Cockeyed pay levels!

• Currently, the UK fourth estate has whipped up splendid headline news (for them) by exposing UK Prime Minister Sir Keir Starmer as having accepted some expensive gifts from supporters – specifically, free football and pop concert tickets, short-term use of a luxury flat, an expensive new dress for his wife and other examples of such appalling venality
• But my guess is pubs and clubs up and down the land are not appalled
• They expect their Prime Minister, who represents them, to look and act the part, whether on the public stage or not
• Remember the Corbyn-look – or Michael Foot!
• They also know, because the media repeat it loud and clear and often, that Starmer is paid £172,000 per annum plus modest expenses:
  • But even his chief adviser, Sue Gray, is paid £30k more 
  • And all his cabinet ministers, with their widely varying competence levels, are paid only a fraction less
• It’s little wonder some UK politicians have allegedly been ‘found’ by the media to be ‘gaming’ their expense claims
• No wonder – they’re not paid enough to do their jobs well
• And they’re not paid enough to attract the quality we, the public, need
• Hence we get what we pay for, with a few notable exceptions
• So the current crop offer rich pickings for the unaccountable media as they arrogantly, often rudely, question them about their policies and actions taken or not 
• But when do the media ever rage about obscene pay levels in other spheres?
• What about the AVERAGE pay per FTSE 100 CEO?
• it’s now over £4,000,000 per annum, before expenses – compare that to £172,000 – then compare responsibilities!
• As we say in our book ‘Productivity Knowhow Revisited’:

• • Some CEOs reward themselves more than handsomely whilst their employees get crumbs from the table – and this is in addition to showering themselves with golden hellos and farewells, huge bonuses and enormous pension pots on retirement, regardless of performance
  • Nobody successful did it on his own – everyone relies on the efforts of other employees, past and present
  • So how do they get away with it?
  • “Because they can!” – said President O’Bama
• But the fourth estate, our check on the use and abuse of power, has not tended to headline and comment on excessive pay levels in the private and even charity sectors 
• Until the other day, that is, when along came an excellent article by Patrick Hosking in The Times sporting the headline:

                       ‘Why are partners at the big four accountants being paid a fortune?’

• We encourage you to read the following extracts from his article
• Whether you lean to the left or right, they should help rebalance the ‘shock horror’ stories about our political leaders’ greed 

• Deloitte reported this week that average annual pay of its UK partners was £1.01 million
• PWC revealed pay per partner was £862,000 – whilst EY said its UK partners got £761,000 each
• To be clear, we’re not talking about the handful of super talented stars of tax-avoidance and dealmaking here, but the AVERAGE across thousands of competent, hard-working but not always particularly exceptional people
• Deloitte has 749 equity partners in the UK – PWC has 1,057
• They are not entrepreneurs or pop stars of Premiership footballers with rare and exceptional skills
• The ‘beancounter’ label is deeply unfair, but few accountants are known for their creativity, innovation, charisma or management skills
• And the largesse tends to go on for a long long time
• An accountant who makes partner at 35, say, can reasonably expect to stay on the partnership gravy train for 15 to 25 years
• And with ever-growing profits of these PSFs – Professional Services Firms – due to the growing complexity of tax laws and compliance regulations (which they help shape), the need for IT advice, the hollowing out of in-house expertise from client companies and larger companies’ need for international expertise and presence
• Compare that to the typical pay of £38,000 to £45,000 for people in their 50s – (overall average UK pay is around £35,000 p.a.)
• So where are partner profits heading next?
• AI could make a huge difference
• Of all the sectors of the economy, accounting is the single most promising for AI
• Already entirely digitised, the activities of book-keeping, data handling and analysis, financial reporting, rule-checking, suspicious activity spotting, compliance-testing and low-level financial communications are, in many ways, perfectly suited to being handled by AI
• If so: “Make hay whilst the sun still shines” comes to mind

• Now re-read the opening words of this post about the amount we pay the UK Prime Minister during his or her few years in charge of the whole nation, with all the responsibilities that involves
• And reflect on the ever-perceptive words of J K Galbraith:

                “The salary of the chief executive of a large corporation is not a market award for achievement – it’s frequently in the nature of a warm personal gesture by the individual to himself”