Toby Webb ponders the role corporate responsibility should play in tackling income inequality
Income inequality is everywhere. There’s not a newspaper on the planet that is not debating it. It was top of the agenda at Davos 2014, as it was in 2013. Revolutions are brewing because of it. But for many, the jobs being created don’t solve the problem. In fact, many of them, low paid and low skilled, exacerbate the situation.
What should a responsibly minded company do about it? A few thoughts:
1. Basic skills investment. If the teaching at universities and many schools is not good enough for companies on basic numeracy and literacy, as many complain, then corporate education and training programmes are vital. Many are basic level, as needed. But how about a bigger, wider plan in collaboration with sectoral peers to scale up?
2. Beyond basic skills. Can companies justify investing more in people beyond basic skills? Of course, many do this already. But is there increasingly a more strategic reason to do this? If expectations are that companies must demonstrate they can and will do more in society, investing in education beyond basic levels has to rise, across the board. Corporate universities and training centres are already in place around the world. Perhaps now there is a greater reason to raise their profile and push more funding towards them. As someone who has taught at a university for five years, I would love to see a company approach my institution to attach a more advanced and practical skills programme to the management school or elsewhere.
3. The tax debate. Companies will never lobby for higher taxes. Governments waste a lot of tax money and it is better spent by business, goes the argument. Sometimes this is true, sometimes not. In the latter case, is there a role for business to support independent public debate around how government money is spent? We need to reform the tax systems of most countries. How about some non-partisan financial support for research on ways to do that? Why is it only rich individuals who get to fund their own thinktanks? We’ve already seen corporate cash help in specific areas, such as with climate change or improved governance. Why not on other issues? Companies could create a fund that fuels public debate, fairly and openly.
4. SME support. This is a major issue for large companies already. Many do excellent work supporting, for example, small farmers and small to medium enterprises around the world. But a lot more is needed. More than 90% of most countries’ employment comes from SMEs, but banks don’t like to lend to them without collateral, so how can we expand financial and other support? Is there a role for business associations?
5. Entrepreneur empowerment. Lots happens here: tech firms are desperate for the next killer app, governments want more James Dysons or Richard Bransons. But when you start a small business, prioritisation is a major challenge, alongside cashflow, marketing, business development and people management. There are good books available, and some fine web resources. But companies could do more to fund free online centres (or low cost ones) where entrepreneurs mentor others, or provide free training courses. Can massive online open courses play a role here?
6. Lead by example. Some argue that chief executive pay caps, like female quotas for boards, are the only way forward. In the UK the idea was discredited in the 1970s. But companies, and groups of companies in particular, need to show some leadership when it comes to pay. A CEO earning over 100 times more than the least well paid employee is unacceptable in troubled times. CEO incentives are changing, and becoming more long term. This is a good thing. Anyone going too far needs to be reined in by CEO peer pressure. This is not easy, but CEOs can lead here by talking about what constitutes fair pay, and not hiding behind contract secrecy or closed doors.
None of the above are new ideas. Many companies are doing great things to support ideas like these and others. My point is this: companies have always supported societal development. Then it became more important as corporate responsibility took hold. But now, company engagement in issues such as these is becoming truly strategic and far more important to invest in.
If companies don’t take the lead and show the way for overworked and underfunded governments, things will get worse: windfall taxes and unhelpful regulation may follow.
Let’s get involved. Income inequality is now strategic, and there’s something your company can do about it.
Toby Webb is founder of Ethical Corporation and Stakeholder Intelligence. He teaches at Birkbeck, University of London and blogs at http://tobiaswebb.blogspot.co.uk.corporate responsibility income inequality price