Think tank urges pay transparency

FIRMS should disclose the ratio between their highest and lowest-paid employees in order to promote greater workplace equality, a think tank urged yesterday.

Publicly-listed companies should have to justify high pay inequalities, such as in banking, because there were few circumstances in which ratios above 20:1 could be defended on economic and social grounds, according to the New Economics Foundation (NEF).

Businesses should adopt a charter of responsible pay in their annual reports to show salary differences in their organisation, the report concluded.

"Inequality is damaging to society and high pay doesn't improve performance at skilled work. In fact, it does the opposite, becoming a distraction to the complex tasks of running a modern business," said the report's author Andrew Simms.

"So why do our top businesses keep pushing open the gap between their highest and lowest-paid employees? Greater equality of pay at work is better for everyone, something admitted even by the International Monetary Fund."

Mr Simms continued: "Transparency about pay ratios can begin to break open the cosy culture of remuneration that benefits, disproportionately and counterproductively, a tiny minority."