Salary. Payable when able?

By now you have probably heard of multiple instances of people's salaries being partially docked, or postponed in full or part, as an immediate consequence of the COVID-19 lockdown.

Step back and think about what messages are implicit in this situation.

• Top Managements of organisations, under implicit, or possibly explicit, instructions from their investors, are moving to mitigate impairment of the financial health of the enterprise.
• One group of creditors, who are currently in no position to insist on their credit being honoured, is employees. The economy was already in deep trouble even before the pandemic hit; when all revenue gets turned off as abruptly as it has, for over a month, and counting, the outcomes worsen by orders of magnitude. They will, in the event, take any punishment which comes their way.
• Managements have, therefore, chosen to attack this statutory obligation with a sledgehammer. Redundancies are rising rapidly, and even those employees who survive the culling, are worse off than they were, just last month.
• Needless to say, while employees' incomes are shrinking, or vanishing, their multiple obligations won't. A home mortgage will, at best, permit a temporary moratorium of maintaining monthly installments, but at a punitive cost in terms of increased interest in the near future. Education, healthcare, energy, household provisions, transfers to support the extended family and so on will not pause, merely because the salary does.

It shocks me, that this assault on employees' compensation has drawn as little anger, revulsion and condemnation as it has.

The contemptuous indifference to the economic, and indeed physical and mental, well-being of employees, at a time when it is more fragile than it has been in my memory, (which goes back to the 1970s, I should add), is freighted with many messages, some of which I shall try to unpack and decode.

• The only voice, which counts at the corporate decision making table, is the investor's voice. His/her ROI must be protected, no matter what else is thrown under the bus to ensure it. This is not surprising. Anyone familiar with the role of incentives in decision making will know that the financial interest of most top management teams is bound, inextricably, with shareholder returns. All the other stuff about caring capitalism is just, well, stuff.
• The entire idea, that equity investment in a business is in the nature of risk capital, which will burgeon when the business enjoys fair climes and favourable winds, and wither when it faces adversities, is a fiction, an oft-repeated fiction which sounds credible exactly because it is repeated so often. Investors, particularly, all sorts of institutional investors, refuse to even contemplate capital attrition, much less allow it, fully cognizant of what it may imply for other participants in the organisational value-chain. Did you notice my refusal to use the popular word, 'stakeholders', and resorting, instead, to an elliptical phrase? 'Stakeholders' has a heartwarmingly broad sweep. The moment the proverbial hits the fan, the only stake which must be, is, privileged is Big Capital.
• The State will offer plenty of lip sympathy to struggling employees, and even appear to raise a disapproving eyebrow or two at errant employers who beleaguer employees. This will be accompanied by little or no legislative or executive action, either to proscribe such actions, or to mitigate the suffering of employees at the receiving end. Managements and investors understand this well, given that here too, a system of incentives, called electoral bonds, or other such virtuous-sounding names, is at work behind the veil.
• Investors in equity become entitled, in perpetuity, to returns on their investment, either in the form of capital appreciation or distributed profits (dividends). Employees must justify their presence on the payroll every day that they spend on it. Employees sign up to a salary which grows in accordance with the company's reward system. Now, it turns out, that there was a force majeur clause, presumably inscribed in invisible ink, which qualified their salary itself. In effect, employers can work, with impunity, on the assumption that salary is not even payable when able but payable IF able.

Thomas Piketty and several other economists and thinkers have been warning us about the ever widening chasm between an ever-shrinking global elite and all the rest of us grunts. COVID-19 has underscored, for hundreds of million employees around the world, how tenuous their lease on their salary really is.

We are just over a week away from International Workers' Day, marked on May 1 every year. Most readers are likely unaware of the history which led to this observance. It commemorates a massive strike in Chicago on this day, back in 1886, which led to the US-wide adoption, over the following decades, of the 8-hour workday. The issues, 134 years ago, pertained to just conditions of employment for the working man. In 2020, the employment contract itself seems to have turned into a flimsy, fragile parchment which might, at any moment, turn to dust.

A few hundred million livelihoods may be devastated over the very near future, but hedge fund partners will not be surrendering multimillion-buck bonuses any time soon.