The Ethics of Remuneration

by Calum Samuelson, 1st February 2018

BusinessmanAt the beginning of this year, a story about so-called Fat Cat Thursday made the headlines. It marked the point (less than three working days into the new year) at which the earnings of FTSE 100 CEOs passed the average annual salary of UK workers (a ratio of 120 to 1). This was followed up by the Oxfam report last week showing that the richest 1% in the world reaps 82% of global wealth. One of the most uncomfortable realities revealed by these and other reports is that national and global inequality is not decreasing—it’s growing.

Among the various components of such inequality is the reality of vast pay differentials. This topic is complex and few can fully agree on the precise causes—much less the solutions. Still, one thing that holds true across the board is that many feel a burning injustice about a CEO being paid hundreds of times more than many people in their own company.

This is why the Jubilee Centre has recently launched a new research project in the attempt to uncover some biblical wisdom that can inform conversations about the ethics of remuneration.

One of the main justifications for the current and seemingly exorbitant rates of executive pay is simply the competition of the market. If a company doesn’t pay the going price to employ a competent chief executive, that person will be snatched up by a different company that will.

Along these lines, many have argued for government intervention. But in the end, few have been able to put a finger on exactly how we should determine what a fair wage is.

Historically, several Church Fathers were content with the bargained ‘market price’ for wages, as long as this was done freely and with no coercion or deception. Other Fathers, such as John Chrysostom, are known for blistering denunciations of the wealthy, ruling classes precisely because of the extreme inequality it represented.

Current Christian writing on remuneration and pay differentials is not plentiful, and in our complex age of transnational corporations and zero-hour contracts the simple arguments of the Fathers hardly seem sufficient.

In order to avoid crafting temporary solutions to superficial problems (e.g. ‘the ideal pay differential should be X to Y’), it seems prudent to step back and consider some deeper, more permanent issues. In a sense, it may be helpful to partially reframe the conversation.

Here are a few preliminary ideas for what this might involve:

    1. Provision. Much of the Old Testament takes place within a context void of ‘money’ as we know it today. In some ways, this presents legitimate interpretive challenges. However, one advantage is that the link between compensation and sustenance was much closer. Not only did compensation in kind literally provide food for a family, but hoarding of goods such as grain also meant that some might actually starve as a result (Deut. 24:15). While it is difficult to determine how much a CEO ‘deserves’, it may be helpful to consider the extent to which various stakeholders (including even the environment and society at large) are negatively impacted by seven-figure salaries.
    2. Reward. From a biblical perspective, one reason why God rewards/blesses his people is to bind them more closely to himself. We find that in numerous passages a blessing or reward increases one’s responsibility and, therefore, the need to remain obedient to and dependent upon God (more children requires more commitment to family affairs). This principle can be glimpsed in Luke 12 when the faithful servant is not rewarded with a lump of cash or indulgent privileges, but the increased responsibility to look after all of the master’s possessions (v. 44). Do the rewards that companies currently bestow upon CEOs endear them more fully to the company or incentivise them to jump ship and pursue selfish aims?
    3. Belonging. A figure such as Job did not reach his place of prominence in isolation from his family, friends, and community. More importantly, it would have been inconceivable to imagine the purpose of his position in isolation from his enormous household which he was responsible for. In the Bible, wealthy individuals could not be individualistic in the way that some CEOs can be today, which is partly why we refer to them as patriarchs. The absence of currency meant that a good name was extremely valuable (cf. Prov. 31:23; Ruth 4:11), and one would not have been respected if they had dealt unfairly with their own family or community. There is some intriguing research demonstrating the way that ‘brand equity’ of companies strengthens the identity of executives in such a way that they are willing to accept significantly diminished pay packages. Could it be that inflated salaries are one of the ways that executives compensate for the lack of a strong identity that comes with a sense of belonging?

Ultimately, we are convinced that biblical wisdom and its derivative system of Relational Thinking offer an integrated framework by which Christians can work for real change in society, and we are humbly expecting to uncover truths that will be genuinely helpful to those engaged in conversations about remuneration.

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Category: Blogs

February, 2018

Comments (2)

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  1. Keith Ringrose says:

    A parrallel question is that would society be better if mergers were restricted and most companies were limited to the natural size for what they doing thus doing away with the need for highly paid, highly stressed executives often with a very short tenure in the job and a wrecked family lives?

    • JubileeCentre says:

      Yes, you raise another key question. The size of companies will certainly feature as an important consideration in the research.

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