No one 'deserves' £265m a year. Society should define fair pay, writes accounting expert Prem Sikka.
The latest pay packet for the boss of Bet365 is a reminder of the ineffectiveness of the government’s policy on checking excessive pay at the top.
Denise Coates picked up £220m in remuneration plus £45m in dividends – meaning the Bet365 boss collected 9,500 times the average UK salary.
The government policy of ‘leaving it to shareholders’ made no difference because the Bet365 boss owns 50% of the shares – and the remainder is mostly held by her family and friends.
If the company had so much cash slushing around, it could have put extra into the employee pension scheme. It could have the raised wages of employees at the bottom-end. Instead, the workers’ toil went to her cash bonanza.
The largest pay packet in the UK is splashed in the newspapers alongside the news that despite the supposed stringent checks by the betting industry, gambling addiction in children has quadrupled in the last two years and 450,000 children aged 11 to 16 bet regularly.
Nature and nurture
Inequalities in income and wealth have consequences for access to education, healthcare, housing, food, transport, pensions, security and ultimately life expectancy. Unsurprisingly, there has been a lot of discussion on the social media about the Bet365 director’s pay.
Some on the right claim that company directors earn their money because of the superior performance and that people have no right to object. The left needs to rebut such claims in order to create possibilities of a more equitable distribution of income.
The key point is that the neoliberal assertions have no substance because wealth generation is always a collaborative effort. While some may have contributed more and may expect a higher share of the wealth, how much more should they be paid? That should be a democratic choice.
What enables someone to contribute more? They may claim to have superior intellect, endurance or other attributes, which enable them to work long hours. But no individual is a creator of such attributes. They are part of a genetic inheritance, equivalent to winning nature’s lottery. No individual has manufactured the genetic pool. That is the outcome of generations of social exchanges, food, healthcare and social stimuli. The society that created this has every right to decide whether someone can run away with vast amount of wealth while others pick-up a few crumbs.
The boss of Bet365 may be a very clever person. Others may unlock nature’s secrets, invent new things, manufacture products, provide desired services and improve quality of social life. But they cannot easily do so on their own: it requires a social context and infrastructure.
Not a private matter
Society provides property rights, security, a legal system, education, healthcare, transport, tax breaks and subsidies to support the entrepreneur. It diverts rivers, razes mountains and clears forests to help the entrepreneur. It provides educated, healthy and suitably nourished workforce. Unpaid housework, such as cooking, cleaning, laundry, adult care and looking after children (future workers) is a key part of the reproduction of capitalist workers and is worth an estimated £1.24 trillion; the brunt of this is borne by women. Family and society takes care of the casualties of big business – accident victims, sufferers from industrial diseases and harmful products.
Society provides the necessary material support without which individuals would not be able to exploit their skills. So it is appropriate that society should decide how much more is to be paid to someone for the alleged superior performance, and indeed what counts as superior performance.
In making these decisions, society must have regard for fairness and equity. Whatever arrangements are made for executive pay, they must work for others as well so that they too share in social prosperity. If not, their exclusion can threaten social cohesiveness and stability, the very thing that helps to generate collective wealth.
A fairer distribution of income is also a necessary condition of corporate survival: without good purchasing power people cannot buy the goods and services produced by businesses.
The left must rebut the neoliberal mantra of leaving executive pay to companies, their CEOs or shareholders: it is not a private matter.
Those used to grabbing the largest pay packets aren’t going to give up their privileges voluntarily: any government listening to the people must enact legislation to secure an equitable distribution of income.
Prem Sikka is Professor of Accounting at University of Sheffield, and Emeritus Professor of Accounting at University of Essex. He is a Contributing Editor for Left Foot Forward and tweets here.Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by becoming a Left Foot Forward Supporter today.