Curbing the pay of London’s ‘City Boys’
TEXT OF STORY
Kai Ryssdal: The British government has a marketing plan for its new austerity budget. The tag line is, “We’re all in this together” — “this” being the budget cuts and service reductions and general economic hardship.
The economic pain is probably being felt equally at the lower ends of the income distribution. Britain’s bankers and company bosses, though, are another story. Last year, the country’s top 100 CEOs saw their pay jump by more than 55 percent. Most workers, meanwhile, got a measly hike of just 2 percent. So now the less well-heeled are fighting back.
From London, Marketplace’s Stephen Beard reports.
Stephen Beard: Geraint Anderson is a reformed addict, a reformed bonus addict.
Geraint Anderson: My first bonus was $20,000. Next year, it was $80,000. And within 10 years, I was on three quarters of a million dollars.
And still it wasn’t enough. Geraint, a former bank analyst, says an ever larger bonus is the ultimate mark of distinction in London’s financial district known as “The City.”
Anderson: If I’m earning twice what John over there earned in bonus, it literally means I’m twice as clever, as hardworking. And of course, that mentality drives people to do whatever is necessary to increase their bonus, any form of deceit and nastiness that can be imagined.
Like insider trading or spreading false stories. Geraint repented his greedy, amoral way of life. He quit the bank and wrote a best-selling expose, “Cityboy: Beer and Loathing in the Square Mile.” And he penned this little ditty, lampooning the excesses of the City.
Anderson, singing: Another hard day number crunching, then I’m off to luncheon, I’m munchin’ Russian caviar, smoking big fat cigars.
Meanwhile, Deborah Hargreaves is taking steps to end what she calls “Britain’s culture of excessive pay.”
Deborah Hargreaves: We need to look at this huge gap between rich and poor and a huge pay differential between top and bottom.
Deborah heads the new High Pay Commission, a private body which aims to dream up ways of restraining top people’s pay. Deborah says when times are hard, like now, everyone should share in the austerity.
Hargreaves: When the economy is going well and things are booming, I don’t think people begrudge it as much as they do when they see bankers and top executives running off with huge rewards — millions and millions pounds — when the rest of us are struggling to make ends meet.
Britain’s top 100 CEOs earned at least $8 million each last year. That’s 200 times what the average worker earned. And then there was this:
Montage of bankers speaking: We are extremely sorry. There’s a profound and unqualified apology. We are profoundly, and I think I would say, unreservedly sorry.
The tabloids called them “this sorry lot.” A clutch of bankers who grovelled before a parliamentary committee, having run some of the country’s biggest banks into the ground. Within weeks of their apology, though, they were all riding high — one with a new annual salary of $3 million, another retired on a pension worth $12 million.
Hargreaves: You’ve got to call time on it and say, “Enough is enough.” We’ve seen this take off in an arms race for pay over the past 10 years. And I think unless someone says, “That’s it!” where will it end?
The High Pay Commission will consider a range of possible curbs — for example, a law limiting executive pay to no more than 20 times the average wage paid within their companies.
This does not go down well with free market advocates. Richard Wellings of the Institute for Economic Affairs.
Richard Wellings: It really isn’t the business of politicians and bureaucrats to start interfering in determining pay by committee. We don’t want to head in that direction.
And even the reformed bonus addict Geraint Anderson, who now rails against the bonus culture, doesn’t believe a British government will ever try to put a lid on executive pay.
Anderson: I think the chances of there being a cap on the pay of CEOs are some where between slim and none — and Slim has just left town.
Anderson, singing: I’m just a City Boy.
But the new High Pay Commission is pressing on and will deliver its recommendations before the end of this year.
In London, this is Stephen Beard for Marketplace.
Stories You Might Like
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
