A new report has called on the government to cap the salaries of the highest earners in an effort to reduce widening economic inequality and save millions of jobs that could be at risk as a result of coronavirus.
The research published today by think tanks Autonomy and the High Pay Centre modelled various proposed wage caps and found that a maximum salary of £100,000 would have the power to release the cash equivalent of one million jobs.
The new analysis also found that with the introduction of a salary cap targeted at just the top 1% of earners in the country would significantly boost wages for nine million low and middle-income workers.
Autonomy director of research Will Stronge said: “A maximum wage is popular with the public and could be an essential tool for making sure that industries and those that work in them survive this pandemic.
“It’s a way of creating a fairer economy – ensuring that when firms succeed, everyone working in them does too. Let’s be honest – earning anything more than £100,000 a year is by most people’s standards extremely excessive, especially during an economic crisis where millions are being made unemployed.
“If income was distributed just a little more fairly, you could still have high salaries but with much higher employment and higher average wages too. After 2008, the 99% were unfairly made to pay for the cost of the crash through austerity but this time around the 1% can and should pay for the crisis.”
The report also suggested that a minimum wage of £10.50 an hour could be paid for by companies if a salary cap of £187,000 was introduced – a move which the research highlighted would affect just the top 0.6% of earners.
In sectors such as the arts, where the highest earners make vastly more than their low-income counterparts, the research indicated that an £11 per-hour wage could be provided to every worker if the highest salaries were capped at £251,760.
The think tanks have released new polling from Survation alongside the report, which shows that 54% of the public backs the introduction of a maximum wage, with a further 31% backing capping all salaries at £100,000.
High Pay Centre director Luke Hilyard said: “Many policymakers and commentators would view the introduction of a maximum wage as a radical step, but this polling shows that the public are much more open-minded.
“Tolerating the vast gaps between those at the top and everybody else in this country is a far more extremist policy than putting a cap on annual earnings of £200,000… a perfectly sufficient reward for doing a difficult or demanding job.
“With the UK economy likely to be much smaller than previously envisaged for the foreseeable future, we urgently need to think about sharing the wealth we do have more evenly.”
700,000 people have been pushed into unemployment as a result of the pandemic with millions more, particularly in the hospitality sector, set to lose their jobs in the coming weeks and months.
But a report last month showed that the highest earners had experienced nowhere near the same level of wage cuts, with many reported salary decreases among the wealthiest being “superficial or short-term”.
Unite the Union proposed plans last week for a strike among its Heathrow airport members in protest at planned 25% wage cuts, despite airport directors earning over £21m last year and its chief executive receiving £2.6m in pay and pensions.