Mike's Minute: CEO pay cut debate is just virtue signalling

Author
Newstalk ZB,
Publish Date
Thu, 9 Apr 2020, 9:45AM

Mike's Minute: CEO pay cut debate is just virtue signalling

Author
Newstalk ZB,
Publish Date
Thu, 9 Apr 2020, 9:45AM

Joe Garner might well become a hero of sorts in Britain. 

He is the first banking boss, he heads the Nationwide Building Society,  to offer to take a pay cut after the Bank of England wrote to all the major banks and suggested everyone take a haircut.

Like so much of what is going on now, this is sort of being made up as we go along. The pay cut call has become an industry of sorts.

The Fletcher's saga here has been the one to ignite most reaction. We've got lots of calls for MPs to take pay cuts for a combination of reasons. Many are at home doing seemingly little, they're part of the state side of the economy, the side that isn't overtly being affected by the lockdown, and general economic hit the rest of us are taking.

Sport has had the issue for a variety of reasons. Mainly because they make their money doing something they can no longer do, so therefore there is no income.

So by the time you mix all the scenarios and examples together, it, like so much of this, is a bit of a mess.

You also have to factor in the envy part of it. Some want those who earn good money to take a cut, just for the sake of it. And a bank boss would be right up there.

Unfortunately the rational, if there ever was any, has gone flying out the window, as it's far easier to simply make the call to cut pay than it is to explain it or justify it. For some, who don't like well paid people, the rational appears to be little more than, you can afford it. So in other words as long as you have the price of a bag of groceries, why do you need any more?

Then we come to the specifics of the cut and what tangibly it achieves. In sport, it's easy to argue. It's survival. The rugby union here handed over two and a half million dollars. And given you only have what you have, you make it last, and spread it around.

But what about those that are open, trading, and heaven forbid actually doing well? The people running the banks will never have been busier. These are dramatic, uncharted times. Skill, experience and gonads have never been more heavily relied upon. So he or she is more than earning their crust.

If someone who doesn’t actually have to take a cut, takes a cut for nothing more than a goodwill gesture, whose goodwill are they garnering? And for how long? How long is a piece of string? If the Queen moved to her least luxurious castle to deliver this week's message do you feel any differently about her?

If the gesture has no real tangibility, if it doesn’t save a job, if it makes no material difference, we enter, do we not, the world of virtue signalling?

Joe Garner may or may not take his cut. But either way, little, if anything changes, which makes the whole maelstrom around it little more than a sport.