Lowering CEO pay would do nothing to help the average worker
4 January 2018
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IEA reacts to the High Pay Centre's 'Fat Cat Thursday'
Commenting on the High Pay Centre’s analysis of executive pay released today, Kate Andrews, News Editor at the Institute of Economic Affairs said:
“Driving down wages of top CEOs will not help the average worker, and will only cut the level of taxes collected by the Treasury. Intervention for the sake of public appearances is rarely a good idea.
“Decisions on pay should be left up to shareholders, who are in the best position to deem what is the appropriate level of pay for all employees given their vested interest. In our globalised economy high pay has merit, with CEOs’ roles becoming ever more important and high pressured as their decisions can make or break a company. Attempts by government to intervene in their remuneration seldom achieve their desired outcome.
“Again, the publicity around “Fat Cat Thursday” distracts us from the crucial issue of low pay and high living costs. Cutting salaries at the top by no means translates to an increase in pay for those at the bottom; salaries are not fixed, nor is value created in this way. If these campaigners are genuinely concerned about disparities in salaries, they would be better placed to concentrate on closing loopholes in the tax systems which benefit only high earners, and on lowering living costs across the board to make ordinary people’s earnings go further.”
Notes to editors:
For media enquiries please contact Stephanie Lis, Director of Communications: slis@iea.org.uk or 0207 799 8909 or 07766 221 268
The Institute of Economic Affairs report on pay regulation “And how much do you earn?” can be downloaded 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.
“Driving down wages of top CEOs will not help the average worker, and will only cut the level of taxes collected by the Treasury. Intervention for the sake of public appearances is rarely a good idea.
“Decisions on pay should be left up to shareholders, who are in the best position to deem what is the appropriate level of pay for all employees given their vested interest. In our globalised economy high pay has merit, with CEOs’ roles becoming ever more important and high pressured as their decisions can make or break a company. Attempts by government to intervene in their remuneration seldom achieve their desired outcome.
“Again, the publicity around “Fat Cat Thursday” distracts us from the crucial issue of low pay and high living costs. Cutting salaries at the top by no means translates to an increase in pay for those at the bottom; salaries are not fixed, nor is value created in this way. If these campaigners are genuinely concerned about disparities in salaries, they would be better placed to concentrate on closing loopholes in the tax systems which benefit only high earners, and on lowering living costs across the board to make ordinary people’s earnings go further.”
Notes to editors:
For media enquiries please contact Stephanie Lis, Director of Communications: slis@iea.org.uk or 0207 799 8909 or 07766 221 268
The Institute of Economic Affairs report on pay regulation “And how much do you earn?” can be downloaded 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.
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