Extract from executive summary
This report covers the issue of the widening gap between pay at the top and bottom of corporations, the effect that has on society and the economy, and the effect it has on the companies concerned. In particular it covers how the ratio between the bottom and the top might be used in order to bring more pressure to bear, both moral and practical, on the problem.
One of the central concerns of the co-operative movement is to distribute more evenly the benefits of economic activity. Their relative success during the recent banking crisis and ensuing economic recession is testimony to the greater resilience of more fair and equal models of corporate governance. But, whilst the co-operative sector is enjoying a renaissance, a greater creeping inequality continues to spread more widely in the corporate sector, bringing with it a range of economic and social costs, and dysfunction. This report suggests how we might begin to reverse that tide.
The publication of the crucial ratio between lowest and highest paid in every public company would encourage debate about pay and corporate responsibility. It would, we believe, kickstart a more informed debate about what kind of pay gap is acceptable and what is simply divisive and inflationary. It would also have a healthy effect on both fairness and equity in the UK, and on the companies themselves. One of the more surprising revelations, shocking even, is the absence of any evidence to support and justify high pay ratios, compared to the large body of evidence concerning the costs of inequality. We believe that the burden of proof should shift, so that companies operating a ratio above 1:20, or even 1:10 (this is the debate we need to have), would need to show how the economic and social benefits of doing so outweighed the costs.
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