Yet more fuel for banker-bashers today: the unfeasibly huge pay packets of City workers are being blamed for rising pay inequality in the past ten years. According to the new research by the London School of Economics, Britain’s highest-paid workers accounted for 30% of the UK’s total pay expenditure at the end of 2008, up from 27% in 1998. And the wages bill for the UK's best paid is now rising by a claimed £12bn a year.
Notwithstanding the efforts of footballers’ with their extortionate salaries, the wealthy upper classes or the UK’s entrepreneurial talents, the LSE reckons that the whopping pay packets being dished out to workers in London’s Square Mile are the real culprits.
While it’s not news that wages are getting more unequal in the UK, this research, based on tax return data held by HMRC, and seems to offer the most convincing evidence so far as to the source of such inequality.
Why does it matter? Pay inequality is often cited as a key indicator in wider social inequality, and in creating a sense of unhealthy disengagement between the wealthiest members of society and the rest.
There’s also the fact that banks haven’t exactly covered themselves in glory performance-wise recently, which rather gives the lie to the most commonly-used justification for paying big salaries – that people earn them for doing an exceptionally good job…
The timing of the release of the findings is likely to help push the issue of bankers pay further up the election agenda, as if it needed much assistance in that department. The three main political parties have announced plans to crack down on bankers’ bonuses in the aftermath of the downturn, with the Lib Dems going as far as to propose an outright ban on cash bonuses above £2.5k.
With all this bad feeling towards bankers around at present, it seems like a good time to remind everyone out there that, love ‘em or hate ‘em, we all need bankers. They may have their foibles but the global economy couldn't function without them…
In today's bulletin:
Goldman Sachs fraud case puts whole industry on trial
Airlines under a cloud, as eruptions continue
City fat cats take home a third of UK's wage bill
Public sector cost cutting calls for surgeons not butchers
Boss-napping back on the menu in France