Unpaid Workers

Politicians try to endear themselves to the electorate, in a democracy, by promising to crack-down on something that they think will please voters. Theresa May is no exception. She opened the batting with a call for workers to be represented in the boardroom and for curbs on directors’ pay. Admirable sentiments that remind me of David Cameron a decade ago hugging huskies; the dogs in the Arctic Circle not the quilted coats in Cirencester.

She will get nowhere by imposing rules on boardroom pay. Some companies overpay, others pay a fair whack and, I suppose, a few underpay their directors. Oh yes, I remember that when I was a director of the International Petroleum Exchange I was unpaid. It’s worth remembering that the overpaid are expected to deliver profits for their shareholders. Recently the jolly-well-paid boss at Burberry was demoted. Many companies pay their executives in share options which cannot be exercised for at least three years. This goes some way towards aligning the interests of the executive and the shareholder.

During my thirty-nine years working in the City I quite quickly learnt not to beat myself up if somebody at the next desk was earning more – or less – than me. It simply wasn’t relevant. What mattered to me was my pay.

So this week Theresa May chaired her first board meeting as Chief Executive of UK PLC. She is paid £142,500. Her board (the Cabinet) are paid £134,565, her senior executives (Ministers of State) £98,740, and Parliamentary Under-Secretaries of State £89,435. I need hardly say that they are all expected to live on their wages. Should they try to boost their earnings with a bribe here, a sweetener there or a generous gift from a business friend, these days, they pretty quickly get caught out.

I hope my chat about boardroom hasn’t turned into bored room because now I’m coming to the point. You may hear the noise of gnashing of teeth at these UK PLC board meetings. Unlike the City everybody knows what everybody else around the table is being paid and this is pretty frustrating for the Commercial Secretary to the Treasury (equivalent to a PUSS),  two Ministers of State and four PUSSies. They and two others are paid precisely nothing.

At first sight this seems unfair. They are doing the same jobs and doing it for nothing. There are two aspects of this worth noting. First,  the size of governments in the UK has ballooned. Since 1900 the Cabinet has been pretty static at around twenty members. This has more to do with the size of the table around which they meet than any political restraint. The total number of ministers has shot up from around sixty to more than 120. It’s tempting for a Prime Minister to buy loyalty by handing out jobs for the boys (and girls) and that’s just what they do. Politicians seldom enact legislation against their own interests but in 1975 they passed the Ministerial and Other Salaries Act (MOSA) that restricts the number of paid government ministers.

MOSA is why there are nine unpaid members of the government today. Can I make a wish? I wish there were some unpaid members of the European Parliament and the Welsh and Scottish Assemblies. I wish those bodies would think about enacting their own MOSAs; fat chance.

After such a boring post you deserve a good and rather summery musical coda.

https://youtu.be/hjD0Ne3CuaY