Friday, January 30, 2015

Salary and Pay 2015

Much is true in this article on pay inequality; I have watched this growing exponentially since the 1980's.

I began work at Thomas R Miller & Son (now Thomas Miller & Co) in the City in 1967 on a salary of £1000 a year, when at that time an average CEO's (then called a managing director) salary was only five times as much - £5000 a year. By the early1980's, although then a partner, I was still only earning £25,000 a year. The big changes began in 1986 when 'Big Bang' allowed American financial institutions to buy up the City - the banks, insurance companies and stockbrokers - and soon introduce bonuses.

Bonuses built into one's employment contract were an anathema to old-established businesses and were regarded as immoral - both in the giving of them, as they were liable to twist a person's performance in a particular unintended direction - and the receiving of them. We would have felt insulted to be offered a bonus when we already worked as hard as we could.  In those days exceptional work could be rewarded by some one-off gift - such as the trip on the QEII to New York given to one of my colleagues who had done enormously valuable work on the removal of the wreck of the 'old' Queen Elizabeth in Hong Kong harbour after a fire.  And this is the only example that I can recall. Even now, my old firm avoids bonuses but has has a modest profit-sharing scheme. Furthermore the most senior executives are not paid a disproportionate amount more than those at entry level (probably a multiple of 10), despite the firm being one of the most successful and respected in the City.