Have you noticed how a different set of rules seem to apply to public sector and private sector pay?
In the private sector, if you cap the pay and bonuses of investment bankers and plc directors it will lead to a brain drain and an inability to recruit top talent. But if you do the same to senior public servants presumably they will just swallow it and happily work for less. In the private sector, high salaries and bonuses enable you to recruit and motivate people. In the public sector high salaries are just a drain on the public purse.
The new government’s policies on public sector pay, if applied to the private sector, would be loudly condemned as socialist interference. Perhaps it should not come as a surprise that the government has employed Will Hutton, a man who was too left-wing for New Labour, to review salaries in the public sector.
Even the Prime Minister’s utterances have echos of a 1980s Labour conference. As he told Andrew Marr:
In any organisation in the public sector, the highest paid shouldn’t be paid more than 20 times the lowest paid. It may mean lifting the lowest paid, it may mean reducing the pay of the highest paid, but it will make our country and our public services fairer.
There is a third option though. You simply outsource the lowest paid jobs, taking them out of the equation and giving your directors a lot more room for hefty pay rises.