New Delhi, Sept. 24: Pay disparities between chief executive and the shop floor worker are totally out of whack — both in the US and India.
CEOs in the US usually get about 400 times the lowest paid blue-collared worker; in India, it is almost as bad at 300 times. “In India, the ratio is 1: 300 between the salaries of the CEO and the shop-floor worker, according to an estimate we have drawn. The salary of an average shop-floor worker is Rs 50,000 a month compared with Rs 1.5 crore for CEOs of MNCs operating in India,” says Madhav Mehra of the UK-based World Council of Corporate Governance.
Last week, Infosys chairman Narayan Murthy suggested that the CEOs shouldn’t get more than 15 times the lowest paid worker in the company. Corporate honchos would probably blanch at Murthy’s prescription: not everyone is suggesting such a low multiple. But there’s a growing concern that greed at the top is severely compromising corporate ethics worldwide.
Real wealth is created by innovation and can be achieved only when employees are motivated. In its absence, companies resort to window-dressing to keep shareholders happy.
Mehra also feels that Indian regulatory systems are strong but punishment isn’t severe enough. “Proper enforcement will help turn India into a fine destination for FDI.”