Last week saw a major advancement in the fight for greater equality in the UK, with the government led by Conservative Party leader Theresa May announcing that companies will be required to publish pay ratios between bosses and their average paid British employee.
For my organization, the Equality Trust, it’s been a long, hard slog to get to this point, with initial calls for the introduction of pay ratios as far back as 2010. However, while this is certainly a win, the government’s wider proposals on corporate governance unfortunately fall some way short of providing the sea change that is necessary.
So what exactly are the proposals released on August 29? In addition to legislation requiring listed companies to publish and justify pay ratios between their chief executives and their staff, a name-and-shame public register is proposed for companies that face significant shareholder opposition to executive pay packages. There is also a proposal to make sure employee voice is taken into account in the boardroom.
It is the final proposal that should cause most concern. Initially the government promised to require workers to sit on boards, a move that would provide ordinary workers with a genuine voice, and allow companies to benefit from the years of experience and knowledge accrued by their wider workforce. More importantly, it is a move that could have helped to narrow the grotesque and unjustifiable pay gap between bosses and workers in the UK, a problem the United States clearly also suffers from.
Instead, the government’s watered down proposal will simply mean employee voice is taken into account— no doubt before it is swiftly dismissed. This is a shame, as after all, worker representation on boards is the norm in many European countries.
The Equality Trust and its local affiliates like My Fair London began calling for CEO-worker pay gap disclosure back in 2010.
Shining a light on pay practices is a hugely important step in highlighting executive greed, poor governance, and in bringing about fair pay and greater equality. In addition to the proposal to require disclosure of the gap between average workers and top executives, the UK has invoked legislation on gender pay reporting.
However, there is clearly still much to fight for. If we want to build businesses that are fit for a modern economy that value and reward their workers and that provide a fair day’s pay for a fair day’s work, then workers must be involved in the decision making process.
We’re proud to have secured pay ratio reporting, but we’ll keep pushing for workers’ voices to be heard.
John Hood is Media and Communications Manager at the London-based Equality Trust, which works to improve the quality of life in the UK by reducing economic inequality. @equalitytrust
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