Comment: Could a ‘maximum wage’ end the age of greed?

June 4, 2009 at 12:41 pm 1 comment

by James Easy

In the wake of the financial and MP’s expenses crises, is a maximum wage the answer to curb a society of greed?

Paddy Tipping, Labour MP for Sherwood, put forward a motion yesterday for a Bill to “prescribe a maximum wage that can be paid; and for connected purposes.

” The Bill would “put a cap on the maximum wage that can be to any person in any one year.”

Such an idea will undoubtedly be opposed by members of the Opposition, and maybe even by members of his own party judging from the role of certain Labour MPS in the expenses fiasco.

There was certainly a wealth of opposition to the introduction of a minimum wage.

Tipping said, “The CBI argued that there would be job losses. That has not been the case. There are still pockets of resistance to the minimum wage, however; I note that the hon. Member for Christchurch (Christopher Chope, Con), supported by some of his colleagues, intends to bring forward the Employment Opportunities Bill on 12 June. Let us be in no doubt that that would axe the minimum wage.”

Tipping continued, “There are genuine concerns about executive pay packages. It cannot be right that some CEOs are receiving £6m per annum or more…or that Terry Leahy the CEO of Tesco, has a salary package of £4.3m, which is the equivalent of 335 of his employees working in Tesco.”

As to how exactly a maximum wage would work, Tipping said “We could say that no one should receive more than £194,000 a year, the same salary as the Prime Minister.”

More empirically however, he said “there is a strong case for arguing that the maximum wage should be 10 times the minimum wage. Based on £5.60 an hour that would give a maximum wage of £120,000. A rule of 100 would provide a maximum wage of £1.2m per annum.”

Denis MacShane (Rotherham, Lab) has argued previously that the multiple on the average wage (£479 per week) should be twenty times, which would produce a maximum wage of £115,000 per annum.

In closing, Tipping argued that “it does not matter what process is used to calculate the maximum wage. The issue is not one of practice but one of principle. It is right and popular that we should move to a fairer society.”

Sir Paul Beresford (Mole Valley, Con) called it a “Stalinist Government restriction” and said that “this has to be one of the daftest ideas that I have heard in this House…The damage it would do to this country would be immeasurable.

“Going back to a communist-type restriction whereby the Government decide wages and jobs is unthinkable. It would be uncompetitive, and it would destroy us.”

The Bill will read a second time on Friday 16 October but has little chance of becoming law.

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1 Comment Add your own

  • 1. jim hogg  |  August 24, 2009 at 5:06 pm

    Long overdue. Even 10 x the minimum wage is obscene, but it would be a move in the right direction. Let the greedy and exploitative make a run for it. Other nations will slowly but surely wake up to the damage that greed is doing – and how it can be converted into a righteous ideology by those who have the arrogance to believe we’re all stupid enough to swallow it.

    Reply

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