GMB, TUC and Unite disappointed business secretary failed to introduce legally-binding proposal to have an employee representative on the remuneration committees
Unions have accused the government of bottling the chance to clamp down on executive pay.
Unite and the TUC are disappointed that Vince Cable’s announcement today that he intends to tighten up controls on boardroom pay did not include a legally-binding proposal to have an employee representative on the remuneration committees.
Unite general secretary Len McCluskey said: ‘If Vince Cable was really serious about tackling the boardroom abuses, he should have included the legal requirement for an employee representative on the remuneration committees as part of his proposals. Instead, he spoke vaguely about boardroom ‘diversity’.
“An employee representative on the board by law would have sent a clear message to the millions of working people, who have seen their living standards slashed by the coalition’s callous austerity programme, that ministers are serious about their ‘We are all in this together’ mantra.”
TUC general secretary Brendan Barber said: ““Through its many consultations and speeches, the government has made a compelling case for radical reform of executive pay. It’s very disappointing then to see that ministers have spectacularly failed to make any significant changes to the status quo.
“Whilst the Business Secretary has announced a few welcome tinkers to the current boardroom pay regime, he has shied away from the big decisions on all of the major proposed reforms, from worker representation to company pay ratios and open advertising for posts on remuneration committees.
“Over-paid and under-performing directors concerned about greater public scrutiny of their pay and bonus arrangements can rest easy tonight.
“Any hopes of reversing the damaging and growing pay divide between top executives and the rest of their workforce have faded after today’s announcement.”
GMB general secretary Paul Kenny said: “ Vince Cable clearly identifies that the ballooning of executive pay “is a clear market failure”.
“Mr Cable then puts his faith in transparency and in the shareholders to sort the problem. Expecting fund managers, representing shareholders, who themselves are also on the gravy train to sort this is putting hope before experience. He bottled putting an employee voice on the remuneration committee. Mr Cable has produced a mouse”.
Len McCluskey said the coalition had been ‘dragged kicking and screaming’ to this point – and that much more needed to be done to stop boardroom abuses that had seen directors of FTSE 100 companies receiving 49 per cent pay rises.
He said: ‘The key to this problem is the ‘you scratch my back’ remuneration committees made up of the same old clique of corporate high-rollers – the mandatory introduction of employee representatives would have diluted this ‘old boy’ network.
“It is a disgrace that Unilever’s CEO earns 285 times that of his average staff. Yet, a whole swathe of middle earners are facing an income drop for the next eight years, according to the Resolution Foundation.
“Ministers trot out the concept of ‘shareholder power’ – but this is mere lip service when so many shareholders are institutions or are based overseas.
“Vince Cable has made a start on tackling the problem of excessive pay, but he needs to go much further and much faster.”
In its evidence to the High Pay Commission, Unite had said that there should be employee representation on the remuneration committees as a mechanism to curb bosses’ pay, which is out of all proportion to average pay of about £25,900-a-year.
Last year, a survey by Income Data Services (IDS) revealed that directors of FTSE 100 companies had received a 49 per cent pay rise in the previous 12 months.
At the time, Unite described as the IDS report as ‘damning’ and showed just how much athese ‘pampered’ directors were removed from the lives of working people.
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