1. There is now agreement across the political spectrum that the gap between directors’ rewards and those of ordinary workers has stretched too far.

I wonder what the evidence of that is? It seems to me it is none of the government’s business what other people do in private.

2. Giving workers a voice on remuneration committees is a direct response to this growing gap and a practical way to make a difference.

The only way it can be assumed it is a practical way to make a difference is to assume that the workers representatives will vote for lower pay. There is no reason to think lower executive pay is a good thing – as long as it is tied to performance. Certainly there is no reason to think that asking anyone from the shop floor to interfere in how stockholders spend their own money is a good idea.

4. Bringing workers into remuneration committees would at a stroke boost awareness among remuneration committee members of employee pay rises, pay levels and morale.

If management wants to know, they will know. If they don’t, why force them?

Worker representation would bring an overdue sense of perspective onto remuneration committees, which has to date been sadly lacking.

It is just another power grab by someone who should know better. There is no case for workers having any say in how stockholders spend their own money. There is not much more to say really. Proposals that give stockholders a larger share make sense. This Corporatist nonsense does not.

More profound stupidity from Cable – since when was it the governments job to stick their nose into what PRIVATE companies pay their staff at any level. If I have a company it is up to me to decide what to pay my staff. If they feel they can get paid more at another company they will do so…but what I pay myself really is none of their business.

The business secretary is politicking, not actually doing anything good for business, like cutting red tape. Instead he is going to add to it….

What else is next? Why stop at directors of companies? Why not have the government or the TUC tell us how much all private sector workers can earn. After all there are lots of well paid peoiple out there who aren’t on company boards.

And if employees get to decide how much their bosses get paid, do we plebs get to decide how much civil servants get paid, for after all, aren’t they supposed to work for us?

There has clearly been a failure when it comes to shareholders holding executives to account, this is the problem that needs to be addressed. Claiming that adding worker reps will solve all ills is just jumping on the bandwagon and remains a bloody silly plan regardless.

Firstly there is a lot of evidence to suggest the pay of directors has grown massively in comparison with those on the bottom of the pay scale. I think this in part is due to the centralisation of capital resulting in fewer big firms. The other influence is the growth of the financial industry where the ‘creation of wealth’ is increasingly based on dubious financial instruments as exemplified in the lastest rogue trader saga.
Sit on that gravy train and the rewards as a percentage of the market will continue to grow.
Furthermore,the lack of any vibrant manufacturing/technological/scientific volume industry justs waters down access of available rewards for everyone else,quite apart from the current effects of fiscal retrenchment.
There is a way of course of redressing earnings disparity.Its called the tax system. Sucessive Governments however have failed to address the redistributive effects of tax principally because the class of people who get these rewards are the very same people who advise or become part of the government. Governments, like these individuals and the companies they represent also form a substantial part of the offshore tax system which makes them increasingly difficult/impossible to tax.
Vince isnt generally right about a lot despite being a diety. In his latest effort he is continuing to piss in the wind.

@2: “More profound stupidity from Cable”

On the evidence, Germany is doing well with its system of Mitbestimmung (co-determination) compared with Britain.

The latest figures from ONS, just released, show that productivity per hour worked in Germany is well ahead of Britain:
http://www.ons.gov.uk/ons/dcp171778_232305.pdf

But we mustn’t let mere evidence stand in the way of a political pitch from Conservatives..

Whilst I want to agree with Bob, the trouble is that Britain isn’t Germany. What works very well there won’t necessarily work here where we are used to a more “red in tooth and claw” capitalism. I hate to say it but probably aggressive strikes and “industrial action” may be the only language that the capitalists understand in this country. SMFS may be correct in the view that a rigidly polarised view on the distinction between workers and capitalists is the only appropriate one in this country.

@ bob b

Your argument doesn’t follow….it is true that german productivity is well ahead of UK productivity, but that isn’t because of the difference between worker and executive pay.

So, care to show some real evidence??

@7: “Your argument doesn’t follow….it is true that german productivity is well ahead of UK productivity, but that isn’t because of the difference between worker and executive pay. ”

How can you be so sure that the higher productivity per hour worked in Germany isn’t due to Mitbestimmung and to the more equal distribution of incomes in Germany which, together, soften the edges in industrial relations and help to foster a shared sense of corporate stakeholding.

Of course, it’s also possible that the lesser percentage contribution of financial services to Germany’s GDP compared with Britain and the greater percentage contribution of manufacturing also matters. Internet sources report that manufacturing contributes about 21% of Germany’s GDP compared with about 13% for Briatin. I wonder how they managed that?

@ bob b

Correlation is not causation.

German labour pay practised are different to our own, but the ‘pay gap’ is not vastly different. German productivity has been outpacing ours as simply put, gerrman workers have been recieivng smaller pay increases whikst increasing unit productivity faster than UK workers. The UK also has to contend with a much larger and less productive civil service than germany.

Regardless. What business is it of yours for you, the government or anyone else to stick your nosee into a private company as long as they are not breaking the law or you own some of it?

@Tyler: “Correlation is not causation. ”

I didn’t claim otherwise. I raised questions about the possible contribution of Germany’s Mitbestimmung institution to Germany’s higher productivity per hour worked by fostering a sense of mutual corporate stakeholding between employers and employees. I also asked about how Germany managed to maintain such a relatively large manufacturing sector.

“The UK also has to contend with a much larger and less productive civil service than germany.”

That’s partly because governance in Germany is much less centralised than in Britain so there is no like-for-like comparison.

The Federal States of Germany (“Länder”) exercise substantial powers of governance, especially in supporting regional industrial development, regional banks and in funding research in science and technology – as well as administering health and education in their regions. In Britain, most of that is administered and financed by central government.

In 2007, before the international financial crisis broke, according to OECD data, General government expendiures (which covers central as well as local/regional government spending) as a per cent of national GDP were almost 44% for the UK and 43.6% for Germany. Plainly, there wasn’t much difference in those percentages before the financial crisis. What changed the picture since is that the recession was deeper in Britain, not least because the relative size of financial services in Britain is so much larger.

It’s not clear what evidence there is for claims that there is more bang for government spending in Germany compared with Britain although it is credible that productivity in the public sector in Germany is higher, just as it is in the private sector.

Why so cynical people? Remuneration committees have a number of members – its not the case that one worker rep = lunatics taking voer the asylum.

The PRIVATE company argument is laughable – BP, Lloyds, BAE, these companies get massive subsidies from the taxpayer – they are not purely private.

Indeed shareholders holding the board to account is also laughable – the vast majority of shares in the UK are held by institutional investors who often ‘share’ directors as NED’s swapped as execs and sell shares at rapid speed and provided the share price rises whose going to fuss over exec pay?

Why is every idea that makes only a minor change but which could enhance the levels of fairness in our society shouted down by so many people on this site??

Its not even going to cost anything for the public at large other than passing the bill that contains the provision!!!

11. Retorik80

Why so cynical people? Remuneration committees have a number of members – its not the case that one worker rep = lunatics taking voer the asylum.

There is nothing remotely cynical here. It may not be the case that a single member will result in the lunatics taking over the asylum, but once you admit a single lunatic has a point of view worth listening to it is only a matter of time before the lunatics take over. See the UN for instance.

The PRIVATE company argument is laughable – BP, Lloyds, BAE, these companies get massive subsidies from the taxpayer – they are not purely private.

Then we need to stop giving them subsidies.

Indeed shareholders holding the board to account is also laughable – the vast majority of shares in the UK are held by institutional investors who often ‘share’ directors as NED’s swapped as execs and sell shares at rapid speed and provided the share price rises whose going to fuss over exec pay?

And yet ultimately someone owns those companies and some other people invest their pensions there. There is accountability. Every company has to make a profit or their shares drop.

Why is every idea that makes only a minor change but which could enhance the levels of fairness in our society shouted down by so many people on this site??

You can’t have it both ways. Either it is a minor change or it will have a big impact. Paying people what they are worth *is* fair. Denying them that is not. End of story. It remains none of your business.

Its not even going to cost anything for the public at large other than passing the bill that contains the provision!!!

In the short turn. But every little fiddle brings us closer and closer to following Argentina down the path of ruin. Do you know where the tipping point lies? If not I would politely suggests you tread carefully.

@12

Thankyou SMFS for the considered response. I appreciate the points you’re making and would agree with alot of it but would add the following:

In reference to worker reps I wouldn’t actually characterise them as lunatics – i merely used the cliche as so often workers are treated as if they have nothing to contribute other than their labour. If the UN is a model for this lunacy we’d do well to look at the ways it ignores failing societies rather than helping them! Ergo one worker rep would not have such an impact that all directors salaries would be forfeit.

Private companies – so we shouldn’t give them subsidies, nice in theory more difficult in practice. I don’t necessarily have a problem with subsidising an industry like defence or trains etc if it results in a positive cumulative effect. But if we are doing that its a bit rich for those companies to then say bugger off the taxpayer has no say on how we run our business. If BAe would like to return all of its ECG credits i’m sure the treasury would take the cheque?

Sure theres accountability but isn’t the main reason for the development of corporate governance the scandals that have taken place? Who amongst the institutional investors was watching the gearing ratios and off balance sheet financing of the banks? Some maybe but not enough to depress their share price, force them to acknowledge risk and then save all the money the taxpayer has paid to bail them out.

Your final points I accept in the main. I don’t think there is anything ‘wrong’ with being paid alot of money – provided you can show some enhancement of an owners value! I don’t know where the tipping point lies but i’d politely suggest that neither do you and all i’m saying is that calling for one member of a remuneration (nevermind nomination, audit etc) committee to be from the ‘employees’ hardly counts as a massive change to business practice or some violent revolution that will send us the way of Argentina.

Kin regards

“The way to do that is for the stronger eurozone members to send money every year, for decades, to the EU in Brussels, and the EU then to spend that money in Italy and Portugal, thereby raising their wealth just enough that they can service their own debts. ”

Absolute madness! The UK and German electorates are fed up with being a net contributor to the EU. You are now suggesting that hard working Germans with a retirement age of 67 should subsidize the Chianti and Porto lifestyles of Italy and Portugal. This is the same moral hazard we have in the UK with countries having different taxation and benefit systems.

You cannot homogenize the peoples of Europe and politicians will have to accept that a ‘Club Med’ lifestyle will outlive their desire to build a superstate.

Is it any more mad than the UK Government sending money for decades to the EU in Brussels to build roads and infrastructure in country’s like Poland – only to see British jobs then destroyed and moved en mass to Poland?

Socialist only know how to spend other peoples money. They have no clue as to how hard it is to earn it in the first place and don’t waste your time trying to discuss “competitive advantages”.