The size of the pay of the top officials of large organisations, which is disproportionately higher than that of ordinary workers, has sparked much debate in the recent times. Some consider it very fair and are very happy about it. I, however, am not in favour of this discrepancy.
Advocates of a fat pay for senior officials argue that it is needed to attract and retain the best executive talent. Undoubtedly, a talented manager is a major asset for any company, as he determines its success and prosperity. Furthermore, the top manager could be re-employed by a business rival. The gifted managers who could understand and manage people in business setting are always sought after. Hence, high salary is a powerful means to retain such talent. Finally, the directors obviously face the stress from their workplace in daily lives, which may cause health problems. Therefore, people should accept the truth that big responsibilities deserve big salaries.
However, the huge difference in the pay has led to many problems. Firstly, as executive pay has soared, the wages of ordinary workers have stagnated. This has led to widening of the gap between the rich and the poor. For example, the soaring executive pay, particularly in the financial sector, has made the UK one of the most unequal societies in the developed world. Unequal societies suffer many social problems. To add to it, economic recovery is also hindered because so much money is concentrated in the hands of the wealthy elite, who do not spend it, but invest it in property or financial assets. The low and middle-income households spend money in the productive economy, but they do not have the money to spend and so the economy suffers.
Furthermore, in most other top-level positions, such as senior civil servants, top lawyers and judges, surgeons, and leading military officials, there is no culture of performance related pay. Therefore, such huge pay packets for top officials in the business sector, is not at all justified. I believe that a fair and balanced pay is what we need to have a happier society. Many studies support the view that firms concerned about social responsibility can put restrictions on executive compensation and still achieve good financial performance.
To sum up, although there are reasons for the fat pay given to the top-level managers, and we need companies to grow and to create both wealth and jobs in this fierce global market, I still believe that we can achieve this by being fair, and not overpaying the top executives.