New research shows this morning that the pay of top company executives will pass the median annual wage for a full-time worker by Friday morning, sparking outrage from unions.
The High Pay Centre said that, by this morning, the median FTSE 100 chief executive (CEO) will have been paid the median UK worker’s annual salary.
The think tank said the “vast” differences between the pay of chief executives and that of other employees may be harder to justify in view of the coronavirus crisis.
Unions called for worker representatives to be appointed on to pay committees and questioned who had contributed most to society during the pandemic.
The High Pay Centre said that, for the first time since it was founded a decade ago, its research had found that chief executives have needed to work into a fourth day to make the same amount as the annual pay of a full-time worker.
CEO pay drops
CEO pay fell by 17 per cent to £2.7m in 2020 from £3.25m the previous year, in light of the temporary pay cuts and bonus cancellations many companies announced during the initial lockdowns following the outbreak of Covid-19, according to the research.
Most FTSE 100 firms have not yet announced CEO pay for their financial year ending in 2021, but 57 per cent$ of those that have recorded an increase on 2020 levels, said the report.
A survey of 1,000 people for the think tank showed that around three out of four disagreed that high earners do more valuable work than low/middle earners or that they work harder.
High Pay Centre director Luke Hildyard said: “Some of the lowest-paying jobs have played the most important role to keep society functioning through the pandemic.
“With the value of the UK economy reduced, there’s also greater pressure to share what we do have more evenly.
“In this context, vast CEO-to-worker pay differences may be harder to justify. It will be interesting to see whether the still very substantial pay gap between top earners and the wider workforce continues to narrow in future, or reverts to previous levels.
“The boards that set executive pay justify very high payouts on the basis that those at the top work harder or do more important jobs than the rest of us, but our research shows that this assumption isn’t shared by the general public.
“Putting workers’ directors on to pay-setting committees could introduce some valuable ‘real world’ perspective into decisions on pay.”High Pay Centre director Luke Hildyard
TUC general secretary Frances O’Grady said: “The pandemic has shown us all who keeps the country going during a crisis. There are millions of hardworking people in Britain – from carers, to delivery drivers, to shop floor staff – who give more than they get back, but greedy executives are taking home millions while ordinary workers face yet another year of pay squeezes.
“As we emerge from the pandemic, we need to redesign the economy to make it fair, and that means big reforms to bring CEO pay back down to earth.
“Executive pay committees have to change. They should be required to include workforce representatives who can speak up for a fair balance of pay with ordinary workers.
“Incentive schemes for company directors should be replaced by profit-share schemes that include the whole workforce. Too much wealth is being hoarded at the top.”
Unite union general secretary Sharon Graham said: “Is it the nurse in an intensive care unit, saving the lives of those struck by Covid, or an elite investment banker, making millions, who contributes most to society? Which of them stood up for all of us during the pandemic?
“The report shows that the banker could be earning 100 times more than the nurse. That means there is something fundamentally wrong with British society.”
GMB general secretary Gary Smith said: “Fat cat bosses trousering 173 times more than the carers who look after our loved ones is a disgrace.
“It doesn’t look very levelled up and is everything that’s wrong with our economy.
“All workers must be properly paid and valued if we want to get our post-Covid economy on track.”
Green Party co-leader Adrian Ramsay said: “There can be no justification for astronomical pay for a tiny elite while the majority of people are struggling to get by.
“The key workers who have put their lives on the line throughout the pandemic deserve to be paid fairly and not see the rewards of their work go to a tiny number of already hugely rich executives.
“A mandatory limit on the difference in pay across every organisation would begin to reverse this rising inequality.”