It seems almost indecent to recount that the richest 400 Americans now own, staggering as it may seem, no less than£1.4 trillions, a collective fortune slightly bigger than the Russian economy. The latest figures also reveal that in the US 95% of the gains from the recovery have gone to the richest 1% of the population. Their share of overall income is now close to the highest level in a century. The most unequal country in the Western world is now becoming even more so. A similar pattern is now emerging in the UK. According to the Sunday Times Rich List, published each year in April, the richest 1,000 Britons who constitute just 0.003% of the population have increased their wealth in the last year alone by £35bn, and by a stunning £190bn over the 4 years since the crash. Within the top 2% of the population HMRC records that there were 4,000 persons paid more than £1 million a year in 1999, but this became 10,000 by 2010 and then a huge rise to 18,000 by 2013.
By contrast the latest figures show that average wages in Britain have fallen after the crash in real terms (i.e. taking account of inflation) by 9% and are still falling. If current trends continue, and that is what Osborne intends, then by 2018 the average family will be £6,660 worse off than it was in mid 2007 just before the bankers brought the system down. Even more disturbing, the Resolution Foundation has estimated that the economic downturn in the UK has pushed another 1.4 million employees below the living wage (£8.45 an hour in London and £7.55 elsewhere in the country) widely regarded as necessary for a basic standard of living in Britain. Altogether the study ‘Low Pay Britain 2013’ found that no less than a fifth of all employees – 4.8 million Britons – now earn below this living wage. So far from falling since the height of the recession in 2009, this number paid below this minimum has actually grown by this year by over 40%.
Several measures are needed before the gross injustice of all this descends into street protests and rioting. We need a High Pay Commission, after consultation with all relevant parties, to lay down objectively what is reasonable remuneration (including taking account of all the lucrative add-ons which inflate basic pay) for people at the top, to act as a guideline (enforceable where necessary) for pay awards within companies. We need the Living Wage to be legally implemented, with annual increases of 1% above the average rise in wages. The pay ratio between chief executives and the median wage in their companies, currently more than 125:1, has to be drastically shrunk over time – 40 years ago it was 20:1. And to end the system of top people with their chums in self-chosen remuneration committees paying themselves any sum their greed dictates while everybody else is subject to competitive contracts or collective bargaining, we need a new system of whole company pay bargaining whereby representatives of all the main grades of employees in the company come together for an annual decision-making meeting to examine the last year’s record and next year’s plans and then discuss and negotiate their respective responsibilities and rewards. That way top people’s pay will have to pass muster with the claims of other employees within the company.