We have all seen (to our own cost) that not every high earner is being incentivised towards doing something that needs to be done. And some individuals have a view of their own worth that is not widely shared. In a true market place, those individuals who overvalue their contribution would simply be unemployed (or be forced by circumstance reduce their rates).
When the employer is subsidised or entirely funded by the tax payer, the market place is not ‘pure’ since these additional funds increase the employer’s ability to pay without necessarily increasing the individual’s ability to add value. The gap between rich and poor wage earners becomes a social and moral issue when high salaries are being funded from taxation of individuals on minimum wage.
Some organisations, arguably including our Parliament, have fudged the issue by publicising a pay scale, but using an indulgent expense or allowance system to increase the value of the post to the post holder.
If high salaries should be funded by the tax-payer, then it is for the employers to make the ‘business’ case and convince an increasingly sceptical public of value. The worst of all choices is to pay lip service to moderate salaries with hidden enhancements and increments. This reduces confidence in our institutions and creates a climate where people believe ‘everyone is on the fiddle’.
Annabel Kaye is Managing Director of Irenicon Ltd, a specialist employment law consultancy. Tel: 08452 303050 Fax: 08452 303060 Website : www.irenicon.co.uk. You can follow Annabel on twitter – http://twitter.com/AnnabelKaye