Income Inequality and the Democratic Deficit
The wages and bonuses of top earners has been, within predictably narrow confines, the subject of much discussion recently. In their recent spring party conference the Liberal Democrats, attempting to reposition themselves as the party of social justice, announced that they were supporting increased ‘transparency over executive pay’ by proposing mandatory disclosure of the pay of top earners. Meanwhile Ed Miliband, in his rebranding speech on welfare, sought to recapture the perception of Labour as the ‘party of the grafters’, criticising unjustly high pay and emphasising the contributory principle with regard to top earners as well as those on benefits. The Conservatives too have engaged in their share of concerned posturing around the issue of executive salaries. It is all sound and fury. The vacuity of this distress can be inferred by the complete lack of any concrete policy proposals within the political mainstream designed to terminate and reverse the growing disparity in earnings. Nevertheless, that our major political parties feel the need to gesture in that direction at least reveals a degree of anxiety about public anger over the issue.
A survey published in the UK this month demonstrates the yawning gap between the public’s view on remuneration and that which is being discussed within the media and proposed within parliament. The poll, conducted by the Institute for Public Policy Research (IPPR), reveals that 78% of Britons support direct government intervention in order to reduce the disparity between high and low earners. A huge majority of 82% believe it is the role of the government to intervene in both the public and private sectors in order to influence levels of pay and close the earnings gap. There was also an overwhelming consensus that low-paid workers deserve significantly more; the average view of the respondents being that office cleaners should receive a 19% pay rise, prison officers a 20% increase, and painters and decorators 12% more. Meanwhile, it was thought that top-earners, both within the public and private sectors, should earn significantly less. The survey also demonstrates a more broadly egalitarian approach towards pay rewards, with only one quarter of respondents approving of the linking of bonuses to individual performance compared to half who thought that bonuses should instead be awarded on an organisational or team basis.
These stark findings come at a time when the levels of income and wealth inequality continue their seemingly inexorable rise, one that has persisted through Conservative, Labour, and now coalition governments. The wages and bonuses of top-earners have long since recovered from the brief blip they experienced during the nadir of recession. The Financial Times reported last week that the pay awards of FTSE chief executives rose by 32 percent last year, symbolised by the recently announced £14m pay and share awards to M&S Chief Executive, Marc Bolland. Meanwhile, the wages of low and middle income workers within both the public and private sectors continue at best to stagnate or in many cases experience significant decline in real terms, in line with the trend of the last three decades.
The public anger felt over this issue and the disillusionment in mainstream parliamentary politics is not confined to Britain, taking on more dramatic forms elsewhere in Europe. As Greece tumbles ever closer towards default, this week sees another general strike planned amidst renewed rioting directed towards the government’s latest discussions with the ‘troika’ (the IMF, ECB, and European Commission) and their drive for cross-parliamentary support for the intensified austerity measures. Meanwhile, the two recent gains by the Conservatives in Southern Europe conceal popular sentiment. The huge defeat of the incumbent Socialist Party in Spain’s local and regional elections last month, which occurred in the context of the widespread demonstrations and protest camps of the ‘indignants’, was widely seen as a protest vote against the austerity policies imposed by the central government in recent years. And as in Spain, the recent governmental elections in Portugal were marked by a sharp increase in spoilt ballots. In addition, the Portuguese poll was shaped by a manifest disillusionment, with over forty percent of those registered not casting their votes.
In accordance with polling on many other economic issues, the IPPR survey on pay demonstrates a widely held and progressive public view that neither has a voice within the mainstream nor sees political representation within parliament. Indeed, it is clear that the gulf between public opinion and mainstream political thought, both in this country and across Europe, has been drawn into sharper focus by the renewed economic crises, highlighting the widespread and acute democratic deficit that exists. What is not yet clear, however, is whether there will be the requisite backlash from those under threat to drive back the austerity measures and whether these movements of resistance can proffer and project a coherent alternative. From the gathering storm in Greece to the ostensibly still waters of Britain, each situation points in a different direction. But across the continent there is undoubtedly a common bubbling of discontent and dissent that must, to those in power, look ominous.