In light of the Paradise Papers scandal Labour has called for the Queen, and anyone earning over a million pounds, to publish their income tax. Speaking to The Independent, Shadow Chancellor John McDonnell said revelations that the Queen had invested millions in an offshore tax haven proved “the culture of tax-avoidance” has “permeated everywhere”.
While getting top earners to publish their income is a good first step, it isn’t enough. Wage inequality is skyrocketing in the UK. The average annual full-time employee would have to work 160 years to earn what a FTSE100 chief executive is paid in just one year. And a report from the Resolution Foundation think tank shows income inequality is likely to increase in the next four years by the most since 1990.
The way to stop the rising wage gap? Make everyone publish their income. Keeping pay a secret allows wages to remain unequal. Whether you’re on £14,000 or £4.5m a year, we all need to be open about what we earn.
This is already the case in Norway, where everyone’s income taxes are published online. Neighbours can snoop on what the people next door make, dates can check out each other’s income online – and workers can see what their colleagues take home. While it may sound like a horrifying invasion of privacy, for employees it’s empowering.
Norway’s tax transparency may contribute to a flatter and more equal pay structure in the country, according to Marius Bakke, speaking to The Guardian last year at the Norwegian embassy in London.
Unsurprisingly Norway ranks among the top three most equal nations in the world, based on the Gini index estimates from the World Bank. The country, along with its Nordic cousins, is also rated among the happiest places to live, according to the 2017 World Happiness Report – which is based on measures such as real GDP per capita, people’s perception of generosity and corruption.
Think about it: if you knew the person next to you was being paid 14 per cent more to do the same job, would you really be prepared to keep working for less? If you could see that your managers’ wages had risen while employees’ salaries were cut, would you be more likely to unionise for better pay?
If salaries were less opaque, the richest in society couldn’t hide their income. It’s hard to say what impact this would have on wages, but we can make an educated guess. When Japanese companies were required to disclose all executive’s earning above ¥100m, bosses were embarrassed and some quickly took a pay cut to not appear on the list, according to Naohiko Abe of Pay Governance. Publishing everyone’s income could result in more equal pay, and it may even cause some to take a voluntary pay cut.
But that wouldn’t be the only benefit. Groups that are typically paid less – women and BAME individuals – would be able find out their colleague’s earnings and then use this to argue for more equal pay. Any discrepancies between workers would be transparent, so it would be easier to spot pay discrimination, and companies would have to justify their wage decisions.
If the idea still makes you feel uncomfortable, think about the alternative. A country where the wealthiest are free to hide their income offshore – and the person sitting next to you could be earning thousands more for the same work. If we expect openness from the wealthy, we should do so ourselves. The embarrassment of having your salary online for all to see is a small price for a more equal society.
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