economy

Bosses' pay has more than doubled during the past six years while workers wages have remained virtually static. It has been calculated that for every £100 earned by directors in 2000, they now earn £205 after allowing for inflation. But for employees their £100 has climbed to an average of £106.

In the City this year bonuses are expected to reach a record £9 billion. At Goldman Sachs alone, about 4,000 high-flying investment bankers are expected to receive £1 million each and those in the top grade are likely to get £10 million each.

Goldman Sachs was the centre of the recent cleaners' fight for better pay. The cleaners, many of whom are paid the £5.35-an-hour minimum wage, occupied one of the bank's most prominent sites in the City waving placards reading “Goldman Sucks”.

To rub salt into the wounds the bosses top executives have the option of retiring at 60 and enjoy access to final-salary schemes.

If the government were to announce that it was cutting the wages of all workers there would be uproar. Yet this is exactly what they have done by calling for ‘pay restraint’ and capping all wage rises at 2%. A below-inflation pay ‘rise’ is a pay cut. No amount of statistical trickery changes this fact.

The government’s favoured measure of inflation, the Consumer Price Index (CPI) is currently running around 3.3%. However, this excludes mortgage repayments. Does that mean we don’t have to pay them back out of our falling wages? No such luck. The inflation measure that does include these payments is called the Retail Price Index (RPI). It is currently running at around 4.3%. So by the government’s own figures they are imposing a pay cut of over 2%.