More equal than most

Dividing the spoils more equally can make for happier people and better businesses. Give staff a stake in the firm and the chance to add value

by Richard Reeves

Is the pay gap between men and women getting worse or better? Well, it depends which newspaper you pick up. The Financial Times points out that the gap in average salaries fell last year, and for the under-thirties it has disappeared. The Guardian (following the lead of the Equal Opportunities Commission) reports that the gap actually worsened over the same period. The fact that both are right might well bring Disraeli's dictum of ‘lies, damned lies and statistics' to mind. The difference depends on which kind of average you prefer. The median pay gap dropped from 13% to 12.6%; the mean rose from 17.1% to 17.2%. (How statistics teachers must love it when this happens.) In the old days - ie, the last century - the mean-median difference didn't matter too much. But now, the soaraway salaries of those at the top of the income scale are pulling the mean wage up very much more quickly than the median and, because these are mostly men, changing the picture of the gender pay-gap.

So behind the women's pay issue lies the even deeper one of the levels of overall inequality now being generated by the labour market, and all with barely a murmur of protest.

The pay of directors in the FTSE-100 rose by a mammoth 28%, in contrast to average earnings that are rising at 3.7% - just above inflation of 2.5%. Sports stars and performers are helping the trend. Everyone - just about - is getting richer. But the rich are getting much richer, much faster than everyone else. Two questions are prompted by the trend of the runaway rich: does it matter? And, if it does, what can be done about it?

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