Government bail-outs of large businesses affected by the coronavirus must include social and environmental conditions including fair pay, fair tax contributions and worker representation on company boards
Our new discussion paper, published today (Thursday 19 March) calls for social and environmental conditions, including a cap on CEO pay at ten times the pay of the median worker, to be attached to the anticipated bail outs of large companies affected by the corona virus.
The paper states that the Government must learn the lessons from the global financial crisis, when public money rescued the banking industry without addressing well-documented problems in the sector. Vast bonuses were funded from the £850 billion bail out, while bailed out banks were repeatedly found guilty of market manipulation and mistreatment of customers in the aftermath of the crisis.
To avoid repeating these mistakes, and to ensure that the money spent on mitigating the crisis is used as efficiently as possible, any public money must come with conditions attached. UK airlines have called for support to survive the Covid-19 crisis, with many other major businesses expected to follow suit. The High Pay Centre argues that it is reasonable to expect certain social and environmental commitments in return for public money, particularly in areas such as tax or pay and working conditions,that have proved controversial for big business in the past.
The conditions proposed are as follows:
- Public stakes in the business commensurate to the value of financial support, giving the government shareholder voting rights.
- Fair pay at the top – Government should impose maximum pay ratios between the highest-paid and median employees of bailed-out companies at an initial ratio of 10:1, to enable bail-out funding to do more for low and middle earners.
- Fair pay at the bottom – Companies should commit within a set timeframe to paying the real living wage, an independently accredited hourly wage level including to contracted staff.
- Fair tax – Bailed out companies should be required to commit to Fair Tax Mark accreditation. This would also promote more responsible tax corporate practices more generally.
- Worker representation on boards and full trade union recognition.
- Sustainable Development Framework – Setting targets against The UN Sustainable Development Goals and Paris Agreements to measure the social and environmental impact of businesses.
- Commitment to investments in research, training and innovation: moratorium on buybacks and unsustainable dividends – Bail-out agreements should include specific undertakings in terms of investments in productivity (for example, research and design or staff training) and commitments not to pay share buybacks or unsustainable levels of dividend in future.
- Recognition for business leaders – the Government should use the honours system to recognise the efforts of business leaders navigating their companies through the crisis, in reciprocation of commitments to responsible business practices as outlined above.
To read the full discussion paper, click on the link below