Marxism at Work: Fat Cats and Poverty Pay

Submitted by Off The Rails on 15 June, 2007 - 5:01

Recently, Network Rail chief executive John Armitt received a total bonus package of more than £200,000; his deputy, Iain Coucher, more than £179,000; the other two executive directors £133,937. And that's just the bonuses! Last year, Network Rail's four most senior executives shared £1.1m in bonuses. Armitt got over £350,000, on top of his £500,000 salary. NR, a so-called 'not-for-profit' company, has just reported a pre-tax profit of £1billion.

In March, Stagecoach paid shareholders a £700m dividend, giving founder Brian Souter and his sister Ann Gloag a £175m windfall. Virgin boss Richard Branson is worth £3bn.

When Bob Kiley ran Transport for London, Ken Livingstone paid him up to £1million a year. He still works for TfL as a part-time consultant, 'earning' £750,000 a year. He even admitted recently that he does "very little work" for his money. Meanwhile, the cleaners on his stations are trapped in poverty, struggling on the minimum wage.

Pay packets like these are obviously obscene. And it is a clear injustice that cleaners who work long hours in demanding jobs struggle to survive on their wage. Marxists have something to say about why these inequalities exist. Massive salaries alongside poverty pay are no accident. They are rooted in exploitation and the capitalist system we live under.

Under this system, a worker may work full time, use all their time and energy and have nothing to show for it at the end of the week. They will struggle to pay the bills and rent, just manage to feed their families, but there will be nothing left to save or enjoy. This is 'poverty pay': a wage that keeps you alive, but only in poverty. It is a reality for millions working on the minimum wage of £5.35 an hour, mainly in the catering, hospitality, retail, cleaning and caring sectors.

'Living wage' campaigns have raised awareness of the fact that the minimum wage is not enough to live on. London Mayor Ken Livingstone recently raised his definition of a London Living Wage to £7.20 an hour, although he neglects to put any pressure to comply on the poverty-paying cleaning contractors he employs.

Marxists know that capitalism will always try to peg wages to the lowest levels. Marx wrote that a worker "sells himself piecemeal for eight, ten ... hours of his life, day after day, to ... the owner of the raw materials ... to the capitalist". We do this in order to live, to keep ourselves alive. The lie we are often told by the capitalists is, "Work hard and you will get rich": if we are poor, it is because we have not worked hard enough.

But the reality is that the working class has always worked hard and stayed poor. No matter how hard we work, as long as we are working for a capitalist who uses our labour to generate wealth for themselves, they will pay us the bare minimum that they can get away with to maximise their own profits.

This is where 'fat cat' pay comes from. The wealth produced by our labour goes mainly to the capitalists, while we are paid a pittance. Capitalists make profit: 'fat cat pay' is the slice of profit personally pocketed by bosses at the top of the capitalist tree.

The level of fat cat pay is sickening. In 2006, the highest earner from the FTSE 100 (the largest companies on the London Stock Exchange) was Stanley Fink, hedge fund manager of Man Group. He 'earned' £9.77m that year. His basic salary was £426,000, he received bonuses of £5.5m, £71,000 in benefits and shares worth £3.77m.

This is even more sickening when compared to minimum wage earnings. GMB General Secretary Paul Kenny explained, "The national minimum wage of £5.05 per hour yields a yearly salary of £10,504 for a person working a 40-hour week. This top director … is paid £9.77 million, which is 930 times the national minimum wage."

This inequality is so much more appalling when we consider that workers produced that wealth in the first place. Marxists know that an exploited working class, paid poverty wages, will always have to exist as long as capitalists are trying to make mega profits for themselves. This is why we want to replace the capitalist system with a socialist system where workers receive a share of the wealth we produce.

But we are not all impoverished earners. Some jobs in the railway industry pay comparatively well - but that's 'comparative' to cleaners and other low-paid jobs, not to our bosses. Where our pay is higher, it is as a result of workers fighting for it through our unions. Without strong unions, we are faced with the insecure world of poverty pay. And even those workers with the marginal comforts of working in a better-paid grade have much more in common with the minimum-wage agency worker than with the mega-rich Managing Director.

We need to fight for the minimum wage to be higher, to lift every worker out of poverty. We should demand that the government tax the rich and big business, so that profits are fed back to benefit the society that produced them. And we need to fight in our unions, for the lowest-paid, most exploited and for all workers, to keep our union movement strong - against low pay and for the workers' right to live by the wealth we produce.

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