Workers could get say in executive pay

The British Deputy Prime Minister, Nick Clegg, has committed the government to a crackdown on excessive executive pay, saying austerity in the public sector had to be balanced by curbs on “irresponsible and unjustifiable” pay rises in the private sector.

The Liberal Democrats’ leader said ministers would publish firm proposals next month and the government was willing to legislate, if necessary, on measures that could include forcing firms to let workers sit on the remuneration committees setting pay rates for top executives.

“Just as we have been quite tough on unsustainable and unaffordable things in the public sector, we now need to get tough on irresponsible and unjustified behaviour in the top remuneration of executives in the private sector,” Clegg said.

With the bank bonus season ­looming, controversy about excessive executive pay is likely to continue. A media report recently claimed that the Royal Bank of Scotland, which is 83% owned by the taxpayer, was expected to pay £500-million in bonuses to its investment bankers.

Another newspaper said about 24 100 staff at Barclays Capital were due to receive pay and bonuses worth an average of £210 000.

Clegg said he was not opposed to people being paid well, provided that they succeeded in their jobs.

“What I abhor are people who get paid bucketloads of cash in difficult times for failing.”

In September, at the Liberal Democrat conference, British business secretary Vince Cable announced two consultations covering executive pay. Clegg said these consultations were complete and that the government would be publishing its response next month. Three areas were flagged for reform.

Firstly, shareholders could be encouraged to take a more active role in restraining pay. Secondly, firms could be forced to put workers on remuneration committees and, thirdly, firms could be forced to publish information about the gap between the average earnings and the top earnings in their companies.

Clegg said the government agreed with many of the recommendations from the high-pay commission, the body set up by the left-wing pressure group Compass that published a report on this subject last month.

He was outraged by a recent report that said the pay of directors working for FTSE 100 companies had climbed by 49%. He said they were getting the extra money even though their companies were not doing any better and that this was “a real slap in the face for millions of people in this country who are struggling to make ends meet”. —

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories


press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday