Stoking hostility towards CEO pay misleads the public, says IEA
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Mark Littlewood comments on report from the High Pay Centre
“Comparing CEO salaries to the average salary serves to stoke public hostility, as a means of pressuring companies to cut salaries at the top.
“Not only does this gimmick flirt with the radical policy of maximum wages, it also misleads workers to believe that cuts at the top end will directly translate to top-ups at the bottom.
“In a globalised economy, the role of the chief executive has become significantly more important; the successes, failures and sudden departures of CEOs can increase or diminish a company’s worth by billions of pounds – which can also result in the gain or loss of thousands of jobs.
“By continuing our obsession with high pay, we dismiss the achievements of successful CEOs which benefit employees and customers alike; and we distract ourselves from tackling the critical issue of low pay and the cost of living crisis.”
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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.
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