Via the Brummie came a Post reference to a statement by Will Hutton writing in The Observer:

“Societies as unequal as Britain’s are profoundly dysfunctional . . . The recovery cannot hold unless we address inequality; our politicians must rebuild the institutions they have so carelessly trashed. Inequality must be tackled head on.”

Recent World Bank and UNDP reports focus on the size of the gap between rich and poor in Britain 

suffolk equality group header


suffolk equality group cartoon

Is inequality an issue now causing twitchiness within the government? We hope so

In the Post article, Dr Steven McCabe wrote: “The fact that Chancellor George Osborne felt it necessary to state his belief that the minimum wage should rise by more than the current rate of inflation is a sure sign that this inequality is an issue causing twitchiness within the government”.

Did the trend commence in the late 1970s? Older readers will assent

OECD inequality

michael schluter economistEconomist Michael Schluter framed a relevant question eight years ago:

“Does it matter that over the last ten years salaries of leading executives of the top 100 companies have been rising at six times the rate of those of average employees? Surely differentials of 300:1, or even just 100:1, raise an issue of justice”.

Schluter pointed out that the Navy used to hold to the principle of a maximum differential between the top Admiral and the lowest paid seaman of 10:1. The John Lewis Partnership used to insist on 25:1 between the chairman and the lowest paid shop assistant. The writer adds that there was a pay ratio of 10:1 in many worker co-operatives in the 70s.

In the FT, Michael Meacher asserts that such inequality is not inexorable

michael meacher4“The metric of reward is not universal across the income distribution. Different criteria apply:

  • collective bargaining for wage-earners,
  • private contracts for white-collar workers,
  • and often self-appointed remuneration committees at the top, with excessively generous incentive schemes that bear little or no connection with reality.

“What is needed is the development of a single system of remuneration for calibrating rewards at all levels, plus much greater transparency in the process”.