Solutions

Introduce a maximum pay ratio

Introduce a maximum pay ratio

Executive pay has become divorced from reality. A pay ratio will spread wealth and reduce inequality.

CEOs continue to enjoy pay awards 117 times larger than the average worker. This has contributed towards unacceptable and toxic levels of inequality which damages people and imposes significant costs on society.

Legislation is needed in order to introduce a maximum pay ratio of 20:1. This is in accordance with the same ratio advocated in the CWU’s New Deal for Workers. The ratio should be a bottom-to-top pay ratio and include all contracted staff – covering self-employed workers and not just employees.

In addition, any organisation with a pay ratio over 10:1 would need to show how the economic and social benefits of doing so outweighed the costs.

The maximum pay ratio of 20:1 should be viewed as a baseline, and workers should be able to negotiate with their employer through their workplace union in order to decide on a pay ratio considered suitable by the majority of workers. For example, the New Economics Foundation has agreed a maximum pay ratio of 5:1 with their workplace union.