Questions About UK Labour Party Government Contractor Pay Ratio Proposal Spurs Hilarious Exchange
May 5, 2017
In advance of next month’s UK snap election, the Labour Party has issued a 20-point plan to fix the “rigged economy” in the workplace, which includes a proposed policy of limiting government contractor CEO Pay to 20-times that of the lowest paid employee. When questioned about how the pay ratio would work, however, UK Labour Party shadow cabinet member Ian Lavery was repeatedly unable to explain the consequences of exceeding the 20-time limit. Similar to classic Monty Python skits, BBC One’s Andrew Neil on its Sunday Politics show asked Mr. Lavery what would happen if a well-known UK defense contractor bids to build additional Joint Strike Fighters for the Royal Air Force, but the CEO breached the 20 times pay ratio limit. Mr. Lavery initially responded: "I understand the point you raise but we've got an obscene situation in this country which everybody recognizes, whereby the bosses at the very top make an absolute fortune." When asked no less than four more times during the interview who would build the jets, Mr. Lavery did not answer directly, instead decrying the existence of a wage gap between CEOs and workers and repeatedly promising to introduce a max wage ratio of 1:20 as part of the Labour party’s 20-point plan. Mr. Lavery’s reluctance to discuss the consequences of introducing a maximum CEO to worker pay ratio reflects the reality that such caps are not economically feasible but they make good campaign rhetoric. Even continental Europe, which typically is more progressive in its workplace and compensation restrictions, has disfavored pay caps. In 2013, Swiss voters decisively rejected a proposal which would have capped compensation of CEOs to 12 times that of the company’s lowest paid worker.