I’m currently contributing a short, light-hearted political column to Hong Kong Time Out Magazine. Below is the uncut, original version of my latest piece…
Japan is one of the world’s most equal societies partly because large salaries are seen to be somewhat uncouth. The average Japanese CEO earns just over HK$3million – which is relatively low compared to their US counterparts who often earn between HK$8-30million annually. Toyota’s board members received a comparatively modest HK$3.4million last year whilst, say, HSBC’s chief enjoys a rather gratuitous basic wage of HK$13.5million.
Executive pay in HK remains the highest in Asia, surpassed only by South Korea, and there is certainly little taboo locally over amassing big bucks. The new watered-down minimum wage bill may help curb inequality – our city’s biggest social problem – but since we lack a ‘cultural cap’ on excessive earnings, further legislation is the next natural step to control executive greed.
No property tycoon, banker or Cantopop superstar needs to earn any more than Donald Tsang’s generous salary of HK$4million. But we needn’t set a specific monetary limit. Instead, businesses can fix the compensation of their top earner as a multiple of its lowest paid earner. For example, if a fast-food worker earns HK$25 per hour, board members may only be allowed to earn 20 times that – HK$500 per hour. Bosses can give themselves a raise, but the cleaners and cashiers will also receive a proportional increase. Some have suggested an even more modest limit – over 100 years ago, business guru JP Morgan himself proposed a multiple of 10.
Such legislation would empower stakeholders, limit inflation and improve social cohesion to end the ‘winner takes all’ society. It is a fallacy that wage ceilings would trigger a brain drain, though there would need to be a ripple effect with similar policies adopted around the world. It might be a tall order, but in this age of bloated bankers and increasing resource scarcity, the timing may be spot on.