I have been getting a lot of tweets from @One_Society and in the main I agree with what they are trying to achieve – a more equal society. I have however expressed some reservations about the idea of fixed pay ratio that would for example limit the maximum pay to 10 times the London Living Wage. I have now started getting replies defending this policy. I won’t be replying in Twitter some arguments can’t be properly made in 140 characters so I reply here.
- I support the minimum wage and I think it should be raised. The minimum wage stops exploitation an recognises the dignity of human labour. We don’t need a maximum wage in order to stop exploitation.
- The factor of ten seems to have been plucked out of thin air – why not say the highest paid should not earn more than five times the lowest? or perhaps twenty times? If there is a case for ten no-one has made it yet.
- If such a rule was brought in lots of people would find ways around it e.g. an office could outsource its cleaning to an agency then make the cleaners who use to have a full time job redundant then the cleaners would not be employees and would not count in the ratio.
- You could try to avoid this by saying that every agent, every service provider and every supplier was included in the ratio but collecting the data would be a nightmare and what could be done about foreign suppliers?
- Cutting the salaries for the highest paid employees may well reduce the total wage bill meaning the owners of the business make even more profit – in many cases the owners will be far richer than the employees so the proposal may not narrow the gap between rich and poor.
- aspiration should not be limited
- The super rich don’t get their money from salaries many of them don’t need to work. A lot of their money comes from inheritance, rents on land and property and returns on investments.
Finally, we have already invented a fair and practical way to increase equality without limiting aspiration it is called progressive taxation and we should use it more. One Society should in my opinion spend its time campaigning against the VAT rise (rich and poor alike pay VAT at same rate) and for increases in taxes on inherited wealth and large land owners. One Society should also be pushing the Government hard on measures to reduce tax evasion.
All that said I commend One Society for caring about these issues and for getting more people (me included) involved in this debate.