CEOs at the UK's Biggest Firms Earned as Much in 3 Days as an Average Person Will in a Year
An analysis of wages reveals astonishing pay differences between the lowest and highest earners.
It’s been the first few bleary-eyed and coffee-fuelled days back to work after the holiday break for millions of UK employees this week.
And in the time it’s likely taken workers to get back to their routines, many of the chief executives of the country’s largest companies have already earned the equivalent of the average’s worker’s entire annual salary — in just three days.
Researchers calculated that the median average pay of the chief executives of FTSE 100 companies (the largest businesses listed on the London Stock Exchange) was £3.6 million in 2019, the last year for which there is full data available. That is approximately 115 times the £31,461 annual salary paid to full-time employees on average in the UK.
The organisation based its calculations on analysis of disclosures in companies' annual reports, combined with government statistics, it said.
Chief executives worked just 34 hours to outearn 2019’s average median annual pay, which was an hour longer than the year before. Their pay remained the same, while employee pay rose a small amount in this year’s analysis, the BBC noted.
In some cases, the difference between executives and the lowest-paid employees was even more extreme. For example, the online grocery delivery service Ocado was singled out as having the biggest earnings gap. Its chief executive was paid £58.7 million in 2019 — which is 2,605 times the £22,500 paid to the company’s staff on average.
The High Pay Centre Director Luke Hildyard said that chief executive pay is up significantly from two decades ago, and the gap between the lowest earners and the highest is widening.
"Estimates suggest it [the pay of the highest earner compared to the lowest] was around 50 times at the turn of the millennium or 20 times in the early 1980s," he told the BBC.
Hildyard added that the figures should raise concern about the governance of the UK’s biggest companies and suggested that vast levels of pay disparity affects society in all sorts of ways beyond the economy.
Our research suggests that FTSE 100 CEOs' earnings for 2021 will surpass the annual wage of an avg. UK worker by around 5:30pm today.— High Pay Centre (@HighPayCentre) January 6, 2021
In 2021 we need a real debate about the impact of such inequality on the public's health and wellbeing. #HighPayDay2021https://t.co/gEUxw18BHN
“[The figures] should prompt debate about the effects that high levels of inequality can have on social cohesion, crime, and public health and well-being," Hildyard said.
Frances O’Grady, the general secretary of Trade Union Congress, a federation of trade unions in the UK, said the analysis was evidence that those on the frontline of the COVID-19 pandemic should be paid more.
"Our army of minimum wage workers — carers, shop assistants, and delivery drivers — have kept the country going through the pandemic, not these CEOs at the top raking far more than their share," O’Grady told the Guardian.
"If the government is serious about levelling up Britain, it needs to start by levelling up pay and conditions for those we most rely on, and stop the threat to freeze key workers’ pay," she continued.
However, others argued that chief executives bring in value that is reflected in their pay.
"Good management is more important than ever in a globalised world and small differences in top talent make a big impact on a business' bottom line," Daniel Pryor, head of programmes at the Adam Smith Institute, a free market economics thinktank, told the BBC.
In order to calculate hourly pay, the High Pay Centre said it assumed a demanding work schedule for CEOs, taking into account "320 12-hour days of work a year," but this still equates to an hourly pay of £941.
It would take a worker on the full minimum wage rate of £8.72 an hour 212 years to earn the same as the average CEO earns in a year, the researchers said.