Corbyn Mulls Ban on Dividend Payments by Low-Wage Companies

  • Labour leader says restriction could promote `fairness'
  • Evokes plan for pay ratios between firms' high and low earners

U.K. opposition Labour Party leader Jeremy Corbyn said that companies should be banned from paying dividends unless all their employees earn Britain’s “living wage.”

Corbyn also floated a plan to impose pay ratios limiting differentials between the highest and lowest earners in companies as he outlined a range of policies to create a fairer society in a speech in central London on Saturday.

“Only profitable employers will be paying dividends; if they depend on cheap labor for those profits, then I think there is a question over whether that is a business model to which we should be turning a blind eye,” Corbyn said, according to extracts of the speech released by his office. “Of the G-7 nations, only the U.S. has greater income inequality than the U.K.; pay inequality on this scale is neither necessary nor inevitable.”

Corbyn is seeking to impose his socialist policies on the Labour Party in the face of opposition from many of his House of Commons lawmakers, who favor a more centrist, market-friendly approach like the one that helped Tony Blair win three general elections. Corbyn said that he wants to build on Labour’s record of delivering “fairness” in contrast to the “laissez-faire” approach of Prime Minister David Cameron’s Conservatives.

The “living wage,” calculated annually by an independent foundation according to basic costs, is 8.25 pounds ($11.75) an hour for most of the U.K. and 9.40 pounds an hour in London. The government has rebranded the minimum wage as the “national living wage,” set at 7.20 pounds an hour starting in April.

‘Death Spiral’

The Conservatives “see only a limited role for the state because they want fairness limited too,” Corbyn said. “Their laissez-faire attitude to the steel industry could let a downturn become a death spiral in that sector. While other governments across Europe acted to protect their industry, the Tories let ours close, let jobs go, let communities suffer.”

Corbyn also pledged reforms to education, housebuilding and social care to share the results of economic growth more fairly.

“Investing in our future, investment in new infrastructure, industries and jobs is guaranteeing fairness. Investing in housing, new railways, new digital infrastructure creates jobs, creates a social and economic return,” he said. “Cutting investment, as this government has done, cuts opportunity and cuts fairness.”

Half of German energy suppliers are owned by local authorities, communities and small businesses, producing and selling themselves cleaner energy, Corbyn said. The Labour Party should try to emulate that, "and the most innovative Labour councils are starting to do so," he said.

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