Universidad Mayor | CEAS [Columna] Empresas: desigualdad de la que no se habla, por Mariana Paludi CIAH | Universidad Mayor
14 January 2020

[Column] Companies: inequality that is not talked about, by Mariana Paludi

Check the column of the researcher of the Center for Economics and Social Policies in La Tercera

In times of reflection and social restructuring I have the question of whether companies are up to the occasion. Given the influence they have on the personal and economic life of their members, their involvement is as much or more relevant than that of the political elite.

A recent article published in The Guardian magazine analyzed the results obtained by the think thank High Pay Center, about the 100 best companies listed in the London stock market (FTSE 100). The study showed the executives of the most prosperous companies, earn in 33 hours of work more than an average worker in a year. That is, by January 6, 2020 at 5:00 p.m. an FTSE 100 executive will have received in his pocket a salary of £ 29,559 (approximately CLP 30,000,000) that exceeds the average annual salary of a full-time employee in London.

Faced with such inequality, the unions said it should be a "national shame" that the "fat cats" of the companies earn so much in such a short time. Think thank analysts agree that companies should increasingly report on salary data and performance awards and performance bonuses. But, just reporting is not enough, if there is no responsibility of the business elite to justify this disparity.

Companies established in Chile do not systematically report salary ranges according to the job. We have little information, but it is still possible to approximate certain numbers for reflection. According to the 2017 Casen survey, at the national level it is possible to identify the corrected autonomous income of an average clerical employee and of directors and general managers. On average, an office worker receives a compensation of CLP 460,047 per month, and receives CLP 5,520,564 annually. While the directors acquire a salary of 6,761,112 CLP per month, which is equivalent to 81,133,344 CLP annually. This indicates that a general manager earns 15 times annually what an office worker. In other words, by February 4, 2020 at 6:00 p.m. an executive in Chile will have received the average annual salary of an office worker in Chile. It remains to ask what happens to those undeclared income, or corporate bonuses or awards that are directly or indirectly camouflaged in the Casen survey reports.

Business sustainability reports could clarify the picture. Codelco Chile reports only the existence of gender pay gaps according to position, responsibility and function performed. The annual report of Santander Bank reports salary increases according to gender, compensation granted, Christmas bonuses, etc. without specifying nominal wages or gaps or disparities between the hierarchical line. The same year with other IPSA companies showed the same result. There are no conclusive salary data.

Corporate governance implies transparent salary policies in companies; that low-ranking workers can be part of the company directories as part of the decision-making process; and, finally, that there is more accountability of the business elite to account for its activities and management to its stakeholders. The famous 2007 Porter and Kramer article published in Harvard Business Review Strategy & Society sums up the importance of corporate responsibility very well. Corporations profoundly and positively influence society by providing employment, investing capital, buying goods, and doing business every day. Today companies have a unique opportunity to benefit society by developing transparent policies that reduce inequality and promote fair remuneration within their doors.

Original source: La Tercera

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