This makes sense in my head so hopefully it'll make sense in type!
When it comes to people that earn extremely high wage packages e.g. CEOs of large companies, top tier sportspeople and so on, we often hear along the following lines in justification of:
'It's what the market dictates and commands. If we don't pay those wages, we won't attract the talent into the business.'
So let's take a couple of examples.
FTSE 100 chief executives were paid £2.7m on average in 2020 (the latest full-year figures available), which works out at 86 times the £31,285 average salary for full-time UK workers, according to Office for National Statistics figures.
Cristiano Ronaldo is said to be the highest paid current EPL star with an annual salary of £26.4m, while Manchester City playmaker Kevin De Bruyne is second on £20.4m.
Here's my thought process. Let's say there was agreement between all FTSE 100 companies (an agreement that was stringently adhered to) to cap chief exec wages at £1.5 million pa. Let's also say there was a similar agreement between all tier 1 football leagues across the world to cap player wages at £7.8 million pa, £150k per week.
The people that are driven to be CEOs and top footballers would still strive to reach the top of their respective industries, no? If you're business obsessed you're business obsessed. Same with wanting to play football. Using my financial examples, it's not as if a young Ronaldo in the making is going to think 'The most I can ever earn is £150k each week? Forget it, I'm going to law school!' Similarly a young Pascal Soriot in the making (chief executive of AstraZeneca) isn't going to think 'The most I can earn if I climb the corporate ladder is £1.5 million each year? Forget it, I'm going to work in the local supermarket!'
Whatever the sector, if you're driven to achieve you're driven to achieve. So if, around the world, each sector had a strictly adhered to cap, those wanting to reach the top would still strive to do so.
Or am I wrong? If I am wrong, why? And remember, in my hypothetical world, the cap agreements are being adhered to, there's no under the table envelopes being exchanged
When it comes to people that earn extremely high wage packages e.g. CEOs of large companies, top tier sportspeople and so on, we often hear along the following lines in justification of:
'It's what the market dictates and commands. If we don't pay those wages, we won't attract the talent into the business.'
So let's take a couple of examples.
FTSE 100 chief executives were paid £2.7m on average in 2020 (the latest full-year figures available), which works out at 86 times the £31,285 average salary for full-time UK workers, according to Office for National Statistics figures.
Cristiano Ronaldo is said to be the highest paid current EPL star with an annual salary of £26.4m, while Manchester City playmaker Kevin De Bruyne is second on £20.4m.
Here's my thought process. Let's say there was agreement between all FTSE 100 companies (an agreement that was stringently adhered to) to cap chief exec wages at £1.5 million pa. Let's also say there was a similar agreement between all tier 1 football leagues across the world to cap player wages at £7.8 million pa, £150k per week.
The people that are driven to be CEOs and top footballers would still strive to reach the top of their respective industries, no? If you're business obsessed you're business obsessed. Same with wanting to play football. Using my financial examples, it's not as if a young Ronaldo in the making is going to think 'The most I can ever earn is £150k each week? Forget it, I'm going to law school!' Similarly a young Pascal Soriot in the making (chief executive of AstraZeneca) isn't going to think 'The most I can earn if I climb the corporate ladder is £1.5 million each year? Forget it, I'm going to work in the local supermarket!'
Whatever the sector, if you're driven to achieve you're driven to achieve. So if, around the world, each sector had a strictly adhered to cap, those wanting to reach the top would still strive to do so.
Or am I wrong? If I am wrong, why? And remember, in my hypothetical world, the cap agreements are being adhered to, there's no under the table envelopes being exchanged
