Maximum Wage: Right Strategy, Wrong Tactics

Although company bosses should be an easy target – their 10% pay rise to £5.5m in 2016 led to a pay gap over employees condemned as 'unhealthy, irrational and growing' by Prime Minister Theresa May – in an article on global platform International Business Times, Lecturer in Economics Alan Shipman suggests that Jeremy Corbyn is on dangerous ground in proposing a pay cap. Most would view a legally imposed maximum as interference that might presage wider state interventions and make businesses less profitable.

Instead, Labour could do considerably more at the lower end of the pay scale, where the minimum wage has proved economically as well as morally justifiable, and Shipman argues that there is particular scope for further improving a 'National Living Wage' and stemming the abuse of zero-hours contracts.

Although excessive boardroom pay is damaging – both to company performance and employment relations – it is best reined-in by corporate governance reform. The worker-director promise which Theresa May made in her first speech as prime minister (and then quietly shelved), and the Hutton Review proposal for a maximum ratio of highest to lowest pay lowest pay, are more promising routes, economically and politically.

Read full article on International Business Times.