The gap between executives’ salaries and UK average earnings narrowed in 2020 as companies hit by the pandemic canceled bonuses and investors tightened their pay policies.
The median salary for CEOs of FTSE 100 companies was 86 times that of the median annual salary for a full-time worker, according to research published by the High Pay Center think tank on Friday.
Although it remains a large gap, it is a significant drop from the previous two years, when FTSE 100 executives’ earnings were almost 120 times those of average British workers.
This reflects temporary wage freezes and bonus reductions announced by many companies after the initial Covid-19 restrictions, with the average remuneration for CEO falling from £ 3.25 million in 2019 to £ 2.7 million in 2020.
UK average earnings for full-time work also fell between 2019 and 2021, although the data was skewed by leave and other pandemic-related consequences. While wage growth has picked up now, it looks like it is likely to be surpassed by rising inflation in the coming months.
The High Pay Center said that based on its figures, 2022 will be the first year in a decade when general managers will have to work until the fourth day of the new year to earn the same amount that an average full-time worker houses. then will take. .
Management remuneration has already begun to level off in recent years, following a period of explosive growth that has led to greater political scrutiny and the introduction, from 2020, of requirements for large companies to determine the ratio of their CEO’s salary to that of workers. to disclose. different levels.
Companies have since collapsed investor pressure to ensure that bosses’ pay reflects the experience that major stakeholders, including shareholders and employees, had during the pandemic.
Public attitudes have also hardened: research conducted by the High Pay Center and the polling company Survation found that a majority of people believe high earnings are the result of educational and social privilege, not a reflection of harder or more valuable work .
“Some of the lowest paid jobs played the most important role in making society function through the pandemic. With the value of the UK economy declining, there is also greater pressure to share what we do more evenly, ”says Luke Hildyard, director of the High Paying Center, adding: be more difficult to be fair. “
It remains to be seen whether the shift to greater wage control will last. The High Pay Center said most FTSE 100 companies have not yet announced reported CEO salaries for the fiscal year ending in 2021, but the majority of those who have have reported increases by 2020.
The campaign group supports calls from unions and opposition parties for further policy reforms to discourage excessive pay at the top – including by requiring companies to bring elected workers’ representatives to compensation committees, an idea that has been considered by Theresa May’s government but has since been scrapped .
Frances O’Grady, general secretary of the trade union congress, said the figures showed the need for “major reforms to bring the salaries of CEOs down to earth”, not only by including workers on pay committees, but also through incentive schemes for directors to replace with profit. stock schemes that benefit companies’ entire workforce.