Billy Hayes - 'The Trade Unions and Economic Democracy'

[TrueBlueTerrier]

“The Trade Unions and Economic Democracy”

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For trade unions today, the most important question of economic democracy is undoubtedly the growth of income in equality.

Earlier this year, Mervyn King, Governor of the Bank of England, said that real wages in 2011 would be worth the same as in 2005. He further said that you have to go back to the 1920s in order to obtain the comparable period of wage cuts. That was a fairly stark example of a longer term problem. Of course, Mervyn King can shrug his shoulders on this problem. But for the trade unions, the problem is one that we simply have to address.

According to the Office of National Statistics, take home pay fell by an average of 0.8% last year – whilst the ONS is anticipating an even bigger fall in 2011. It estimates a drop of 2% in take-home pay in 2011. As I said, this is taking place against a longer term trend of growing income inequality. According to a recent IPPR Report, “Getting What We Deserved?”, between 1975 and 2008, the top ten percent of earnings increased their share of the wage bill from 22 to 32%.

Compare this to the position of middle and lower earners. Last month the TUC published a survey that showed the pay for middle income workers had gone up 56% since 1978 – whilst GDP had risen by 108%. For the low paid, the results were even worse. Their income had increased by a mere 27% over the past three decades, against the GDP growth of 108%.

So what this means is that whilst GDP doubled, the middle income group increased their wages by a half and the low income group increased their wages by around a quarter. This isn’t just an unequal sharing of the growth of national product – in real terms the increase went to the top 10%. In my view, this is linked to the decline in trade unionism over that period.

Since 1979, the trade union movement has lost around half its membership in Britain. The percentage covered by collective agreements is also similarly reduced. The most recent ONS figures indicated that even with the severely weakened union movement, the trade union “mark up” is worth over 15% on the hourly wage rate.

Consequently, we can say that the rise of income in equality is proportionate to the decline in union organisation. Indeed the IMF in a recent report on the world recession by Michael Kumhof and Romain Ranciere argues that one of the reasons for the recession was the reduction in real wages. The report suggests that the way out of economic stagnation includes: “… restoration of the lower income groups bargaining power …”

This will remain a pious wish until the inequality in social power is also recognised for the only way that workers from lower and medium income groups can express their “bargaining power” is through their organisation into trade unions. I am very well aware that, in response to public sector unions defending their members wages and pensions, the Government is threatening all sorts of new legal obstacles to trade unions organising or taking action.

Clearly a Government which is intent on further squeezing living standards does not want to see workers having effective organisations which will offer then some security. But it isn’t the case that the public is by nature hostile to trade unions, or indifferent to wage inequality.

The same IPPR Report I referred to earlier found that 78% of Britains supported direct Government intervention in order to reduce the gap between high and low earners. 82% believe that the Government should intervene in both private and public sector to change the earnings gap.

By itself, the market will simply not deliver the results. The Financial Times reports last week that the pay awards of FOOTSIE chief executives rose by 32% last year. The Sunday Times Rich List, published in May, showed that the very rich added 18% to their incomes in the last 12 months.

So we face a very stark problem in the next few years. On the one hand we have a Government determined to freeze or reduce living standards. On the other hand, we face a growing public awareness, and a resurgent union movement, which believe that income inequality must be reduced in order to solve our economic problems.

No one can know the outcome of these contending forces. But I certainly know which side has both the justice and economic efficiency to support it.

[stokes11eg]

Since 1979, the trade union movement has lost around half its membership in Britain. The percentage covered by collective agreements is also similarly reduced. The most recent ONS figures indicated that even with the severely weakened union movement, the trade union “mark up” is worth over 15% on the hourly wage rate.
Maybe if the Union leaders paid hed to the above statement, they might ask themselves why there has been such a drop?

[MinisterofCucumber]

There is a class of people who believe that they are better than the rest of us. They believe that they should work in luxurious surroundings, sealed off from the real work and get paid multiples of what the workers get paid.

There are some business owners and managers who are willing to get their hands dirty but how many of these are there in RMG?

RMG should not be encouraging this culture of 'them and us'. Management and their support staff should be placed in glass walled offices on the shop floor. They should be obliged to use the same loos as us and smell what we have to smell. Disabled toilets are for the disabled. They should not be used by the able bodied.

There are many more times people on low pay than on high pay. Reducing the wages of those on low pay and increasing the wages of those already on high pay is not good for a service economy like ours in the UK. Most of our companies rely on the custom of ordinary individuals and if our pay is being squeezed, we can't go shopping.

[Straight4ward]

Taken from The Independent
Sunday, 15 May 2011

Britain's bosses are pocketing an increasing portion of the nation's income, according to a report from the High Pay Commission to be published tomorrow. As the majority of people in the country face the largest drop in household income for three decades, a tiny minority at the top are awarding themselves a growing slice of the UK's wealth.
The top one thousandth of the British working population currently receives 5 per cent of the country's earnings, a ratio equivalent to that in the 1940s, the report says. If these trends continue, income for the highest paid will account for 14 per cent of the country's total by 2030 – the same proportion as in 1900.

The independent commission was set up in November to scrutinise the rising pay of those at the top. Its first report concludes that during the decade Labour was in power, income at the top grew by 64.2 per cent, while that of an average earner increased by 7.2 per cent over the same period.

The study accuses businesses and governments of having "failed to tackle the dramatic growth in pay at the top" despite growing public anger at the gulf between soaring rewards for executives and tightening circumstances for the rest of the country.
The conclusions will be a blow to David Cameron's attempts to emphasise that "we're all in this together". The Government has appeared flat-footed in its attempts to persuade senior executives and bankers to curb the pay and bonuses they award themselves, particularly as the effects of the recession are still being keenly felt by the rest of the country.

Burgeoning pay increases to top bosses has been caused, in part, by attempts to link pay and bonuses to performance, the commission says. It also blames weak control of companies by their own shareholders.
Currently the average salary for the highest-paid CEOs is more than half a million pounds. By 2020 this figure is expected to be £1m.
Many of the largest pay packets have been awarded to those in the financial sector, who make up a third of the top 0.1 per cent. Their pay is boosted by bonuses and share options that far outstrip their base salary.
Chief executives of FTSE 100 companies earn an average of £3.7m – or 145 times the average wage. By 2020 they are expected to be paid 214 times more than the average.
The commission believes that if companies were forced to be more open about how much of their profits go to executives rather than shareholders, bonuses would be reined in.
Deborah Hargreaves, the chairman of the commission, said: "This is the clearest evidence so far that the gap between pay of the general public and the corporate elite is widening rapidly and is out of control."
Ms Hargreaves believes the importance of tackling high pay is as much an economic concern as a moral one. "You can express moral indignation but if all the rewards go to the top, who is going to get the economy going again when average wages aren't even keeping up with prices?"

The Business Secretary, Vince Cable, launched a consultation on corporate governance and executive pay last year, the results of which will be published next month.
Responding to the report, he said: "What is impossible to justify is the fact that differentials of income at the top end continue to increase even when it's not justified. When bankers are bailed out by the state and continue to demand bigger sums, that's what people find inexcusable. Clearly something needs to be done to strengthen shareholder responsibility in this area, because at the moment they're either abdicating it or not exerting it."
Increases in executive pay have drawn criticism from all parties. Before the election last year the Tory MP Kenneth Clarke said he was "astonished" that the British were "so quiet about the massive gulf that's opened between the very rich and the ordinarily paid over the past 12 years".

Despite the telephone number pay packets of executives, a report last week from the Institute for Fiscal Studies, showed that average income could fall by 3 per cent this year, the steepest drop since 1981, taking households back to 2004-05 levels.
Paul Johnson, director of the IFS, said: "We haven't seen average people being squeezed since at least the early 1980s. What we are going to see is that the incomes of the majority fall by 3 or 4 per cent, so when people see a squeeze on their living standards that may well impact on how they see the very top."
The Labour MP Anne Begg, the chairman of the House of Commons Work and Pensions Select Committee, said: "Families and hardworking people are being squeezed as the cost of living rises, and this Tory-led government's policies are not helping. While Labour is putting forward the ideas to strengthen communities and help the next generation do better, the Government's front-loaded cuts and VAT rise are putting the economy into the slow lane. The Tory-led government is hurting, but it's not working."

The undeserving rich?
Bart Becht
Chief executive of Reckitt Benckiser
Paid £18.2m last year, 702 times the median national wage
The company behind household products such as Cillit Bang and Air Wick knows how to make its executives feel appreciated. To Becht's credit, his charitable donations are substantial. In 2009 he was the best-paid PLC employee in UK. He retires later this year, no doubt on a pension commensurate with his pay package.

Frank Chapman
Chief executive of British Gas
Paid £28m last year, 1,081 times the median national wage
As customers struggled to pay soaring gas bills last winter, Chapman was reaping the benefit. His basic salary of £1.14m and bonus of £1.6m were boosted by a further £5.26m from a long-term incentive scheme and £15.5m from share options which he exercised in September.

Mick Davies
Chief executive of miner Xstrata
Paid £27m in 2009, 1,042 times the median national wage
Davies is one of the highest paid people in the FTSE 100. He has expanded the mining giant's coal assets, despite concerns of environmentalists. This summer the company tackles Friends of the Earth in court over plans to build the world's biggest mine in Australia.

Martin Halusa
Chief executive, Apax Partners
Paid £13m in 2010, 502 times the median UK wage
The private equity investment group behind such household names as the high-street chain New Look has seen its profits soar during the recession. Private equity groups have been accused by politicians and trade unions of "behaving like locusts" by "asset-stripping, slashing jobs and paying outrageous rewards".

Bob Diamond
Chief executive, Barclays
Income Up to £27m if his bonuses and shares pay out, 1,042 times the median national wage
Diamond did himself no favours when he said that "the time for remorse is over" and that bankers should stop apologising. After a salary of £250,000 and £6.5m in bonuses, he is also in line for a further £6.75m of shares that could pay out in the future. Share deals from the past five years yielded some £13.8m.

The myths the realities...
'Big money is needed to get the best chief executives'
That assumes most are brought in, when 59 per cent of CEOs in the FTSE 100 were already at the company for five or more years.

'Being a CEO is risky, so they need to be compensated'
Hardly. Only six CEOs left FTSE 100 companies in 2009, a turnover rate of 6 per cent, which is less than half the national average.

'Big pay packets are linked to business success'
What about the bumper pay for bankers that caused the crisis? Over the past 10 years, CEO pay has quadrupled while share prices have fallen.

'Big bonuses mean better results'
Not necessarily. Research suggests performance-related pay works 50 per cent of the time – and bonus culture didn't stop bankers leading us all to crisis.

'Without big pay packets, executives will be lured abroad'
Only one FTSE 100 company has had its chief executive officer poached by a rival in the past five years – and that was by a rival British firm.

'Our high pay is in line with other leading countries'
It is significantly higher than the rest of Europe – it is less than in the US, but its CEO pay is 170 per cent higher than the rest of the world.

'Highly paid people at the top boost a company's success'
Having a pay gulf between staff at the top and bottom of a company can damage personal and corporate relations. Just look at how popular bankers are now.

'Top earnings have always risen faster than average wages'
Until 30 years ago, the gap had been decreasing. From 1949 to 1979, the proportion earned by the top 0.1 per cent decreased from 3.5 per cent to 1.3 per cent.

'Top earnings rise at the same percentage rate as average pay'
No. The earnings taken by the top 0.1 per cent increased by 64.2 per cent in the past decade, while average pay went up by just 7.2 per cent.

'Attempts to regulate CEO pay would be bad for the economy'
When you pay disproportionately high rewards in one sector – such as finance – it is harder to attract good graduates into other vital areas of work.

Pasted from <http://www.independent.co.uk/news/busin ... 84397.html>

[stokes11eg]

'Without big pay packets, executives will be lured abroad'


Let them all go! The bubble will burst soon, and you know what they say about the higher you are the harder you fall ! Without exceptions, throughout the pa
ges of history, when free market economies run riot like this, it leads to collapse!
we lesser morteals won't feel the crunch nearly so badly.

[POSTMAN]

'Without big pay packets, executives will be lured abroad'

Aint it the other way round,all join GB PLC for a good screw.