At 5:30pm on January 6, the median FTSE 100 CEO’s earnings for 2021 has surpassed the median annual wage for a full-time worker in the UK, a recent report by the High Pay Centre says. This means that in a mere 34 hours, CEOs will have surpassed median earnings. It was 33 hours in 2020. The report then goes on to say that the pay for top CEOs today is about 120 times the typical worker, in comparison to 50 times in 2000 and 20 times in the early 1980s.
These rising levels of inequality are a global trend, with Oxfam reporting that the world’s billionaires have more combined wealth than the poorest 4.6 billion people. It is unclear what effect the covid-19 pandemic has had on this, but the increased use of companies such as Amazon and the rapid wealth accumulation of Elon Musk point to a worsening of this inequality.
Serious questions need to be asked in the face of such staggering inequality: Is this sustainable? What is the best way to tackle this? The answer to the sustainability of these standards of inequality is simple: such abhorrent levels of inequality propagate the corrosion of social cohesion, and this contributes to rising crime levels and decreasing standards of public health and wellbeing.
Due to the UK’s commitment to meritocracy, this level of inequality is seen with ‘smug winners’ at the top, and ‘humiliated losers’ at the bottom. Harvard professor Michael Sandel has written that the current meritocratic ethos may well have contributed to the populist votes of Brexit and the presidency of Mr. Trump and could be why we find ourselves in a time of political polarisation like no other. Therefore, especially with the meritocratic character of today’s politics, the levels of inequality now are not only unsustainable, but morally objectionable.
The best way to tackle the increasing levels of inequality is a harder question to answer. The first, and most pressing reform, seems to be the need to introduce a maximum pay ratio in companies. The Green Party have previously called for a 10:1 pay ratio between the highest and lowest paid workers in any company. Labour have also previously called for a 20:1 pay ratio. Effective tax legislation also needs to be introduced, to stop so-called ‘tax-efficiency’ and the industry which profits off this and which is essentially done to maximise profit for shareholders to the damage of the stakeholders. It also undermines the government in its ability to provide effective funding for schools and the NHS and other services. The strengthening of trade unions to promote worker’s right and promote their interests could help protect against the ‘race to the bottom’ outsourcing too often seen.
Overall, however, the reforms needed are more ideological in nature: we need to have a society based on the values of kindness, liberty, equality, and the often-forgotten fraternity – not the reckless worship of profit. We need to value the dignity of all work, and not just reward those CEOs whose companies manipulate wealth. The obsessive valuation of the worth of a nation by its GDP and GNP have forgotten what is really valued: gender equality, happiness, social mobility.
Sandel has written that equality of opportunity is only a partial ideal, the full ideal being equality of condition: where all people’s work and worth is recognised and rewarded accordingly – not just by their academic ability but by what they contribute. Hopefully, the recent political upheavals and pandemic will allow us as a society to reflect on our priorities and choose a more equitable future.
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