Control pay, don’t cap it
Limiting a primary school headmaster’s pay – or any other public servants’ salary – to less than the prime minister’s £142,000 remuneration has a popular appeal to the majority who are paid below that figure, but it is a crude form of wage restraint that will backfire.
Averaging out the back-pay of the south London school’s head may put his total annual pay, including generous bonuses and overtime, at about that prime-ministerial level, but if he is unable to earn more, why should he try to? And if his deputy is lucky enough to see his pay package rise towards that ceiling too, what is the point of seeking promotion to a headship?
The argument is the same one that applies when the public protests that bankers or businessmen are overpaid. And the one thing it proves is that of all the ways to determine remuneration, a popular vote by the public is probably the worst.
The person in an average job earning £25,000 can well argue why they should be paid more than the below-average worker and will concede that people doing more important jobs should be paid more. But from where they stand, they see pay as a rapidly flattening curve.
So the clerical worker on £25,000 accepts that the more senior staff should receive £30,000 – and aspire to move to such a rate. They accept that the department’s deputy head should receive even more, and the head more even than that, but the view from the bottom of the pyramid is that the differentials should diminish, in percentage terms at least. So they think the head of accounts ought to be on, say, £60k, the finance director on £70k and the chief executive on perhaps £90k.
People paid under £100,000 – under £40,000 – cannot conceive how someone ought to be paid £250,000 or £600,000 because they cannot see how much harder that top job is. After all, the chief executive cannot work that much harder than the machine operative because there are not that many more hours in the day.
But if people are to seek promotion to improve both their own lot and the country’s, and if senior jobs are to be filled by competent people, there has to be a financial incentive for moving. That is not to say that any particular chief executive is worth £1m or that a primary school head should receive more than the chief executive of a typical small company, but there must be a pay scale and imposing a ceiling equal to the PM’s pay - or a multiple of, say, 20-times the shop-floor pay - is nonsense. The result will not be poorer-paid top positions but people choosing not to fill those vital roles.
