It’s an order of magnitude thing.
I’m a huge fan of the Financial Times’ Alphaville blog, and of analysing the impact of policies from outside the political mainstream.
As such, I’ve taken this weeks slightly sideways look at Zak Polanski’s Green Party policy that the ratio between the salary of a chief executive and the lowest paid member of staff should not be allowed to be larger than 10:1 and applied it to higher education. The data on high pay more generally is from the High Pay Centre, while the higher education figures come from HESA – and while neither of these sources allow me to look at the ratio between the CEO and the lowest paid employee, there are comparisons with median pay in both datasets that I can use as a proxy.
First up, here’s the two datasets plotted together, which rather counterintuitively makes the case that heads of higher education institutions have a long way to go to match the efforts of private industry CEOs in extracting surplus value from the labour of others.
The ratio between the median employee salary and the chief executive salary in industry is, for the most part, substantially beyond 10:1. A part of this can be attributed to lower salaries overall – but it is also clear that chief executives are paid far more than your average vice chancellor, even for the kind of FTSE250-index operations that have similar income, expenditure, and exposure to market (and even, in some cases, to the specific problems caused by performing services on behalf of the government) as medium-to-large sized universities.
So let’s enforce a 10:1 ration between basic CEO pay and median pay. This isn’t quite the Green Party proposal, as above, but we could perhaps imagine it as a compromise hammered out during difficult coalition negotiations. In most cases, higher education employees would lose out – while in comparison the median Tesco employee would be looking at an impressive £970,000 pay rise. I guess every little helps. The inferred median pay here is calculated – I have the ratio and some indication of CEO salary – but is unlikely to be anything better than indicative, so this should be understood accordingly.
You struggle to find good news for university employees: staff at Loughborough would be £5,000 better off (about £2,500 at Cambridge, £500 at LSE) which is probably why we don’t tend to see this kind of ratio used in sector pay negotiations.
Pay in higher education could perhaps be compared fairly to pharmaceutical or healthcare companies – both require staff with significant academic training, and both require support functions that are likely to be less well paid in order to run the enterprise. And while median pay looks similar, the fact remains that CEO pay is an order of magnitude higher.