Corbyn maximum wage proposal backfires

Jeremy Corbyn's wage remains more of an aspiration than a fully fledged new policy.

Dr Matthew Partridge
By
published
in Features

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Jeremy Corbyn's wage cap needs further thought
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"The original Jeremy Corbyn is dead, long live Jeremy Corbyn 2.0," says the FT's Sebastian Payne. The Labour leader has "relaunched his attempts to be prime minster" by proposing a maximum wage cap, though it remains "more an aspiration than a fully fledged new policy". That's just as well, since it "would be almost impossible to implement".

Companies would find ways round it, largely through an increase in benefits-in-kind. Even if a cap was properly enforced, "those seeking high-wage employment will simply hop on a flight and go elsewhere". However, "many voters feel increasingly hostile to elites so the idea of clamping down on their perceived huge pay packets will be appealing to some".

It is certainly "hard to defend the pay gap between many top British executives and their employees", agrees The Times. Indeed, in the past two decades the ratio of CEO pay to the average worker has "trebled to more than 170". Yet there is no discernible link between lavishly paid bosses and the investment returns to their companies. What's more, "executives continue to pocket generous payouts even when removed for poor leadership". The government should require firms to publish their pay gap ratios.

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Greater transparency on this front should help ensure that "genuine wealth creators would still command top dollar" while "overpaid placeholders would not". Corbyn, meanwhile, "needs a clear vision backed up with clear messaging", not random proposals thrown into the ether, says Owen Jones in The Guardian. The pay cap idea just distracted people from the crisis in the NHS. Thanks to Corbyn's muddled messaging, the Tories "are getting away with it all".

Dr Matthew Partridge
Dr Matthew Partridge
Shares editor, MoneyWeek

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri

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