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THE GUARDIAN |
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Fat cats can
be tamed if the government has
the will
Britain is a land of overpaid executives and underpaid temps Polly
Toynbee It was a spell-binding moment when office cleaner Abdul Durrant stood up at last week's HSBC annual general meeting and asked if cleaners at the bank's Canary Wharf headquarters could be paid more than £5 an hour. It was not, he said, enough to live on. So he cast his single vote against HSBC's remuneration to protest against the astounding $37.5m (£23m) package for executive William Aldinger. Mr Aldinger sat there but spoke not a word until he was hustled away by heavies to a private jet to attend a charity dinner elsewhere. No chance to ask him what $37.5m is for or why he's worth it. Only 20% of shareholders abstained or voted against: the City culture of secrecy makes it impossible to find out if your pension fund manager voted for or against Mr Aldinger's booty. (However, if any HSBC customers want to express their disgust, changing banks is easy. The Co-operative Bank - ethical investor owned by its account holders - will fix it all, including direct debits; one phone call to 0800 905090.) But consumer power can never correct unregulated pillage at the top: that is the job of governments. Yesterday the DTI published Rewards for Failure, its consultative document on directors' pay. It is a mouse-like squeak, eager to stress that "the government fully supports high levels of reward for high levels of success". The wonder is that any document emerged at all: Patricia Hewitt, secretary of state for trade and industry, had to argue hard with No 10's reluctance to touch fat-cat pay. It smacks of old Labour envy, tarnishing New Labour's aura of aspiration and enterprise. Public opinion, though, rightly draws a distinction between an admired Richard Branson - self-made entrepreneur - and jobbing chief executive officers employed by public companies. The document offers questions. For example, should legislation take into account "underperformance in determining severance payments"? Here the report gives the boardroom game away. It warns that a new law to limit severance pay to "fair and reasonable compensation" would lead to lengthy litigation because "it might be very difficult to establish the causal relationship between the performance of an individual director and the performance of the company as a whole". Well, that's no surprise. It admits there is no test for whether a William Aldinger is worth what he is paid. With the performance of every classroom, hospital and street sweeper monitored, public companies that guard - or lose - our pensions stay beyond any measurement. In fact, their performance can be measured: if asked, the financial services authority could rank how well companies are run because City analysts already do that for their clients. But even then, the performance of individual directors would be hard to gauge. So there needs to be a framework of rewards that makes sense. The DTI's emphasis on "reward for failure" misses the point. Most companies "succeed" or "fail" according to their share price, irrespective of their real performance. The FTSE index is starting to rise, so next year when the AGM season comes round, will there be new boardroom bonanzas amid claims that they have "performed"? This consultation is a chance - a slim one - to debate what top people are worth and why, what criteria are used to measure that, and why it has exploded out of control into cowboy capitalism. Income Data Services reports that pay rises for executives in the top FTSE-100 companies were running at 23% in the last quarter. Tony Blair is wrong to think this boardroom brigandage is not a popular cause. Down at the other end of the scale yesterday, the DTI was up to real wickedness. At the EU council of ministers, Britain led a group of four countries that scuppered a proposed EU directive to give equal pay to temporary agency workers. The DTI demanded a 12-month qualifying period, making it a nonsense since few "temporary" workers stay with one employer for a year. The employment agencies put up a fierce fight, warning that Britain's "flexible" labour market would become as ossified as those in France and Germany - an easy way to frighten the government. But this has nothing to do with flexibility: employers can still take on temps to fill gaps or busy times for as long or as short as they like. Paying staff the going rate does not affect flexibility. This affair has confirmed the way the word "flexible" has come to mean exploitable in government-speak. The DTI likes to claim that keeping temporary work cheap is a step from the dole into the labour market. But research shows temps are no more likely to have been unemployed than any other workers. Last year, researching low pay, I worked for an agency as a hospital porter for a company holding a London teaching hospital's portering and cleaning contract, working with a host of agency porters on £4.35 an hour. Porters directly employed by the company were far better paid, so the agency workers were desperate to get taken on permanently to qualify for sick pay, pensions and overtime pay rates. Without that, some were working double shifts, 80-hour weeks, trying to earn a living wage with not a penny extra for working nights, weekends or long hours. Some had tried for a year to become permanent, with no success. Even though the contractor was paying the agency more than £7 an hour, it was still cheaper than giving the staff equal pay and conditions. Until then, I had not realised the depth of damage done by the contracting culture. This working at two removes from the NHS had bizarre effects: porters were not allowed to lift patients because their company was not insured. But above all, it allowed demoralising undervaluing of those who should have been respected NHS staff. Official estimates suggest that of some 600,000 agency workers, 200,000 are paid less than permanent staff. It is shocking that a Labour government has sabotaged equal pay for people doing equal work. Fair pay might cut into the agency business - it's high time public services stopped spending a fortune on high fees to agencies for temps who get exploitation pay. Temporary work is useful flexibility for employers to take on extra staff when needed. But that is no reason to underpay them. So Hewitt has sent out muddled messages. She rattled a sabre at the fat cats, but yet again taken the CBI's side over vulnerable temporary workers who need most protection. Ask why the gap between top and bottom yawns ever wider and "the market" is the excuse for both the excess and for the exploitation. But the market is deformed by a new degenerate capitalism, under-regulated by a timid government, and too removed to be embarrassed by public outrage. · Polly Toynbee is the author of Hard Work: Life in Low-Pay Britain MediaGuardian.co.uk © Guardian Newspapers Limited 2003
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