COULD GRADUATES EARN MORE IF BOSSES EARNED LESS?
We have a National Minimum Wage – but is it time we had a National Maximum Wage too? The idea was proposed by Labour leader Jeremy Corbyn last week, as a potential solution to the growing problem of pay inequality in the UK.
We know that many graduates feel they are losing the pay war. Junior employees are often hired on minimal salaries (or even no wage at all, in the case of unpaid interns). Other graduates are stuck in low-paid “stop gap” jobs in retail or catering for big firms that continue to inflate the pay of senior executives (so-called ‘fat cats’) to up to eight-figure salaries, whilst failing to boost pay levels for everyone else.
Corbyn has since changed his mind about the proposal (perhaps after economists called it “unworkable“) – instead suggesting a “pay multiple” model. Under such a system, senior executives could only be paid, say, 20 times the salary of the lowest paid worker in the organisation.
This is not a pipe dream. Sacha Romanovitch, boss of Graduate Fog sponsor Grant Thornton, has proved it can be done. One of her first decisions as the new CEO was to cap her own pay at 20 times the the average salary in her firm. That is a fraction of the 149 times average ratio across FTSE 100 firms.
* WOULD YOU BACK A ‘FAT CAT’ PAY CAP?
Or could a “pay multiple” model work better? Alternatively, do you have any other ideas for correcting the pay inequality problem? Have your say below…
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