FTSE 100 CEOs out-earn average workers in three days
The yawning gap between ordinary workers and their bosses has grown yet again, with new research finding that the pay of Britain's leading CEOs outstrips an average employee’s annual wage firms after just three working days. The news has already prompted concerns from Britain’s Government and the national Trades Union Congress.
While the majority of UK workers have endured stagnant wages that have never managed to reach their pre-recession levels when accounting for inflation, the good times have continued to roll for the CEOs of the FTSE 100 – making executive pay a sustained bone of contention in Britain. This is only expected to escalate in 2020, as it will be the first year that publicly listed firms with more than 250 UK employees must disclose the ratio between chief executive pay and that of their average workers, as well as explaining the reasons for their executive pay ratios.
In the run-up to the release of the much anticipated figures, last year, it was revealed that the average UK employee would still need to work for 95 years to earn one year of a FTSE 100 CEO’s salary. Adding to that, a damning new report from the Chartered Institute of Personnel and Development and the think-tank High Pay Centre has found that the average FTSE 100 chief would only need to work three days in a year to surpass the annual wage of the average worker.
The study suggests the average FTSE 100 chief was paid £3.46 million in 2018, or the equivalent of £901.30 an hour. According to figures based on the latest available data, the average full-time annual salary of £29,559 works out at £14.37 an hour, which would meaning that top bosses earned about 117 times their average employee. As a result, just two weeks into 2020, FTSE 100 CEOs have already brought home above the UK’s average wage.
The report has already led to widespread consternation across the political spectrum. UK Trades Union Congress General Secretary Frances O’Grady argued that the report "tells you everything about how unfair our economy is," while Conservative Business Secretary Andrea Leadsom said that the pay gap was "concerning." The Minister did however argue that the coming changes to the way companies report pay would "increase transparency around how directors meet their responsibilities."
Peter Cheese, Chief Executive at the Chartered Institute of Personnel and Development cautioned against making such assumptions. While he agreed that pay ratio reporting would “rightly increase scrutiny” on pay and reward practices, he suggested to the BBC that reporting the numbers “is just the start.” He further stated that the UK needs businesses to “step up and justify very high levels of pay for top executives” – particularly with the rest of the workforce still seeing their pay languish at well beneath its rates of 2008.
Luke Hildyard, Director of the High Pay Centre, meanwhile added, "CEOs are paid extraordinarily highly compared to the wider workforce, helping to make the UK one of the most unequal countries in Europe."
