30th September 2011
All the latest stories from the world of work
Shareholders and employees could have a greater say on executive pay. A consultation launched by business secretary Vince Cable set out proposals to rein in executive pay and strengthen the link between executive pay and company performance.
The consultation advocates greater transparency on executive pay, such as making directors’ total pay, including pension contributions and bonuses, public. The proposals also suggest giving employees a place on remuneration committees to help keep a check on top pay.
The government argues that at present, shareholders have too little power over pay and bonuses awarded to top executives, which has led to rapidly increasing rewards at the same time as share values have remained stagnant. The measures are designed to reconnect pay with performance. Shareholders may also be given a binding vote on certain remuneration packages, rather than the advisory vote they currently have to approve the entire organisation’s remuneration strategy.
Speaking the Liberal Democrat conference, Cable said:
"I am consulting on how best to tackle the escalation of executive pay which, in many cases, has lost any connection with the value of shares, let alone average employee pay," Cable told the conference. "It is hard to explain why shareholders can vote to cut top pay but the managers can ignore the vote. And surely pay should be transparent; not hidden from shareholders, and the public. I want to call time on payouts for failure."
Average (median) total remuneration for FTSE 100 chief executives increased from £1 million to £4.2 million over the last 12 years, while average share values have remained static.
The number of people unemployed again crossed the 2.5 million mark according to figures released this month. This was an increase of 80,000 on the previous quarter. This is the largest jump in unemployment since the end of the recession.
The quarterly employment statistics also showed worrying levels of youth unemployment. Although the overall level of unemployment is 7.9 per cent, the unemployment rate for 18-24 year olds has risen to 20.8 per cent. Contrary to the suggestion that young people are remaining in education to avoid entering a difficult labour market, figures from a Manpower survey show that 18.4 per cent of the age group are not in employment, education or training.
There are a large number of people working fewer hours than they would like, accounting for 16.7 per cent of all part time workers. This underemployment is higher among women.
The CIPD’s labour market outlook also suggested that uncertain prospects for economic growth were affecting the number of permanent employees businesses were taking on. The effect is particularly pronounced in sectors such as manufacturing that are likely to be affected by any downturn in global demand. As a consequence, demand for temporary workers remains strong.
Public sector unions announced plans to ballot members on strike action in response to the government’s proposed pension reforms. At the TUC annual congress, general secretaries from a wide range of public sector trade unions discussed the possibility of a coordinated day of action on 30th November.
The pension reforms, if implemented, will introduce career average pensions, raise employee contributions and delay the age of retirement for both men and women. Trade unions argue that this will constitute an unwarranted cost to employees, who already stand to lose out from the change to the measure of inflation used to determine the annual pensions increase.
Trade unions proposing to ballot members, or already balloting members include PCS, NUT, ATL, UCU, FDA, Unite, GMB, FBU and EIS. The National Association of Head Teachers, which has not taken strike action in its 114 year history, also announced that it would ballot its members.
Government negotiations with trade unions are expected to conclude in October.
