In today's column, Polly Toynbe writes:
The Work Foundation points to these hard figures: in 1980 top directors in FTSE companies were paid 10 times the average worker in their companies. By 1990 the gap had multiplied to 31.5 times. And by 2002 the top dogs were paid an enormous 75.7 times more than their average employee. It is a statistical and social impossibility to pretend that we can really abolish child poverty in a society shaped like that.
It has not been easy trying to find the source of these figures (the Work Foundation merely "points" to them). The best I can do is an article called "Corporate governance and disappointment" in the Review of International Political Economy 11:4 October 2004. I haven't found it on the web freely available, but you can buy a copy here.
From this, we learn that it is not all FTSE companies, it is FTSE-100 companies. The data refer to the highest-paid individual director in each of the FTSE-100 companies. And it is not "the average worker in their companies", rather it is the average of "full-time manual employees in the UK." [emphasis added, source is the article I mentioned above].
Now, the average of all manual workers pay is different from the average pay of people working in a FTSE-100 company, as I am sure the employees of, say, 3i or Barclays or Schroders will be able to confirm.
When Polly called these "hard figures", I initially assumed she meant tough or rigorous, rather than difficult to get right.
Even more interesting, though, is the 'why can't we be more like Sweden?' meme. In the paragraph directly after the authors of "Corporate governance and disappointment" introduce the figures which Polly makes a half-hearted attempt at citing, they say:
Or could it be that there is scant causal link between directors' pay and child poverty?
The US/UK differences are interesting but it is a mistake to make too muchof them or to assume that by the late 1990s large payouts to executives were limited to Anglo-Saxon, stock market-based economies... As Messier at Vivendi or Barnevik at ABB demonstrate, greed knows no boundaries and consequently some of the most interesting examples of excessive compensation have arisen in the most unlikely places. As Business Week (19 May 2003) observed of the Swedish/Swiss ABB, ‘for a staid engineering company, they sure know how to make a golden parachute’.