Corbyn wants to ban Co.&#x27;s which don&#x27;t pay living wage from paying dividends

Original post by SonOfTheGun

http://www.telegraph.co.uk/news/politics/Jeremy_Corbyn/12102504/Jeremy-Corbyn-Ban-companies-from-paying-shareholders-unless-staff-earn-the-living-wage.html

The Labour leader will call for companies to be prevented from paying dividends unless their staff are paid above the minimum wage

He may find the government nicks his policy. As it will be a criminal offence not to pay the national living wage, there is no reason not to prohibit dividends in such cases.

Reply 2

math42

Hmm, I'm not sure about this plan. Doesn't seem like it will..

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Spoiler

Reply 3

Original post by SonOfTheGun

http://www.telegraph.co.uk/news/politics/Jeremy_Corbyn/12102504/Jeremy-Corbyn-Ban-companies-from-paying-shareholders-unless-staff-earn-the-living-wage.html

The Labour leader will call for companies to be prevented from paying dividends unless their staff are paid above the minimum wage

What a pointless and toothless policy. Considering payment below the minimum wage is illegal, the management should be facing criminal charges.. not a restriction on dividend payments.

Reply 4

Farm_Ecology

12

Original post by nulli tertius

He may find the government nicks his policy. As it will be a criminal offence not to pay the national living wage, there is no reason not to prohibit dividends in such cases.

Wont that just mean the living wage is the minimum wage?

Reply 5

Original post by Farm_Ecology

Wont that just mean the living wage is the minimum wage?

The living wage will be the legal minimum wage for people 25+ from April. the national minimum wage will apply to those aged 21-24.

Reply 6

viddy9

16

I'm not sure whether the media have reported on Corbyn's view on dividends accurately, so I'll have to wait for the actual speech.

Ensuring that the ratio of CEO pay to worker pay is fixed or prevented from increasing is certainly a policy proposal worth discussing.

CEOs simply don't deserve the extraordinary pay that they're getting today. The gap between CEO pay and worker pay was much lower a few decades ago (the ratio was usually between 10:1 and 20:1), yet productivity and performance has stayed the same in top corporations, so the massive take-off in CEO pay simply can't be justified (the ratio is as high as 273:1 nowadays).

The whole low-pay issue is pretty much dealt with in places like Scandinavia. Why? Because they have strong trade unions and workers have bargaining power, power which has been systematically dismantled. Proponents of the free-market should be supporting strengthening trade unions and getting union membership rising (an anarcho-capitalist friend I have supports trade unions, for instance). I expect Jeremy Corbyn and Labour will do so, with the support of the OECD who, in their reports, have identified strong trade unions as a key way to reduce inequality whilst promoting economic growth.

Unfortunately, in this country and particularly in the United States, big businesses have been allowed to form monopolies, exploit their workers, and meanwhile the government has weakened unions, meaning that workers are stuck in low-paid jobs. As Jeremy Corbyn has said, raising the pay of the poorest in society strengthens the economy. Both the IMF and the OECD have found that higher inequality reduces economic growth.

(edited 8 years ago)

Reply 7

Original post by Reue

What a pointless and toothless policy. Considering payment below the minimum wage is illegal, the management should be facing criminal charges.. not a restriction on dividend payments.

Enforcement of the NMW is with HMRC with limited enforcement resources (it brings in no tax). A restriction on dividends would make most public companies ensure that the audit committee of non-execs verified compliance. As I say, don't be surprised if this isn't in Osborne's next budget. Corbyn has been naive announcing workable policy initiatives far too early.

(edited 8 years ago)

Reply 8

Original post by nulli tertius

Enforcement of the NMW is with HMRC with limited enforcement resources (it brings in no tax). A restriction on dividends would make most public companies ensure that the audit committee of non-execs verified compliance.

Non-board level employee pay is not the responsability of an audit committee.

Also: Why punish investors for management's illegal actions?

Reply 9

username402722

19

Original post by nulli tertius

He may find the government nicks his policy. As it will be a criminal offence not to pay the national living wage, there is no reason not to prohibit dividends in such cases.

The national living wage as defined by Gideon is not that as defined by the Living Wage Foundation, especially in London, and will be above 25 year olds not 18. The Tories proposal should be called something such as the Increased Minimum Wage or the New Minimum Wage.

Reply 10

Original post by Reue

Non-board level employee pay is not the responsability of an audit committee.

The shareholders will make it their responsibility, if it means that dividends cannot be paid.

Also: Why punish investors for management's illegal actions?

The investors are always punished for a company's illegal activities. Any fine on a company ultimately falls on its investors but the fine at present is not significant enough for investors to take notice. This provides a method of ensuring compliance without imposing over-large financial penalties. Don't expect any sympathy from the Treasury here.

(edited 8 years ago)

Reply 11

Original post by barnetlad

The national living wage as defined by Gideon is not that as defined by the Living Wage Foundation, especially in London, and will be above 25 year olds not 18. The Tories proposal should be called something such as the Increased Minimum Wage or the New Minimum Wage.

That is an argument about rates. Corbyn's idea can be adopted regardless of the rate at which it is adopted.

Reply 12

Original post by nulli tertius

The shareholders will make it their responsibility, if it means that dividends cannot be paid.

The shareholders have no direct control over how the company is run.

Original post by nulli tertius

The investors are always punished for a company's illegal activities. Any fine on a company ultimately falls on its investors but the fine at present is not significant enough for investors to take notice. This provides a method of ensuring compliance without imposing over-large financial penalties. Don't expect any sympathy from the Treasury here.

Again, see above; the investors have no direct control over how the company is run. So you're punishing them for something they have no involvement or, likely, knowledge of.

Reply 13

Original post by Reue

The shareholders have no direct control over how the company is run.

Again, see above; the investors have no direct control over how the company is run. So you're punishing them for something they have no involvement or, likely, knowledge of.

BP paid a fine of $20Bn for Deepwater Horizon. That will definitely hit every shareholder in the pocket. None of those shareholders had the slightest influence over how that rig was operated or how BP monitored that operation. Nevertheless the shareholders were punished. That is how capitalism works. If you invest in a company, you take the rough with the smooth.

Reply 14

Original post by nulli tertius

BP paid a fine of $20Bn for Deepwater Horizon. That will definitely hit every shareholder in the pocket. None of those shareholders had the slightest influence over how that rig was operated or how BP monitored that operation. Nevertheless the shareholders were punished. That is how capitalism works. If you invest in a company, you take the rough with the smooth.

It didnt. BP dividends have risen almost continuously from 2011 to 2016.

Reply 15

Original post by Reue

It didnt. BP dividends have risen almost continuously from 2011 to 2016.

And they would have risen by more if there had been another $20Bn in the kitty

Reply 16

Original post by nulli tertius

And they would have risen by more if there had been another $20Bn in the kitty

Complete speculation. The dividend rise looks pretty consistent with comparable competitors. If anything it's at a higher trajectory than say, Shell.

Reply 17

Original post by Reue

Complete speculation. The dividend rise looks pretty consistent with comparable competitors. If anything it's at a higher trajectory than say, Shell.

I am sorry. This $20Bn did not come from the magic money tree. I cannot engage with people who not accept basic tenets of economics.

Reply 18

Original post by nulli tertius

I am sorry. This $20Bn did not come from the magic money tree. I cannot engage with people who not accept basic tenets of economics.

I think you're struggling to understand that dividend payout often has little relation to gross profit for the year. Fortunately the example you've picked (BP) is an excellent example of a company who's dividend payouts have been completely unrelated to the year's gross profit.

Nevermind though, saves me the effort of trying to explain the advanced tenets of economics to you :smile:

Reply 19

Jammy Duel