Business

Wage gap between workers and executives in the UK narrows

Gap between chief executive pay and UK median earnings narrows in 2020, as pandemic-affected companies cancel bonuses and investors intensify scrutiny of policies pay their salaries.

The median salary for the chief executives of the 100 FTSE companies is 86 times the average annual salary for a full-time worker, according to research released Friday by the High Pay Center research group.

While that’s still a big gap, it’s a significant drop from two years ago, when the earnings of 100 FTSE executives were almost 120 times that of middle-class workers. average in the UK.

This reflects the temporary salary freezes and bonus cuts announced by many companies after the initial Covid-19 lockdown, with the average CEO compensation dropping from £3.25m in 2019 to £3.25m in 2019. remaining £2.7 million in 2020.

Average UK earnings for full-time work also fell between 2019 and 2021, although the data was skewed due to furlough and other pandemic-related impacts. While wage growth has improved for now, it looks likely to go beyond that in the coming months due to soaring inflation.

The High Pay Center says that based on its figures, 2022 will be the first year in a decade when executives will have to work New Year’s Wednesday to earn the equivalent of a year. the average worker will go home for the whole year. .

Executive pay has begun to level off in recent years, after a period of explosive growth that led to more political scrutiny and, from 2020, requirements for large companies to disclose rates. salaries of their executives compared to employees at different levels.

The company has since become pressure from investors to ensure that bosses’ salaries reflect the experience that broader stakeholders, including shareholders and employees, have had during the pandemic.

Public attitudes have also hardened: research conducted by the Center for High Pay and the polling firm Survation shows that a majority of people believe that high incomes are the result of educational privileges. and society, rather than a reflection of harder or more valuable work.

“Some of the lowest paying jobs have played the most important role in keeping society running through the pandemic. With the value of the UK economy falling, there is also greater pressure to share what we have more equally”, added Luke Hildyard, Director of the High Pay Centre: “In In this context, the pay gap between CEOs and workers can be harder to justify. ”

It remains to be seen whether the shift towards higher pay restrictions will last. The High Pay Center says most of the FTSE 100 companies have yet to publish reported executive pay rates for the financial year ending 2021, but the majority of them have reported increases. in 2020.

The advocacy group is backing calls from unions and opposition parties for further policy reform to prevent overpaying at the top – including requiring companies to bring in worker representatives. elected to compensation committees, an idea considered by Theresa May’s government, but shelved.

Frances O’Grady, secretary general of the Trades Union Congress, said the figures show the need for “major reforms to bring CEO pay down to normal,” not just by bringing in employees. compensation committees but also by replacing incentive schemes for directors with profit. -share programs benefit the entire workforce of companies.

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