Big pay gap angers expert

Retired Victoria University researcher Geoff Bertram.

The Government should stop giving contracts - and knighthoods - to companies that pay their bosses more than three times their lowest-paid workers, an economist has suggested.

Dr Geoff Bertram, a retired Victoria University economist who inspired a Labour Party plan to force down electricity prices, made the proposal at a conference on inequality in Wellington yesterday.

He said laws that already require big companies to disclose the salaries of their highest-paid executives should be extended to require disclosure of their lowest wages too.

"An essential part of company reporting that the Stock Exchange should be looking at is an indication of the income dispersion within the company from top to bottom," he said.

"This is far more important than triple bottom line." He said the disclosure should include people working for contractors as well as direct employees.

He did not advocate legislating any particular wage ratio between the highest and lowest-paid because that would always be a matter of debate.

"I'd settle for 3:1, others might settle for 10:1," he said.

"Then the Government should say no Government contracting, no knighthoods, make them feel some tangible pain [if they exceed whatever limit is agreed]."

Professor Robert Wade, a New Zealand-born economist at the London School of Economics, argued earlier that increasing inequality in the US helped to spark the 2008 financial crisis because the rich tried to exploit their wealth by lending to people who could not afford to keep up their mortgage payments.Simon Collins