The head of Britain's largest employers' group admitted yesterday that the growing gap between soaring executive pay and rewards for ordinary workers was undermining public trust in the business community.
In his first major speech since taking over as director general of the Confederation of British Industry, Richard Lambert said public confidence in businesses and their leaders had collapsed over the past three decades. He said the collapse of private pension schemes allied to reports of executives retiring with vast final-salary pension pots had created a "climate of suspicion".
His comments came as the Trades Union Congress said last week that directors of major companies have amassed pensions of £1bn while they have scrapped final-salary schemes for their workers.
"There is no doubt that the changing ratio between the pay of the top and the average employee has had an impact on the public view of business. [This is] especially so in those cases where high compensation has not been matched by high performance," Mr Lambert said in a speech to the Social Market Foundation.
He said that an opinion poll in the late 1970s showed that almost six out of 10 people agreed with the idea that company profits helped to make things better for the country. The same poll carried by Ipsos MORI this year found that support had fallen to 21 per cent while more than half openly disagreed with that statement.
Mr Lambert said the popular loss of trust was illustrated by David Cameron, the Conservative leader, distancing himself from big business. "It has damaging consequences for society in the areas of tax, regulation, public services and how the country copes with globalisation. Business is the source of wealth on which almost everything else depends."
He blamed the media for creating a "caricature of a fat cat" executive. "The impression is given that if an individual, or a company, is making lots of money, it must be at someone else's expense," he said. "If that has become the accepted view, you can understand why most people today don't agree with the idea that profits help to produce better products and services."
He urged business to "turn the spotlight" on itself to ensure it regained public trust, although he defended the high pay packets earned by directors.
He said there was a parallel with football where television rights and the opening up of the global market for players had opened up the gap between wages of the players at the top and bottom of the league.
Mr Lambert appeared to harden his stance on the volume of immigration that should be allowed in from Bulgaria and Romania when they joined the European Union in January, saying uncontrolled inflows of workers could damage the "social fabric".
He said: "It is very rational for an individual company to say he can't get his skilled workers here so he will go to Poland but I am not sure it is a rational choice if you get all your skilled workers from outside this country."Reuse content