Why nobody wants to admit they're part of the 1 per cent

A culture of secrecy over executive pay is holding back attempts to tackle inequality.

Last week another public figure, the Archbishop of York, Dr John Sentamu, had his two penn'orth on top executive pay, decrying the excesses of the financial sector as unfair and bad for society. But for all the air time given to the issue of levels of pay, discussing how much we are paid remains a social taboo - a subject best avoided in polite circles.

It raises the question - how do we address the thorny issues of high levels of pay amongst elite groups in society and income inequality, if we do not know how high earners themselves think about their pay and its effect on society? Changing behaviour is always tough, but in this case will be particularly difficult without a better understanding of how high earners see the world and their place in it.

To shed more light on this, the High Pay Commission, an independent inquiry into top pay in the private sector, commissioned Ipsos MORI to talk to a group of top earners - people in the top 1 per cent of the UK's income distribution.

The research shows that the taboo around discussing your pay inhibits rational debate on the subject and distorts the way top earners see their salaries.

First, hardly anyone who took part in the study considered themselves to be rich. High earners feel closer to the "squeezed middle" than the "super rich". They considered that their costs of living were too high for them to be more than "comfortably off". For them, "rich" means Bill Gates rich - having too much to be realistically able to spend.

Transparency around pay is not a cultural norm in the UK. There is a culture of secrecy over pay for many high earners. Some have little basis for comparison, aside from occasional conversations with headhunters. And the more senior they get, the more difficult it is to discuss pay.

They are not immune to the current media commentary on pay and discussions of bankers' bonuses. Compared to a similar sample of high earners in 2008, these high earners are more thoughtful about the way society values them and less likely to claim that they deserve their pay purely through their own hard work and skills.

So, satisfaction with pay is based on a sense of entitlement - if that is what the industry pays, that is what I should be getting. They do not justify their high pay by claiming that they work harder than everyone else or have more specialist skills. Some told us that they bring value to their companies which exceed their salary cost. But at the same time, they acknowledge that an individual's contribution to corporate success is hard to quantify and so pay does not always reflect individual performance.

Instead, the people who are paid most are those who are best at pay negotiations and "selling" themselves effectively.

Overall, they recognise that there is income inequality and they are to a great extent fortunate to earn what they do. They feel some industries simply pay high and there is a hefty dose of luck involved.

Here lies the tricky issue. High earners believe high pay is an institutional, global and systemic phenomenon. They also mention a number of social benefits coming from having high earners in our midst - for example, they believe in the trickle-down effect of high salaries to the rest of society.

There may be potential to communicate with high earners about changing the way society values different incomes, but they do not have faith that any local interventions around equalising pay would work.

Those in the City felt that asking the City in particular to behave differently is unlikely to work - as it only answers to its own rules.

So where does this leave public policy on the issue?

In a world where high earners do not talk about their pay and underestimate how close to the top they are, something is needed to get high earners out of their "bubble" - to take high pay out of the shadows and make it clear how different the top 1 per cent are from the other 99 per cent.

Ministers have urged companies to publish salaries voluntarily. It seems unlikely that many companies will accept the invitation. But however it is achieved, greater transparency about salaries might help high earners themselves understand the challenges of income inequality - and get on board with an agenda to reduce it.

Sarah Castell is Head of Qualitative Methods at Ipsos MORI

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Leader: Corbyn’s second act

Left-wing populism is not enough – Labour must provide a real alternative.

Since Jeremy Corbyn first stood for the Labour leadership he has been fortunate in his opponents. His rivals for leader ran lacklustre campaigns in 2015 and failed to inspire members and activists who longed to escape the tortured triangulations of the Ed Miliband era. Later, at the 2017 general election, Mr Corbyn was confronted by a dismal Conservative campaign that invited the electorate’s contempt. Theresa May’s complacency – as well as Mr Corbyn’s dynamic campaign –has helped propel the Labour leader to a position from which he could become prime minister.

With greater power, however, comes greater responsibility. Mr Corbyn’s opponents have for too long preferred to insult him or interrogate his past rather than to scrutinise his policies. They have played the man not the ball. Now, as he is a contender for power rather than merely a serial protester, Mr Corbyn’s programme will be more rigorously assessed, as it should be. Over the months ahead, he faces the political equivalent of the “difficult second album”. 

Labour’s most electorally successful – and expensive – election policy was its pledge to abolish university tuition fees. Young voters were not only attracted by this promise but also by Mr Corbyn’s vow, in an interview with the free music paper NME, to “deal with” the issue of graduate debt. The Labour leader has since been accused of a betrayal after clarifying that the phrase “to deal with” did not amount to a “commitment” to wipe out student debt. In an interview with the BBC’s Andrew Marr, he explained that he had been “unaware of the size of it [graduate debt] at the time”. (The cost of clearing all outstanding student debt is estimated at £100bn.)

In fairness to Mr Corbyn, Labour’s manifesto said nothing on the subject of existing student debt (perhaps it should have) and his language in the NME interview was ambiguous. “I’m looking at ways that we could reduce that [graduate debt], ameliorate that, lengthen the period of paying it off,” he said. There is no comparison with the Liberal Democrats, who explicitly vowed not to raise tuition fees before trebling them to £9,000 after entering coalition with the Conservatives in 2010. Yet the confusion demonstrates why Mr Corbyn must be more precise in his policy formulations. In a hyperactive media age, a single stray sentence will be seized upon.

At the general election, Labour also thrived by attracting the support of many of those who voted to remain in the European Union (enjoying a 28-point lead over the Conservatives among this group). Here, again, ambiguity served a purpose. Mr Corbyn has since been charged with a second betrayal by opposing continued UK membership of the single market. On this, there should be no surprise. Mr Corbyn is an ardent Eurosceptic: he voted against the single market’s creation in 1986 and, from the back benches, he continually opposed further European integration.

However, his position on the single market puts him into conflict with prominent Labour politicians, such as Chuka Umunna and the Welsh First Minister, Carwyn Jones, as well as the party membership (66 per cent of whom support single market membership) and, increasingly, public opinion. As the economic costs of Brexit become clearer (the UK is now the slowest-growing G7 country), voters are less willing to support a disruptive exit. Nor should they. 

The worse that Britain fares in the Brexit negotiations (the early signs are not promising), the greater the desire for an alternative will be. As a reinvigorated opposition, it falls to the Labour Party to provide it. Left-wing populism is not enough. 

The glory game

In an ideal world, the role of sport should be to entertain, inspire and uplift. Seldom does a sporting contest achieve all three. But the women’s cricket World Cup final, on 23 July at Lord’s, did just that. In a thrilling match, England overcame India by nine runs to lift the trophy. Few of the 26,500 spectators present will forget the match. For this may well have been the moment that women’s cricket (which has for so long existed in the shadow of the men’s game) finally broke through.

England have twice before hosted women’s World Cups. In 1973 matches were played at small club grounds. Twenty years later, when England won the final at Lord’s, the ground was nearly empty, the players wore skirts and women were banned from the members’ pavilion. This time, the players were professionals, every ticket was sold, and the match was shown live around the world. At the end, girls and boys pressed against the advertising hoardings in an attempt to get their heroes’ autographs. Heather Knight, Anya Shrubsole, Sarah Taylor, Tammy Beaumont, and the rest of the team: women, role models, world champions. 

This article first appeared in the 27 July 2017 issue of the New Statesman, Summer double issue