Fairness is on everyone’s lips. It is not surprising. In prosperous times a rising tide lifts all boats. In a period of austerity, suddenly the question of how society distributes its benefits and burdens becomes more salient. Do the very highly paid deserve their ever more generous compensation because of their vital contribution – or are they being unfairly spared privations visited upon the rest of the society?
Reflecting this concern David Cameron and George Osborne asked me the day after the coalition was formed to investigate fair pay in the public sector, and whether in particular a multiple of top to bottom pay, for example 20:1, could create more fairness. I was also asked to what extent such a principle could be extended to become a wider social norm.
My interim report, published today, steers a path between egalitarian and libertarian conceptions of fairness. Yes people should get paid more the more they contribute – but proportionally. And there should be upper boundaries, because no one individual, however talented, can claim that an entire organisation has improved because of his or her contribution alone – something ever more true in a knowledge-based economy where skills and decisions are more diffused.