Major parties manifesto commitments on pay – Election June 2017

The main political parties’ manifesto encompass a range of commitments on pay, including on public sector wage restraint, the national minimum and living wage, equal pay and salary ratios reporting.

Conservative Party
  • Commitment to increase the national living wage to 60% of median earnings by 2020 and thereafter by the rate of median earnings.
  • Commitment to legislate to make executive pay packages subject to strict annual votes by shareholders.
  • Listed companies will be required to publish the ratio of executive pay to broader UK workforce pay.
  • Companies will be required to explain boardroom pay policies, particularly complex incentive schemes.
  • New examination into the use of share buyback schemes with a view to ensuring these cannot be used artificially to enable executives to hit performance targets.
  • New law enabling certain groups of public sector workers to mutualise and become employee-owned organisations.
  • Companies with more than 250 employees will be required to publish more data on the pay gap between men and women.
Labour Party
  • Firms supplying national or local government, and all public sector organisations, will be expected to reduce boardroom pay excesses by moving towards a 20:1 gap between the highest and lowest paid.
  • Labour will also legislate to reduce wage inequality by introducing an excessive pay levy on companies with staff on very high pay.
  • The public sector pay cap will be removed and national wage bargaining restored for a number of public sector groups, including teachers, NHS and prison staff.
  • Introduce sectoral collective bargaining – ‘because the most effective way to maintain good rights at work is collectively through a union’.
  • The national minimum wage will be increased to the level of the living wage (expected to be at least £10 per hour by 2020) for all workers aged 18 or over.
  • Introduce a civil enforcement system to ensure compliance with gender pay auditing ‘so that all workers have fair access to employment and promotion opportunities and are treated fairly at work’.
  • The Labour Party points out that Black and Asian workers still suffer a massive pay gap. By introducing equal pay audit requirements on large employers, Labour states it will close this pay gap. Also, making the Minimum Wage a real Living Wage will particularly benefit ethnic minority workers who are more likely to be on low pay, the manifesto argues.
Liberal Democrats
  • Commitment to encourage the creation and widespread adoption of a ‘good employer’ kitemark covering areas of employment practice including the payment of a living wage.
  • Establish an independent review to consult on how to set a genuine living wage across all sectors. The Liberal Democrats state this living wage will be paid in all central government departments and their agencies, and other public sector employers would be encouraged to do likewise.
  • Extend transparency requirements on larger employers to include publishing the number of people paid less than the living wage and the ratio between top and median pay.
  • Encourage employers to promote employee ownership by giving staff in listed companies with over 250 employees a right to request shares, to be held in trust for the benefit of employees.
  • Strengthen worker participation in decision-making, including staff representation on remuneration committees, and the right for employees of a listed company to be represented on the board. The Liberal Democrat manifesto states the party will change company law to permit a German-style two-tier board structure to include employees.
  • Require binding and public votes of board members on executive pay policies.

Commenting on the likelihood of a continuation of public sector pay restraint if the Conservatives form the next government, the Institute for Fiscal Studies, said:

‘Restraining public sector pay compared to the private sector, as proposed by the Conservatives, and – to a lesser extent by the Liberal Democrats – risk exacerbating recruitment, retention and motivation problems and ultimately the quantity and quality of public services provided.’