One of the difficulties underlying the current high volume arguments about pay & bonuses is the lack of any clear guidance from economists on how to determine the worth of any one employee, or indeed one class of occupation within a business, compared to another.
Although ‘Equal pay for Work of Equal Value’ is enshrined in law, equal value is nowhere defined, except in cases where jobs are identical but are paid at different rates for men & women. The job evaluation schemes relied upon are usually nothing more than empirically – or heuristically – derived scorecards which depend on factors such as level of training & responsibility. And woebetide anyone who suggests that elements of human capital such as good looks or personality have any role to play.
As Tim Montgomerie, editor of the Conservative Home website put it in a recent column for The Times, why does someone need £1 million to run the Royal Bank of Scotland – something he cannot understand, any more than the rest of a snarling nation.
But Montgomerie does understand - along with every other fan of Manchester United – why Wayne Rooney is worth what he is paid.
It’s just that, along with everybody else, he expresses that as if professional footballers belonged, along with other sons of toil, to the weekly wage-earning classes.
So here is a suggestion. A new unit of measurement for evaluating the worth of bankers & board members.
Wayne Rooney’s club wage of a reported £200,000 a week is, in round numbers, £10 million a year.
Then we can ask why the ability to perform brilliant overhead kicks makes anyone worth 10 of someone whose only skill is keeping afloat one of the world’s biggest banks.
