If current pay trends continue, by 2030 inequality in the UK could reach levels not seen since Victorian England, according to a report published by the High Pay Commission on Monday
If current pay trends continue, by 2030 inequality in the UK could reach levels not seen since Victorian England, according to a report published by the High Pay Commission on Monday.
According to the report, inequality in the UK has now reached the same level as during the 1940s. In 2000 the top 0.1 per cent of earners were taking home 4.6 per cent of national income, but between 1949-1979 this had dropped from 3.5 per cent to 1.3 per cent. The average salary of a FTSE 100 executive is now 145 times higher than the average national salary, the commission reported.
Inequality has increasingly become a political issue, following public furore over bankers’ bonuses and coalition pledges to make Britain ‘fairer’. 62 per cent of Britons polled by the Commission said that they agreed or strongly disagreed that income differences are too large, but few understood the figures involved. Only 9 per cent correctly identified that the average FTSE 100 CEO earns over £4 million, while 4 per cent believed the average salary for a FTSE 100 executive to be £50,000.
Since the recession there has been a shift in the inequality debate. Tony Blair once said that he didn’t care how much footballers earned, provided that child poverty was cut (and under Labour overall inequality grew but those at the very bottom were better off than under the previous Conservative government, the Commission reports). Today inequality, and not only poverty, is under attack.
The High Pay Commission’s report aimed to move beyond the politics of envy, arguing that inequality has very real political and economic ramifications. It said that the widening gap between the very rich and the rest is unfair, that it undermines social cohesion, leads to decision-makers being ‘out of touch’ and encourages excessive risk taking.
For those looking for a reason why we should care about inequality rather than poverty, or to put it another way, why the rich should care about inequality, the report’s analysis was disappointingly under-developed. Unlike a book like The Spirit Level, the Commission failed to show that inequality inflicts real economic, political or social damage, and thus avoided the important issue of why we should care if the super-rich get disproportionately richer, provided that the rest of society is better off too.