that are exempt from the minimum wage. We must not inadvertently deter employers from providing valuable work experience opportunities.

One of the other new developments in the debate is the idea of a ‘living wage’ which has emerged from the London Citizens movement.

It specifies a wage rate higher than the minimum wage, particularly applicable to places, like London, with relatively higher costs of living. The living wage operates through moral pressure rather than legal sanctions.

Politicians are frequently asked to sign up to the ‘living wage.’ The problem with the current debate is that the ‘living wage’ means different things to different people. At one extreme it is simply aspirational, an expression of solidarity with low paid workers: higher pay as a nice thing to do, if employers could afford it. At the other extreme it amounts to a demand for a higher minimum wage. Either way it is dishonest to pretend that there are no consequences. It is possible that in some uncompetitive markets, employers earn a monopoly rent which could and should be distributed to employees. It is more likely that higher pay will be passed on to consumers, or be absorbed in lower investment or reduced employment. Higher wages may be the most economically or sociably desirable outcome but there would be consequences.

In practice the demands for a ‘living wage’ include replacing a national minimum wage with regional variations, with London enjoying a higher minimum wage than the rest of the country. The argument is that the cost of living is higher in London; but unemployment is also higher which points in the opposite direction. Moreover London is a complex regional economy with enormously different local labour markets (reflected in different unemployment rates across London boroughs). There are other arguments too against reinforcing regional pay differentials through moral or legal pressures; not the least being that it reinforces the ‘pull’ of successful regions.

But I do want to see the arguments around the ‘living wage’ grounded in evidence rather than rhetoric and political point scoring. First principles would suggest that widespread adoption of the ‘living wage’ would substantially increase unemployment but also stimulate demand and increase incentive to work. It would be arrogant and irresponsible for any politician to claim to predict the net effects.

Let me turn to the aspect of pay you are focusing on this morning: high pay and the evidence we have of widening inequalities in earnings. There are several elements to the story of earnings inequality but one of the most important is the explosion in the executive earnings both in absolute terns and in relation to median incomes. Continuing a strong trend, chief executives’ earnings rose 15.8% last year, almost entirely due to bonuses.

Analysis of executives’ pay shows that recent increases do not reflect company performance or other real economy factors; rather, it reflects behaviour in which company boards consistently seek to position themselves in the top quartile, creating a upward ratchet.  Some shareholders have pushed back against executive self-aggrandisement:  the so-called shareholder spring.

The government’s response has been to reinforce the control of shareholders over the companies they own by requiring binding votes on executive pay policy and more transparency over remuneration packages.  The new legislation will come into effect in October and I believe we shall see a moderation of executive pay as a consequence.  There are specific problems in the banking sector though there is evidence of a sharp decline in bonus pools.  In crafting policies to deal with executive pay I draw on the ideas of the High Pay Commission.  Of its 12 recommendations, we are taking forward in principle all but one.

The issues raised here relate to pre tax income, while the distribution of take home pay depends also on tax and benefits.  The current top rate of income tax, of 45% plus national insurance, is higher than for the whole period since 1988, while marginal and average tax rates have been cut for the low paid.

Some of us would be more radical in taxing wealth.  But we undoubtedly have a progressive system leaning against the widening inequality in pay."

The Financial Times called the report the last rites for the trickle-down theory of eco- nomics. Trickle-down was at the heart of Reaganomics in the 1980s with Margaret Thatcher a close follower.

The idea was that if the rich got richer, their wealth would circulate throughout the income scale in the form of additional investment and job creation. A rising tide lifts all boats, ran the argument.
Policymakers could conveniently ignore calls for redistribution and instead concen- trate on cutting taxes and reducing govern- ment spending. This allows the market to allocate resources efficiently, according to proponents. Trickle-down – or supply side economics – has been the overriding eco- nomic theory of the past 30 years and suc- cessive governments have ignored the sub- sequent rise in income inequality.

However, this is a real-life experiment that has failed. In the UK, the gap between top pay and average wages has been rising sharply since 1979, yet there has not been any corresponding boom in investment. In fact, rising inequality has instead weakened the economy.

A report by the UN Conference on Trade and Development (UNCTAD) calls the theory of saving and investment that underlies trickle-down “highly questionable”. The UK has much lower levels of investment in research and development than France, Germany and Japan, for example.

The OECD report showed that the most striking effect of inequality over the past 30 years is not just that the top 10 per cent of the income scale moved further away from the bottom 10 per cent, but that the top 1 per cent and even the top 0.1 per cent has accel- erated away from the rest. This has been driven by top pay for “stars” in sport, enter- tainment and business as well as banker and executive bonuses.

High earners at the top of the income scale have not invested their capital as pre- dicted. Instead, their profits have been channelled into financial assets and per- sonal portfolios.

Far from helping those further down the income scale by creating jobs, this has actually driven up house prices in places such as London and New York, and fuelled investment in products such as commodity funds, which speculate on rising grain and commodity prices. This has, in turn, exacerbated a rise in food prices, making
things worse for those on lower incomes who spend a higher portion of their income on staples.

The figures are stark. In Britain, pay for those running our biggest companies – FTSE 100 – has trebled in the past 10 years to £4.8m or 185 times average pay. Wages for those on middle and low incomes have barely kept up with rising prices during that period. The share of GDP going to wages has shrunk by 12 per cent since the mid-1970s.

One in five workers in the UK is paid be- low two-thirds of the median wage (£13,600 a year for full-time work). This is expensive for the rest of the workforce: UK taxpayers transfer £4bn a year in the form of in-work benefits to subsidise low pay.

In thrall to the idea of trickle-down, successive governments have cut taxes for the wealthiest in society. The average tax paid by the top 1 per cent of taxpayers in the UK was above 60 per cent until 1988, today it is 45 per cent. Tax rates on top pay are currently at their lowest levels since the end of the Second World War. The reduction in top tax rates appears to be uncorrelated with saving, investment and productivity growth.

The rich have also become a self-reinforcing group since wealth has given them power and access to those in power. They have the ear of government to skew policy in their favour, which serves to perpetuate their entitlement.

At the same time, those at the bottom of the income scale in insecure and poorly paid employment, not to speak of those who are out of work, are castigated in public rhetoric as the skivers. They have lost out in the great redistribution of the past 30 years with many falling into debt in order to support their lifestyles.

The coalition government is going further by removing the link between social security increases and prices. The TUC points out, if the minimum wage had risen at the same rate as executive pay since its introduction in 1999, it would now be £19 an hour rather than £6.19.

In 2011, 14 million people were at risk of poverty or social exclusion according to the Office for National Statistics (ONS). The ONS also reports that the number of people who say they would be unable to cope with unexpected bills has increased considerably since the start of the financial crisis – up from 26.6 per cent in 2007 to 36.6 per cent. The proportion of people unable to afford one week’s annual holiday has also risen from 21.4 per cent to 29.7 per cent.

Stewart Lansley, well-known economist and author of The Cost of Inequality, has long declared the failure of trickle-down. In a pamphlet for the TUC, he says this market model has led to: “a slump in productive investment, while productivity growth has been lower than in the 1950s and 1960s. Finance and banking created almost no net jobs in the 15 years to 2007.”

Lansley calls it the livelihood crisis which he says is locked together with economic instability via soaring inequality “in a dangerous economic vicious spiral”.
“This is because the rising concentration of wealth, driven by the collapsing wage and rising profit share, has not only led to the declining opportunities that underlie the livelihood crisis, but has also contributed to economic fragility.”

However, despite this failure, govern- ments domestically and globally cling to the orthodox thinking that says cut taxes for the rich and everyone will be better off.
There needs to be a much stronger argument in favour of making the wealthy pay a higher share of the tax take. This could in- clude taxes on income and on wealth, such as a land tax or higher council tax bands.

Even Christine Lagarde, arch free-marke-teer who runs the IMF, has warned governments not to ignore the rise of inequality. “I believe the economics profession and the policy community have downplayed inequality for too long,” she said at this year’s World Economic Forum in Davos. “Now all of us have a better understanding that a more equal distribution of income allows for more economic stability, more sustained economic growth and healthier societies with stronger bonds of cohesion and trust.”

For the UK, the longer term challenge is to create a better-paid structure of work so the government does not spend billions of pounds subsidising low-paying employers.

The recent findings of the Commission on Living Standards, hosted by the Resolution Foundation, called for the establishment of new sectoral skills institutions to boost the supply of skilled workers. It also recommended the evolution of the minimum wage into a genuine low pay strategy. Subsidies for childcare could help those at the bottom end of the income scale back into work.

Gavin Kelly, chief executive of the Resolution Foundation, believes Britain could develop career structures out of existing low-paid sectors such as the care industry where investment in skills, learning and career progression could lift thousands of women out of low-paid insecurity.

However, it is going to take a huge exer- cise in political will to debunk one of the overriding myths of the past 30 years – that wealth will trickle down. Instead the government seems happier to castigate those who are out-of-work or in insecure employment rather than admitting that tackling inequality will benefit us all.

In 1979 the richest 1 per cent of the population controlled about 6 per cent of the national income. By 2007, this figure had grown to 15 per cent.
Since 1998, the pay packages of FTSE 100 company chief executives have risen by nearly 500 per cent – for the average worker, the pay increase over the same period has been around 15 per cent.

The UK is also the 7th most unequal OECD country, with only Israel and the USA, plus the poorer economies of Mexico, Chile, Portugal and Turkey, worse off.

It is the reversal of these destructive, destabilising and unfair trends that ought to be the government’s number one priority, at the forefront of George Osborne’s mind when he stands up to deliver his budget today.

In this context, Osborne’s decision to reduce the top rate of tax from 50p to 45p on earnings over £150,000 seems perverse.

Research for the High Pay Centre suggests that if 10 per cent of the income of those who fall into this tax bracket (about 0.9 per cent of taxpayers) were redistributed (or predistributed) to the bottom 25 per cent of earners, it would boost their income by an average of 55 pence an hour.

This would bring the average hourly wage of those in those in the bottom quartile to £7.35 – just 10p short of the living wage outside London.
In other words, a very minor reduction in the incomes of a tiny proportion of the population – who would remain very wealthy indeed by most people’s standards – would go a long way towards eliminating the problem of people in gainful employment remaining unable to support themselves, if appropriately redistributed.

Measures to make this happen could include, for starters, a reversal on the 50p tax rate. The link between social security payments and inflation should also be maintained.

Further revenue could be raised by reviving the tax on bankers bonuses, briefly introduced by Labour, and extending it to so-called ‘long-term’ incentive plans and the wider corporate sector, where performance related pay has also grown to distasteful levels, despite the absence of any apparent improvement in performance.

Bringing Capital Gains Tax in line with income tax would help to counter the growing share of national income accounted for by profits in relation to wages.

This has greatly benefitted the rich, who receive a disproportionate amount of their income in profits, at the expense of low and middle income households, whose earnings are mainly in the form of wages.

Redressing the balance need not come at a cost to enterprise.

In her ‘Re-balancing What?’ pamphlet for Policy Network, Mariana Mazzucato shows that there is little evidence to suggest that lower Capital Gains Tax rates have enabled greater private sector innovation – instead, they have merely increased the returns from the typical, short-term venture capital investments in companies that are already at an advanced stage of development.

Osborne will know better than most that these kind of measures are important, not just as a means of tackling inequality, but also for symbolic reasons.

The Conservatives plummeted in the polls after the 50p tax cut rate in 2012, and Tory peer Lord Tugendhat warned last week that when the incomes of the very richest in society “so far outrun those of the people who work for them and the population at large, they lose moral authority, their words will be discounted and the business case on economic and social matters will go by default”.

This is sage advice – and it is hoped that Tugendhat’s party colleagues in the Treasury will heed it.