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SECTION 1 2 3<br />

WHAT CAN BE DONE<br />

Despite the knee-jerk claims of some employers, increases in the minimum<br />

wage have had little or no negative macro-level effect on the employment of<br />

minimum-wage workers. 356 Goldman Sachs economists found that increases<br />

in the minimum wage are unlikely to result in significant job losses because of<br />

the resulting increase in consumer demand. 357 Wage increases offer benefits<br />

to business as well; for instance, they often lead to lower worker turnover,<br />

which can constitute a significant cost. 358<br />

Ending excessive pay at the top<br />

If a key cause of the widening wealth gap is labour’s declining share of<br />

national income, an obvious solution is a more equitable sharing of wealth<br />

within companies.<br />

The idea of restricting income at the top is not a new one. Plato recommended<br />

that the incomes of the wealthiest Athenians should be limited to five times<br />

those of its poorest residents. And since the 2008 financial crisis, MNCs<br />

have faced increasing public pressure to forgo executive bonuses and<br />

cap top incomes.<br />

Some forward-looking companies, cooperatives and governance bodies<br />

are taking action. Brazil’s SEMCO SA, for instance, employs more than 3,000<br />

workers across a range of industries and adheres to a wage ratio of 10 to 1. 359<br />

Germany’s Corporate Governance Commission proposed capping executive pay<br />

for all German publicly traded companies, admitting that public outrage against<br />

excessive executive pay ‘has not been without influence’. Two US states –<br />

California and Rhode Island – have suggested linking state corporate tax rates<br />

to the CEO-worker pay ratio – the higher the pay gap, the higher the tax rate. 360<br />

Shared interest: Giving workers a stake<br />

A growing body of evidence shows that companies owned at least in part<br />

by employees tend to survive longer and perform better. In the UK, they<br />

consistently outperform the FTSE All-Share index. 361 When employees are<br />

given a say in governance, as well as share ownership, the benefits appear<br />

to be even greater. 362<br />

Employee-owned firms have been found to have higher levels of productivity;<br />

they demonstrate greater economic resilience during turbulent times,<br />

are more innovative, enhance employee wellbeing, have lower rates of<br />

absenteeism, create jobs at a faster rate, improve employee retention, and<br />

also demonstrate high levels of communication and employee engagement. 363<br />

And ‘unlike changes in tax policy (which can be reversed), employee ownership<br />

is long-term and sustainable.’ 364 It is a powerful and practical idea for a more<br />

inclusive capitalism.<br />

Productive work will only be part of the solution to out-of-control inequality<br />

if decent jobs pay living wages and workers’ rights are upheld and enforced<br />

by governments. Voluntary action by employers alone is not enough.<br />

80

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