The gap between CEOs’ pay and average earnings in the UK narrowed in 2020, when companies hit by the pandemic canceled bonuses and investors stepped up their study of pay policies.
The median salary for CEOs of FTSE 100 companies was 86 times the average annual salary of a full-time employee, according to research published Friday by the High Pay Center think tank.
Although it remains a huge gap, it is a significant decrease from the previous two years, when the earnings of the FTSE 100’s CEOs were almost 120 times higher than the average British worker.
This reflects temporary pay cuts and bonus cuts announced by many companies following the initial Covid-19 lockdowns, where average CEO salaries fell from £ 3.25m. in 2019 to £ 2.7 million. in 2020.
Average earnings in the UK for full-time employment also fell between 2019 and 2021, although data have been distorted by leave and other pandemic-related effects. Although wage growth has now risen, it looks set to be surpassed in the coming months by rising inflation.
The High Wage Center said that based on its numbers, 2022 would be the first year in a decade that top executives would have to work into the fourth day of the new year to earn the same amount that an average worker would take home throughout the year. .
Executive pay had already begun to level off in recent years after a period of explosive growth that led to greater political control and the introduction, from 2020, of requiring large companies to disclose the relationship between their CEOs ‘salaries and employees’ salaries. different levels.
Companies have since come under investor pressure to ensure that executives’ salaries reflect the experience of broader stakeholders, including shareholders and employees, during the pandemic.
Public attitudes have also become tougher: Surveys conducted by the High Pay Center and polling firm Survation showed that a majority of people believed that high earnings were the result of educational and social privileges, not a reflection of harder or more valuable work.
“Some of the lowest paid jobs have played the key role in keeping society functioning through the pandemic. With the value of the UK economy reduced, there is also greater pressure to share what we have, more equally,” said Luke Hildyard , Director of the High Pay Center, adding: “In this context, huge pay gaps between CEOs and workers can be harder to justify.”
It is still unknown whether the shift towards greater wage restraint will hold. The High Payroll Center said most FTSE 100 companies had not yet announced reported salaries to CEOs for the fiscal year ending 2021, but a majority of those who had reported increases compared to 2020.
The campaign group supports calls from unions and opposition parties for further political reforms to discourage excessive pay at the top – including by requiring companies to bring elected workers’ representatives into remuneration committees, an idea that Theresa May’s government has considered but has since shelved.
Frances O’Grady, general secretary of the Trades Union Congress, said the figures showed the need for “major reforms to bring CEO salaries down”, not only by including workers on pay committees but also by replacing incentive schemes for directors with profit. share schemes for the benefit of the entire corporate workforce.