One of my daily displacement activities when building up to do some work is the Alex cartoon in the Telegraph. Today’s* (25/2/11) underlines a point I have made more than once in these posts. That one of the least effective ways of controlling pay is to set a maximum. Currently it is the government trying to limit senior pay in the public sector through the artificial construct of the Prime Minister’s salary (£150,000: but that is only his second job – he gets his MP’s pay on top).
As the cartoon illustrates, and I have said before, quoting a salary value simply becomes the norm and not the maximum. Anyone getting less is not only embarrassed in front of their peers and colleagues but, even more pressure-generating, in front of their family and friends. Those of us around in the late 60s will remember Jim Callaghan’s attempt to curb pay rises. He set a maximum pay rise of six pounds per week (yes, and beer really was two shillings a pint). His maximum was immediately taken as the standard and many workers got a bigger pay rise that year than if he had kept quiet.
The only things that will effectively control senior pay are income or budgetary constraints. After all in many public sector organisations it is not just the pay of the top person that causes the problem but the number in the next level or two down.
Of course some will always find ways around any limit. Remember when Tony Blair ran out of budget to appoint as many junior ministers as he wanted; one poor MP ended up working for no ministerial salary. Now, there is a concept that might be worth exploring. Unpaid internship, anyone?
* sadly I can’t find a way put a permanent link to this particular day’s cartoon strip. But everyday’s edition is worth a look.
