If you don't mind my asking...

Keeping quiet about how much you earn only helps employers, argues Nick Cohen
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The Independent Online
During the Conservative backbenches' long battle to stop the disclosure of MPs' earnings, the tired 1970s condemnation of "the politics of envy" rang out like a cracked bell.

The alarm against the poor coveting their betters' wealth was sounded so often that Sir Edward Heath was impelled to try a variation. The Nolan Committee's demand that politicians' outside earnings be revealed was not produced by mere envy alone but by a "doctrine of envy and hatred'', he said. "Why does the public have a right to know about financial reward for our individual private activities?"

Last week Sir Edward, Kenneth Baker, David Mellor, nine other Conservative MPs and two Labour members had the confidence to refuse to declare all their earnings in the first post-Nolan register of MPs' interests. Perhaps they thought the public would hold to the old view that talking about salaries was vulgar. If so, they misjudged the spirit of the times. Vulgarity is sophisticated and envy absolutely essential.

"In the new non-union companies staff have a vested interest in finding out how much their colleagues are earning," said Julie Dickinson, lecturer in organisational psychology at Birkbeck College, London. "And managers have a vested interest in secrecy."

Ms Dickinson's graduates come back to the college from human resources departments with tales of three people doing the same work and earning wildly different salaries. Rational employees, most academics believe, would demand that all salaries be posted on company noticeboards so staff could make sure they were not being underpaid.

Union-busting, performance-related pay and personal contracts lie behind the impertinent desire for openness. In companies and organisations where collective trade union pay agreements still hold - now down to about one third of the economy - it is possible to work out how much everyone earns. If you know what level a nurse, say, has reached and how many years she has worked for the NHS, you can estimate her salary.

But in the rest of the private and public sectors no such calculations are possible. Workers facing performance reviews have to try to discover what the going rate for their job is and then struggle to get their managers to give it to them. It is in their managers' interest to keep them in the dark.

The result of this shadow boxing, says William Brown, professor of industrial relations at Cambridge University, is a world of work rent by suspicion. Few people will accept that their performance is below average. Their instinctive response is to question the system that evaluates their performance. They are most likely to lose their tempers when they find out, by whatever means necessary, that close colleagues are earning more.

Professor Brown sees the anger as a kind of "cognitive dissonance". Staff may not care if the chairman is a millionaire: there is nothing they can do, so they push it to the back of their minds. But they care very much and feel they have the right to go in and bang managers' desks if they know that Buggins at the next desk receives a fatter cheque at the end of the month.

The explanation for the growing tensions caused by secrecy about salaries may be couched in the jargon of psychology, but there are sound economic reasons for discontent. An exhaustive 1994 study by the Policy Studies Institute concluded that all the talk of performance-related pay, human resources, and empowering employees was a swindle. After interviewing 5,000 managers Neil Millward said that non-union Britain was a country where most employees were treated as "factors of production, rather than as human beings, with hopes, aspirations and rights". A team from the London School of Economics said that when human resource managers brought in performance-related pay and personal assessments, productivity fell and absenteeism and protest rose.

In most jobs, economists argue, it is all but impossible to separate an individual's performance from the performance of colleagues and the company. To do so, and to introduce genuine rather than sham personal contracts, would require managers to spend so many hours on the Herculean task of assessing real performance that they would never have time to get on with the rest of their work.

Julie Dickinson, who is interviewing hundreds of managers, says modern human resource managers are not really interested in measuring performance. "They tell me in private their main concern is to cut the wages bill," she said.

If openness about pay would allow middle-class employees to negotiate more effectively, it would also prove an enormous benefit to the working poor - now on the wrong side of the largest gap in wage differentials since records began in 1886. One of new Labour's few commitments is to introduce a national minimum wage to help them. It is a promise that will require the party to recruit hundreds of inspectors to identify sweatshop employers.

No one has a list at the moment. The Government's annual New Earnings Survey misses most of the poor because it is based on national insurance numbers and the lowest-paid do not pay national insurance.

Workers can always blow the whistle themselves. But if they do, they risk retaliation. Last year the Low Pay Unit nominated an unnamed hairdressing salon in Cumbria for its annual Scrooge at Christmas award because it was paying wages as low as 88p an hour. Unfortunately, the local press found the salon along with the worker who had secretly told the pressure group about pay rates. She was forced to leave.

Greater transparency about salaries could also send the standards of public debate soaring. If editorials condemning welfare and the European Social Chapter in the Daily Mail, for example, ended with a note saying that the editor earned at least pounds 350,000 a year, readers would have a useful critical benchmark.

Equally, John Humphrys would be able to preface his questions on the Today programme about Labour's plans for higher-rate taxpayers with "listeners should know I earn pounds 140,000 basic and pounds 3,000 to pounds 5,000 a time for chairing conferences and making after-dinner speeches. My accountant reckons that makes about pounds 250K a year."

If this sounds like an unacceptable invasion of privacy, consider the example of Norway where all tax returns are available for public inspection. Every year nosy Norwegians go down to their town hall to find out what their neighbours are earning. Local newspapers print the income and assets of every small town resident. In Oslo, national papers such as Aftenposten scour the records for the most interesting stories from each tax year.

Norway's civic society is regulated by a strong Lutheran sense of restraint. Although they praise the advantages of openness at home, Norwegians living in Britain wonder whether we could handle full disclosure. "I'm not sure if you would make as little fuss about it as we do," said Liv Tessem, Aftenposten's London correspondent. "We're a lot less flippant in Norway."