Labour leader urges employers to tackle pay inequality
Labour leader Jeremy Corbyn has suggested that under a Labour government, companies could be banned from distributing dividends to shareholders until they pay workers the living wage.
In an effort to tackle pay inequality across Britain, Corbyn said employers could also be forced to reveal the pay gap between senior leaders and the lowest-paid in their organisation.
In a speech to delegates of the Fabian Society conference, a left-leaning think tank, Corbyn said: “Too much of the proceeds of growth have accumulated to those at the top.”
“Not only is this unfair, it actually holds back growth – as OECD research has found. A more equal society is not only fairer, it does better in terms of economic stability and wealth creation,” he added.
At the Unite Policy conference in Scotland later in the day, the Labour leader repeated his call for employers to “pay the living wage to the workers first and the dividend later on”. He warned that current government policy was “determined to tip the scales still further in the direction of the employer”.
“One proposal is pay ratios between top and bottom so that the rewards don’t just accrue to those at the top. Of the G7 nations, only the US has greater income inequality than the UK. Pay inequality on this scale is neither necessary nor inevitable,” Corbyn told the think tank audience.
“Another proposal would be to bar or restrict companies from distributing dividends until they pay all their workers the living wage. Only profitable employers will be paying dividends, if they depend on cheap labour for those profits then I think there is a question over whether that is a business model to which we should be turning a blind eye.”
Corbyn’s ideas — which are not formal Labour policy – have come under fire from other MPs and business leaders, with a spokesman for the Conservative party describing his plans as “anti-business”.
Commenting on Corbyn’s suggestions that shareholder dividends should be restricted, Matthew Fell, chief of staff at CBI, said: “The idea of politicians stepping into the relationship between a private company and its shareholders would be a significant intervention, and not one that we would support.
“Business is the catalyst for job creation and growth up and down the country, and has lots to offer in terms of investment, innovation and delivery of our critical national infrastructure.”
Simon Walker, director-general at the Institute of Directors, said the proposal was “completely potty”.
“Paying a dividend is not an immoral act, pensioners are dependent on them for their retirement, and without them, investment in British companies would dry up,” he said.
Labour has pledged to hold big businesses accountable for pay inequality and the poor treatment of staff, with a new commission for workplace rights, headed by Ian Lavery MP. Its main aim will be to repeal the Trade Union Bill and “give employees a real voice in the organisations they work for”.
“Fairness is under attack and we have to find new ways to institutionalise fairness in British society again,” Corbyn said.