In Focus: The big freeze
There was an interesting survey done by the Institute of Directors this week, which said that its members’ pay had only risen 2.5 per cent in 2010 – a pay drop in real terms. The survey also pointed out that 23 per cent of directors reported that their bonus was cancelled or postponed this year. Where bonuses were awarded to directors, the average bonus was down on last year by nearly 20 per cent. The average bonus for a director in a small company was £10,000; it was £12,600 in a medium company; and £17,200 in a large company.
These figures seem to fly in the face of one side of the debate on pay at the top level, but they also ignore one fact: pay for those who aren’t directors or receive bonuses hasn’t risen in real terms since the seventies.
Ron Lynch, IoD East Midlands regional director, fought his corner well, as he always does, saying: “When politicians and other individuals attack the private sector for excessive pay they ignore the fact that the majority of private sector directors earn about the same as a school headteacher or an ordinary NHS GP.”
Leaving aside the school headteacher, who I think deserve every penny they get, I don’t think anyone can argue with this fact. And that fact that GPs do seem to have a bob or two. But there’s sense here that we must drive down everyone’s wages to be seen to be “fair” – that word that is so ambiguous and that has been bandied around so much in the last few weeks.
Lynch went on: “This survey kills the idea that company directors are beginning to enjoy big pay rises at the very moment a pay freeze takes effect in the public sector.”
I’m not sure it will, to be honest. This week on Channel 4 news came a private sector-led story, revealing how much it’s going to cost to lay off the half a million public sector workers over the next few years, through redundancy payments. Cue shock, horror from talking heads in local shopping precincts.
It seems to me that both sides are getting a little too bogged down in the minutiae of pay, and not really concentrating on the bigger picture of creating jobs. We’re all in this together, goes the mantra. Now whether you believe that or not, it doesn’t help that the private sector and the public sector are having their own little civil war on the sidelines. Fiddling whilst Rome burns, you could say.
For those out of work and facing redundancy any pay is better than no pay, and it’s my bet that they’re not too fussed about directors’ pay – more about making sure they can pay the bills. Only creating jobs can achieve this; private sector – it’s over to you.
Any comments? Sam Metcalf, Insider
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