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31 December 2015

Inequality, What can be done?

Over the Christmas period I resolved to tackle the tottering pile of books crowding out my living room. One of these was Inequality, What can be done? by Professor Sir Tony Atkinson. Widely praised – and rightly so – the book recommends ambitious new policies in five areas: technology, employment, social security, the sharing of capital, and taxation.


Public awareness of inequality is at an all-time high, but few of us know what to do about it.  In Inequality Atkinson maps the extent of inequality today and sets out a comprehensive set of policies that could help to reduce the gap between rich and poor. While not focusing on the gender pay gap as such, the implementation of some of Atkinson’s proposals – the introduction of a living wage and a national pay policy, for example – would go a long way towards reducing or eliminating the gap, but what interested me most was his suggestion of a Code of Practice for Pay and Employment. Having had a hand in all three Codes of Practice on Equal Pay, I have a particular interest in codes of practice relating to pay.

Atkinson is concerned to rein in the explosion of pay at the top of the earnings’ distribution, and points out that in the UK, the top decile of earnings, which in the 1970s was two-thirds higher than the median, is now double the median. He proposes a voluntary, but state-promoted pay code, and suggests ways by which the private sector could be induced to espouse a pay code containing limits on the rates of pay. These are to make the adoption of the pay code a pre-condition for eligibility to supply goods or services to public bodies and to include a compulsory reporting element, so that pay multiples would be publicly available.

Atkinson points out that the existence of a code would strengthen the hands of those on remuneration committees who were concerned about excessive executive pay, but he also says that the code should be concerned with whether people are being paid equally for work of equal value, and that consideration of the fairness of existing pay policy should probe issues such as gender, ethnic and age distribution of pay. Someone (at the Equality and Human Rights Commission?) could usefully sit down and read Atkinson’s proposals alongside the current (statutory) Code of Practice on Equal Pay.

Atkinson won’t convince everyone, but he may shift the debate away from the ‘hands off’ approach, which all too often means ‘no-can-do’, towards a set of policies which see the redress of inequality, in all its guises, as a proper objective for policy makers in and out of government.

References:

Anthony B Atkinson, Inequality, What can be done? Harvard University Press, 2015

Statutory Code of Practice on Equal Pay, Equality and Human Rights Commission, 2010


ENDS