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Pay for BBC top talent revealed - should this model be used more in our Labour Markets

Jonny Clark

19th July 2017

If you haven't seen it already, have a look of the list of the BBCs top earners here which has been revealed today. When you have a scan through, there are few surprises and, on the basis I can't find any other criteria for differentials the pay must be based on the propensity for being sanctimonious.

Now, I don't know if I'm alone in finding the revealing of pay in such a public way slightly unnerving?  It's not that I'm particularly bothered about the sensitivities of such wealthy people (although Mr Lineker may wish to not look at his Twitter account for a little while) but there does seem something intrusive about the whole reveal.  Mind you, it will be interesting to watch the One Show tonight to see if the fact that we now know (as they do) that Matt Baker and Alex Jones are paid at different levels adds to the show's frisson.

However, it did get me thinking about the advantages that might exist if we introduced a law in the UK which required all employers to reveal the wages of all employees.  The law already ensures that an employer can not actively prevent employees from finding out each other's wages but what impact might a statutory reveal of pay have on labour markets in the UK?

  1. It could reduce inequality.  Scan down the list and the first female arrives at number 7 (Claudia Winkleman).  Only a third of the list are female - could this force the BBC to consider their pay differentials for men and women?
  2. It could reduce the differences between the pay of the highest and lowest earners in an organisation.  With pay fully revealed, all sorts of forces could come in to play to question the difference in pay between the top and bottom earners.
  3. It could reduce the differences in pay between occupations.  There's a lot of talk at the moment about the pay for public servants and the 'premium' they receive for pensions in comparison to those who work in the private sector.  Could transparency of pay enable us to make better comparisons and therefore better decisions about occupational pay rates?
  4. Perfect information.  In the end, don't we economists argue about the benefits of free markets, which in turn requires perfect information?

In short, other than my, perhaps, overtly British sense of lack of comfortableness with pay reveals are there any arguments against pay transparency?

  1. Employment stability.  Employers may feel less inclined to reward its best performing employees through fear of causing unhappiness within the workforce.  This, in turn, could lead to such employees moving to another occupation or employer.
  2. Giving information to competitors.  It is possible that published information would be used by competitors to 'poach' staff from other employers through the offer of higher pay.

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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