The salaries paid to some of the BBC's biggest stars have been made public for the first time. That’s good for transparency, but bad for keeping wages under control.
Details of all those earning more than £150,000 were revealed as part of the corporation’s annual report but while the BBC’s openness has been welcomed by many, Alexander Pepper, professor of management practice at the London School of Economics, argues that while it shows up pay gaps in "sharp relief" the big earners will still be the winners in the long-run.
"One of the peculiar, paradoxical consequences of publishing high earners’ salaries is that it adds to pay inflation, rather than moderating it," Pepper says. "Labour markets for the ‘average worker’ work reasonably well. With lots of buyers and lots of sellers, you arrive at the right price. The problem with high-paid categories, whether that’s TV presenters, footballers or CEOs, is that the market doesn’t work properly because they have very specialist skills. This tends to ratchet up pay. That’s what happened in the corporate market when CEO salaries first became public information in the 1990s.”
So while publishing TV stars' salaries may appear to be a noble gesture to appease politicians and license fee payers, it’s those highly-paid stars themselves that have the most to gain. A handy rundown of how much they earn is invaluable for competitors on a headhunting spree, Pepper argues, with talent salaries higher at commercial broadcasters.
The BBC report revealed Chris Evans as BBC's top earner, making between £2.2m and £2.25m in 2016/2017, while Claudia Winkleman was revealed as the BBC’s highest-paid female celebrity with a salary between £450,000 and £500,000. The revelations are a requirement under the BBC's new Royal Charter, which came into effect on January 1 and provides a constitutional basis for the broadcasting corporation.
As well as stoking up the debate over income transparency, the report has highlighted the gender pay gap. Only a third of the names on the BBC’s high earners list are women. The report also revealed a disparity in the salaries between white BBC stars and those from Asian and minority ethnic (BAME) backgrounds. George Alagiah, Jason Mohammad and Trevor Nelson are the highest paid BBC stars with BAME heritage, each receiving between £250,000 and £300,000, while news presenter Mishal Husain tops the female table with a salary between £200,000 and £250,000.
The BBC needs to "go further and faster" on gender and diversity issues, director general Tony Hall admitted, saying that he wants onscreen equality on TV and radio by 2020. During the last three years, 63 per cent of new starters and those promoted on TV and radio were women, he said.
In 2015, former prime minister David Cameron vowed to eradicate the gender pay gap within a generation and from April 2018, firms with more than 250 employees will be required to reveal their pay gaps.
While there is clearly a long way to go, a number of firms, including Whole Foods Market, Buffer and data analytics firm SumAll are already open about staff salaries, with Buffer even publishing pay rates on its website. However, this kind of openness is rare, at least in the UK and US.
"Twenty years ago, nobody disclosed what their pay was and society didn’t feel the need to ask questions about what other people are paid," Pepper explains. "Since then, suspicions that labour markets don’t work fairly and that people are able to exploit this ‘secrecy’ to benefit unfairly have arisen, and we’ve gradually become accustomed to disclosing the rates of high paid people."
Keeping salaries secret can actually have a negative affect on worker performance, according to a 2014 study conducted by Tel Aviv University and Cornell University. The researchers also found that pay secrecy is linked to a higher likelihood of the employee leaving to work somewhere else. Another study from University of California, Berkeley found that employees were more productive when they were able to compare their earnings with those of their colleagues.
While companies in many countries still choose to remain tight-lipped on what their employees earn, some are much more forthcoming. In Norway, both salaries and tax returns are published as standard, giving companies no room to hide when it comes to pay discrimination. Could the UK take a similar approach in future? "I suspect we will," Pepper says. "In many ways, more information is better than not enough information, but people should just be aware that the consequences will be pay inflation for high paid people."
This article was originally published by WIRED UK
