We are just entering the period when financial institutions declare their 2011 corporate earnings and in many cases the 'bonus pool' that will be shared among their employees.
Following the bail-out of RBS, Lloyds and HBOS, the retail and investment banks now fall into two camps. Part state-owned (see earlier) and those others institutions such as HSBC, Barclays JP Morgan, CitiCorp and Goldman Sachs, which received zero bail-out funding from the UK government - we will call these latter type - private institutions.
We can expect lots of the usual froth from commentators about 'excessive' bank bonuses and how the 'government ought to do something about it'.
So what can the government do?
Well in the case of the part state-owned RBS, Lloyds and HBOS, they can use the shareholdings, that they hold on behalf of the UK people, to limit the amounts of payouts. These could be limited to those that are required to meet contractual obligations - some people have bonuses built into their contracts of employment and if they meet certain targets, then legally, these must be paid - and they can then limit other payouts to zero or to certain pay grades etc., however, they and the other shareholders see fit.
In the case of the private institutions, it is really none of the business of government to interfere in how the shareholders (otherwise known as owners) spend the income of their company.
If the government wants to affect such private sector bonus payouts, it could do so through the tax system (as I have proposed, on an earlier blog) but it cannot and should not dictate to private companies on the remuneration that they give to any of their workers.
If the government wants to set the tone around pay restraint, then maybe they should concentrate on the areas which are within its span of control................
So, set a cap on the pay of anyone employed by a public organisation. So local authority executives, civil servants, military chiefs, ministers, BBC executives, etc. My suggestion would be around £100,000 per year. Many private sector companies have re-organisations and require personnel to re-apply for their role, so do the same with all of the above - get them to re-apply for their job but at a reduced rate of maximum £100,000. Oh, and let's make the maximum include taxpayer contributions to pension funds.
That might start to sound a little more like 'we are all in this together' in action!
Following the bail-out of RBS, Lloyds and HBOS, the retail and investment banks now fall into two camps. Part state-owned (see earlier) and those others institutions such as HSBC, Barclays JP Morgan, CitiCorp and Goldman Sachs, which received zero bail-out funding from the UK government - we will call these latter type - private institutions.
We can expect lots of the usual froth from commentators about 'excessive' bank bonuses and how the 'government ought to do something about it'.
So what can the government do?
Well in the case of the part state-owned RBS, Lloyds and HBOS, they can use the shareholdings, that they hold on behalf of the UK people, to limit the amounts of payouts. These could be limited to those that are required to meet contractual obligations - some people have bonuses built into their contracts of employment and if they meet certain targets, then legally, these must be paid - and they can then limit other payouts to zero or to certain pay grades etc., however, they and the other shareholders see fit.
In the case of the private institutions, it is really none of the business of government to interfere in how the shareholders (otherwise known as owners) spend the income of their company.
If the government wants to affect such private sector bonus payouts, it could do so through the tax system (as I have proposed, on an earlier blog) but it cannot and should not dictate to private companies on the remuneration that they give to any of their workers.
If the government wants to set the tone around pay restraint, then maybe they should concentrate on the areas which are within its span of control................
So, set a cap on the pay of anyone employed by a public organisation. So local authority executives, civil servants, military chiefs, ministers, BBC executives, etc. My suggestion would be around £100,000 per year. Many private sector companies have re-organisations and require personnel to re-apply for their role, so do the same with all of the above - get them to re-apply for their job but at a reduced rate of maximum £100,000. Oh, and let's make the maximum include taxpayer contributions to pension funds.
That might start to sound a little more like 'we are all in this together' in action!
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