‘Fat Cat Wednesday’ highlights pay inequality
TOP bosses will have earned more by midday today than typical workers earn in the entire year, according to the High Pay Centre think tank.
Branding it “Fat Cat Wednesday”, it has revealed research that compares the earnings of top executives at FTSE 100 firms with the average UK salary.
The group estimates that a chief executive makes around £1,000 an hour – compared to the national living wage of £7.20.
It is comparing the top bosses’ median salary of about £4m a year with the median UK employees’ salary of £28,200.
The hourly figure of £1,009 is calculated on the assumption that CEOs work 12 hours a day, including three out of every four weekends, and take fewer than 10 days holiday per year.
The group said the average pay ratio between FTSE100 CEOs and the average total pay of their employees in 2015 was 129:1.
High Pay Centre director Stefan Stern said: “Our new year calculation is not designed to make the return to work harder than it already is. But ‘Fat Cat Wednesday’ is an important reminder of the continuing problem of the unfair pay gap in the UK.
“We hope the government will recognise that further reform to pay practices are needed if this gap is to be closed. That will be the main point in our submission to the business department in its current consultation over corporate governance reform.”
He added: “Effective representation for ordinary workers on the company remuneration committees that set executive pay, and publication of the pay ratio between the highest and average earner within a company, would bring a greater sense of proportion to the setting of top pay.”
Ben Willmott, head of public policy at the CIPD, the professional body for HR and people development, said: “There is still a shocking disconnect between the pay for those at the top and the rest of the workforce at too many FTSE companies, despite efforts to rein in executive pay in recent years.
“The situation is likely to get worse before it gets better as higher inflation in 2017 will mean many frontline workers will face a pay squeeze at a time when FTSE 100 CEO pay is already 129 times that of the average employee.
“This disconnect demotivates staff at work, with a recent CIPD study showing that six in ten (59%) employees identify CEO pay as an issue that demotivates them at work. The message from the workforce is clear: ‘the more you take, the less we’ll give’. Business leaders need to ensure there is a is a much clearer link between overall top pay, organisation performance and the rewards of the wider workforce or risk reducing employee engagement and productivity at work.
“Government can also play a role in helping to provide more transparency over chief executive pay by requiring companies to publish the pay ratio between what the chief executive earns and median pay in their organisation. This will help place more scrutiny on whether top pay is proportionate to the performance of the business and improve overall fairness in organisations, at a time when many pay packets are being squeezed.”
