The clamour for action on excessive pay is growing, not least from some of our biggest business names. Sir Stuart Rose, of Marks and Spencer, recently suggested that the gap between CEO pay and the wages of ordinary workers might have got out of control, while the newly appointed President of the CBI, Sir Roger Carr, this week described ‘rewards for failure’ as “unforgivable”.
Yet the idea that very high salaries can be justified as long as they are deserved is called into question by research from the High Pay Commission, which found that executive pay has grown by 7 per cent a year in real terms over the last 10 years, compared to annual average real growth of just 0.8 per cent between 1949 and 1979. Researchers can find no evidence that UK firms have done better over the last 10 years than in the 1950s, 60s and 70s. Nor is there any evidence that senior executives are significantly more mobile than ordinary workers or modern firms more complex to run, as many supporters of the rapid increase in top pay argue.
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