IEA reacts to High Pay Centre analysis of executive pay
“’Fat Cat Friday’ is a gimmick heavily reliant on stoking public hostility as a means of pressuring companies to lower salaries at the top end.
“But this tactic stems from two false premises. First, it pushes the spurious idea that salaries are fixed; that there is a set amount of money in a pot somewhere, every penny of which is dished out in varying quantities to all salaried employees. This is simply not how value is created or how salaries are determined. It is disingenuous to suggest to workers that if their CEO was paid less, the money would automatically be redirected towards their own salaries.
“The other problem with this tactic is the assumption that high pay in itself has no merit: that it is a “problem” in need of a “solution”. The concept of ‘super talent’ is no myth. In our globalised economy, CEOs’ roles are indeed becoming more important as their decisions can make or break a company – and determine the fate of thousands of people’s jobs.
“Not only will driving down wages of top CEOs fail to help the average worker, but it will decrease the amount of revenue collected by the Treasury as well. Campaigners would do well to stop flirting with the economically damaging idea of maximum wages, and focus on innovative ways to top up low-pay instead.”
Notes to editors:
For media enquiries please contact Nerissa Chesterfield, Head of Communications: [email protected] 020 7799 8920 or 07791 390 268
For IEA research on wages and the labour market click here.
The mission of the Institute of Economic Affairs is to improve understanding of the fundamental institutions of a free society by analysing and expounding the role of markets in solving economic and social problems and seeks to provide analysis in order to improve the public understanding of economics.
The IEA is a registered educational charity and independent of all political parties.