The Socialist 30 August 2007 |
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The growing wealth gap
THE SUPER-RICH, the owners of Britain's industrial and financial giants, are getting enormously richer while workers are more and more forced to take industrial action merely to defend their pay, pensions and conditions.
Hannah Walter looks at the growing wealth gap.
THE TOP bosses in the City of London should be smiling in their sleep. They have had record executive remunerations - directors of FTSE-100 companies topped £1 billion 'wages' for the first time with an average pay rise of over 30% for the year 2006-7. Executive bonuses reached a record £14 billion in the City of London and £26.4 billion nationally.
The picture for ordinary workers however is not so bright. With a derisory 2% pay offer - in effect a pay cut as inflation runs at 5-6% - attacks on their pension entitlements and working conditions, public-sector workers are up in arms.
The situation facing private-sector workers is no better. Young, often un-unionised workers in particular find that the minimum wage is also the maximum that they can expect to be paid. The miserly 20p an hour rise in the minimum wage from next month will in reality make little difference to workers for whom it is simply a continuance of poverty pay. Yet big business still complains that this is more than they can afford.
The fat cats, however, are not content to merely make us live on poverty pay and have us make up the difference between what we're paid and what we need for a decent standard of living by borrowing.
No, they rub their hands as New Labour sells off large sections of the NHS. They want us to buy back operations from them, giving them a profit, rent our hospitals from them and then expect us to stay silent when they decide to close A&E and other departments/wards claiming that they are unaffordable and inefficient. As though anyone would claim that being ill was meant to be efficient!
WORKERS ARE understandably angry at these and other attacks from big business. No wonder when it is revealed that one in three of Britain's top 700 companies paid no corporation tax last year and another third paid less than £10 million each.
Government ministers, especially the rich man's best friend Gordon Brown, have been reducing the amount of corporation tax paid by big business by tens of billions of pounds - and still they don't pay it!
Banking, insurance and oil and gas companies have been making record profits and have not found it so easy to get away with non-payment. Other wealthy industries such as real estate, tobacco, alcohol and car industries pay next to nothing.
While multinational big business avoids taxation by shifting their debts to the UK (debt is deducted from taxable profit) workers are not so lucky. With wages for those at the bottom stagnating or even falling, workers at the bottom of the income scale pay more and more tax as a proportion of their income as direct taxation (that based on income) is reduced and indirect taxes (such as VAT) are increased.
At the same time Britain's total level of household debt has topped the country's annual GDP. This not only means that the country is technically bankrupt but that most of those who have managed to maintain their living conditions have done so by borrowing huge amounts of money at low interest rates.
While the recent crisis in world financial markets has meant many banks holding interest rates steady this month, these are more generally on the rise and will hit those on the lowest incomes hardest.
Of course many workers are beginning to fight back. Gordon Brown is clearly determined to go ahead with his plans for privatisation of public services and tax cuts for big business regardless of the effect it has on ordinary people. Neither the Tories nor the Lib Dems offer an alternative with both parties set on the same neo-liberal policies as New Labour.
It is time to fight back, but not just through the trade unions. To fight against the pro-big business political parties that attack our living conditions, we need a new workers' party that will stand up for ordinary people and trade unionists alike.
A TV programme Fabulous lives of mega-rich Wall Street traders on 2 September opened up a world far beyond the dreams, or nightmares, of most of us. It introduced us to Steve A Cohen (SAC), estimated to have earned $1 billion in 2005.
His relative poverty must be sneered at by Edward S "Eddie" Lampert who has a net worth of $3.8 billion and earned $1.5 billion in 2006. A series of white, middle aged men were paraded before us.
So what do the mega-rich spend this cash on? Properties are popular. One of them owned 24 mansions around the world which he lends to friends and families for holidays. One bought a school building in Manhattan for $20 million and spent another $10 million decking it out with such essentials as heated pavements to melt snow.
Buying art (seen as a bull market) is very popular. SAC is very fond of all things likely to increase in value and has bought up such beauties as Damien Hirst's shark in formaldehyde. He sees the $100,000 cost of repairing the rotting shark as "inconsequential". He also has a head sculpture made of frozen blood.
The programme left you with a nauseous feeling. There was no social commentary comparing their obscene wealth with the three-quarters of a million homeless people in the US, or the estimated 36 million who live below the poverty line.
Britain's boardroom bonanza
BOARDROOM PAY at the top companies in Britain soared 37% last year, that's ten times as fast as pay rose generally. This has been the pattern now for many years, (the previous year's executive surge was 28%, following rises of 16% and 13%). The average total pay for a chief executive at the 100 biggest companies on the stock market has now reached £2.85 million.
The total amount paid to FTSE-100 directors was enough to pay for 15 new hospitals or 50,000 new nurses. The ratio between bosses' rewards and employees' pay has risen to 98:1 with share options and other incentives. That is up from 93:1 a year ago according to the guardian's annual survey of executive pay.
Topping the league of FTSE-100 directors' pay is Bob Diamond, who runs the troubled investment banking arm of Barclays Bank and earned £23 million last year.