What's wrong with people getting a big bonus?
Last updated at 11:39, Wednesday, 08 February 2012
They say that if you pay peanuts you get monkeys. That’s the argument in favour of high salaries and massive bonuses for top bankers and company directors.
But these days, when thousands of people are suffering a pay freeze and joblessness creeps towards 1980s levels, can bonuses to people on already huge salaries ever be justified?
Not to two Cumbrian trade union officials. Deborah Hamilton of Unison and Willie Whalen of builders’ union UCATT both condemn them as “immoral”.
Yet two of our highly paid bosses seem to have taken the objections on board, and have turned down their bonuses this year.
Stephen Hester, chief executive of Royal Bank of Scotland, has handed back his bonus of £963,000 – which would almost have doubled his salary.
And Sir David Higgins, his counterpart at Network Rail, who is expected to be offered £340,000, has promised that he and other directors will donate theirs to a safety fund for level crossings.
But as Mrs Hamilton points out, they are the exceptions. She is secretary of the Cumbria County branch of Unison, representing thousands of council workers who haven’t had a pay rise for two years yet have seen prices go up relentlessly. So she describes the bonuses as “morally wrong”.
Mrs Hamilton says: “We’ve seen a sharp rise in the cost of living, day to day products are getting very expensive, so a pay freeze is effectively getting a pay cut.
“The value of a banker’s job is being considered higher than the value of a care worker, or a teaching assistant, or a social worker – people who are on the front line, and give the most valuable support to vulnerable people.
“They are not after a bonus for the work they do. They just want their salaries to keep up with inflation.”
And she sees Mr Hester’s and Sir David’s refusals of their bonuses as empty gestures. “It was only because of political pressure. Plenty of others are accepting theirs. We find it almost disgusting.”
Nonetheless no-one could argue that it’s easy being the boss of a troubled organisation like RBS or Network Rail. Many believe that to get the best people in the top jobs, high salaries and generous bonuses have to be offered. If one company won’t offer them then they will move to another that will.
The argument over bonuses first arose with bankers – who many blame for our current economic woes – but as Suzanne Caldwell of Cumbria Chamber of Commerce explains: “It is now emerging into a wider debate about bonuses elsewhere in the economy.”
Many organisations offer them, not all at the high levels offered to Mr Hester and Sir David, and she says: “Businesses need to be able to reward staff – at all levels – for their contribution, and to attract and retain the right calibre of people.”
Nor should they all be tarred with the same brush. “We must not allow this issue to spiral into a demonisation of those who work extremely hard, take calculated risks and are rewarded for their success – whether small business owners or those running large corporates. Business is fundamental to our economic recovery.”
However RBS is 82 per cent owned by the public, and Mrs Caldwell argues that this gives us more right to take an interest in what it does.
“For most businesses bonuses are a matter for their boards and their shareholders. The area that’s most contentious is around the payment of bonuses where a business is seen not to be performing – particularly when the business is largely or wholly publicly funded. This does need to be looked at seriously and logically.
“If you are shedding staff or cutting salaries then personally I think they are very difficult to justify.”
Perhaps what people object to most is not the principle of bonuses, but the high level of some of them. Cumberland Building Society pays bonuses, but deputy chief executive John Leveson points out that they have never been controversially high – and all staff, not just the bosses, can qualify for them.
“We have only ever had very modest bonuses, so it’s not something that has been an issue for us,” he says. “We pay bonuses at all different levels, throughout the company.”
But what other companies do should be up to them, he adds.
“It really has to be a matter for their boards, their remuneration committees and their shareholders, if they have shareholders, to decide what they think is appropriate.”
To Willie Whalen, Labour county councillor and branch secretary of UCATT, high-level bonuses make a mockery of David Cameron’s claim that ‘we’re all in this together’.
“For a cabinet full of millionaires to say we all have to take the pain is just arrogance,” Mr Whalen says.
“There are people who have lost their homes and lost their jobs, who are in real financial difficulties – and then they see these bonuses going to the people they feel are to blame. That is politically and morally wrong.”
Like Mrs Hamilton he regards the rejections of bonuses by Mr Hester and Sir David as the result of political and media pressure rather than selflessness.
“I’m pleased that they’ve done it. But they are not making some tremendous sacrifice. Who knows what benefits they’re going to receive in the future?”
First published at 11:29, Wednesday, 08 February 2012
Published by http://www.newsandstar.co.uk
Have your say
bonuses are meant as an incentive to work harder. I can understand the justification of rewarding workers with bonuses, but if that worker is already on a high salary should they be rewarded at all? it seems like a slap in the face to the working class!
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