Why pressure to reveal pay at the BBC may increase the earnings of those at the top

Transparency has definitely come into vogue lately. It’s been rumbling on for a while now, but exploded last year when details of MPs’ expenses were revealed. Heartened by its success, the transparency bandwagon has been running away with itself.

The new Lib-Con coalition has published details on the earnings of senior civil servants, whilst smugly congratulating itself on the new-found honesty it has brought to Government. Now, the BBC is coming under pressure to reveal ever more details about how much senior staff and “talent” earns (because one can’t be talented at back-room functions of course. “Talent” only refers to the ability to sit down on a couch and talk a lot – an exercise so tricky that most of us have never dared attempt it).

Transparency sounds like a great idea doesn’t it? We get to find out what our taxes and licence fees are going on. But what effect does revealing employees’ wages actually have?

In the early 1990s, regulators in the US forced companies to reveal details of the pay of their top executives. Since then, CEO pay relative to that of the average worker has rocketed. Yes, rocketed, increased, not fallen.

Why? In his Predictably Irrational book, Dan Ariely puts forward the explanation that once less well paid CEOs realised what their peers were earning, they demanded more. And so average CEO pay went up.

There is nothing inherently wrong with this, and I am certainly not against transparency. I just have a feeling that most of the people on the bandwagon aren’t hoping for further increases in pay for those at the top…

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