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Pay Rates

Polly Toynbee

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What is anyone worth? Since people trust GPs above all others, it may reflect popular will to super-pay some of them £250,000, with their average £100,000 doubling since 2000. But if you want proof for the counterintuitive truth that more money doesn't make people happier, then the miserable doctors are a good example. Neither consultants (68% increase) nor GPs seem one jot happier for their recent windfall. Their union, the BMA, pumps out ever angrier anti-government press releases complaining of "vindictive treatment" in this year's "shocking" pay offer as they demand another 4.5%.

So don't expect gratitude. Mori research into attitudes towards employers shows that of all workers in the public and private sectors, GPs and the police are most prone to rubbishing their employers and their service: teachers are most likely to talk positively about theirs. Doctors may be hard-working, but they do whinge.

If higher pay does not lead to happiness or gratitude, how people feel about their pay is complicated and exceedingly important. Research finds the absolute sum matters less than the way people perceive fairness and transparency in pay. So when a dazzle of daylight was shone on the pay of BBC radio stars, it sent out a frisson of shock. Bloggers and letter-writers fulminated about the BBC licence fee - one grumbling that his 30 years of fee barely covers one hour of Jonathan Ross. And that was before the news that a bidding war for Ross has just risen to £15m.

News like that makes people stop and think about pay, reward and merit. Where to begin? The first rule should always be transparency. The BBC should reveal all fees to ensure there really is a genuine market in talent out there. And that should be a general rule, not just in public bodies but everywhere. People do know more or less what everyone else earns in the public sector, so why not make it compulsory for all?

In Norway and Finland, anyone can summon up anyone else's tax return on the internet - and why not? The shock at first would be seismic, with eruptions of rage and embarrassment all round. But it would put a stop to secretive employers who divide and rule by spreading uncertainty and insecurity about what the person at the next desk might be getting. Making tax returns public helps to stamp out fraud and tax evasion, risking exposure of any undeclared income. After the initial shock, people would soon get used to the idea. As it is, money is the great taboo. People are more likely to reveal intimate secrets of their sex lives than ask someone what they earn.

Shocking facts emerge from time to time: chief executives who in 1979 paid themselves 10 times more than their workers now pay themselves 54 times more. Such revelations cause intermittent indignation, but it soon subsides into a "nothing can be done" gloom. Margaret Thatcher's deadly legacy has been to spread her Tina economic fatalism. "There is no alternative" has entered the British soul, leaving a sour sense of helplessness that iron economic laws shape our destiny: we ignore them at our peril. But there is no iron law, there is only political choice. The Nordic countries, with far more successful economies, refuse to suffer our unjustifiable pay gap. Nations can and do choose differently how they share rewards: that's politics, not economics.

For example, the Work Foundation proved that the globalised market for CEOs is a myth. Most top CEOs are not only British, but bred within their own companies. They pay each other these stonking great sums by mutually agreed cartel, all racing to prove they are top dog for no extra productivity or risk.

Their pay distorts the public sector with odious comparisons, especially now that the division between the public and the contracted-out is blurred. Envy and discontent spills over through failing to nurture a sense of a distinct public ethos in the public sector that has its own honourable rewards. Even with pay briefly having risen faster than in the private sector, public employees are still paid less than the private workforce. The old compensations of secure pension, stability, security are exchanged for constant turbulence and badly managed "reform" at risk of Gershon down-sizing. So what's the upside, if they sit beside some outside private contractor or consultant earning far more?

The Work Foundation finds that the happiest employees are not the best paid but the best respected. People who work collaboratively, who profit-share. Teams deciding their own work practices and rewards are the most content and stay the longest, even if pay is higher elsewhere. Mammon is not king.

Performance-related pay is another Thatcherite hangover: she tried to get written into Major's Citizen's Charter that all employers must "reward the good and punish the bad" before they earned a charter mark. (Remember them?) Her spirit of cut-throat competition remains the prevailing management dogma, though there is no research evidence that it increases productivity one iota. On the contrary, research finds performance-related pay detested by the managers administering appraisals with half-hearted embarrassment, and by the workforce on the receiving end of arbitrary judgment. Most extra sums earned are piffling for the affront caused. Or they become automatic, like the fat City bonuses now so predictable that mortgage companies accept them as part of regular pay. This evidence-free management mantra persists, despite proof that it is collaboration, not pay competition, that best retains the best people.

The greed-is-good culture, unchallenged by Labour, corrodes trust and social solidarity, spreading dismay and unease. Am I getting enough? What is enough? What am I worth? The myth of a rational market in pay is mainly a cloak for rewards that make little sense. To be sure there is a transparent, functioning market for a few scarce skills: plumbers are hard to find, there is only one David Beckham and probably one Jonathan Ross. Admired entrepreneurs such as Richard Branson are reckoned to deserve whatever they have created.

But the great majority of people work in markets that are artificial, dominated by tradition, where no one can explain quite why x job is worth more than y. Women's jobs are marked down because women traditionally do them. Unspoken cartels operate: employers need not illegally conspire to keep cleaning, checkout and care jobs at rock-bottom wages even when there is a shortage, preferring to go short-staffed rather than up the local pay rate for all.

Because the highly paid command the citadels of public debate, they grossly distort the true picture of the way most people live now. Knowing only people like themselves, they refuse to believe that fewer than 4% earn over £52,000 - or that two-thirds earn less than the average £28,000. There are questions that need asking. Is there any good reason why any public servant (including the head of the BBC) should earn more than the prime minister?

Making sense of reward is difficult - but the debate has to begin by throwing open the books. It wouldn't hurt much if everyone had to do it together. Let's see how the culture changes when we can all read each other's tax returns. Why not? What's to hide? The most equal countries do it.


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I wonder how much Polly Toynbee and other political commentators earn? This undoubtedly effects what they say. For example, is it so surprising that highly paid political commentators rarely complain about the low levels of income tax that high earners pay under the Tony Blair/Gordon Brown regime? Both these men must feel pretty confident that Jeremy Paxman will not ask any awkward questions about the top rate of tax during television interviews. Is this not an example of a “conflict of interest”? Some are kept under control by the promise of honours. Others are kept quiet by other methods.

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