The bosses of top British companies will have made more money by lunchtime on Thursday (04 Jan) than the average UK worker will earn in the entire year, according to an independent analysis looking at the vast gap in pay between chief executives and everyone else.
The chief executives of FTSE 100 companies are paid on average, £3.45m a year, which works out at 120 times the £28,758 given to full-time UK workers.
The bosses will have earned more in less than three working days than the average employee will pick up this year, leading campaigners to dub the day “Fat Cat Thursday”.
Frances O’Grady, the TUC general secretary, said it was outrageous that bosses were picking up “salaries that look like telephone numbers” while workers were “suffering the longest pay squeeze since Napoleonic times”.
The analysis by the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre shows chief executives of FTSE 100 companies are paid an average of £898 per hour – 256 times what apprentices earn on the minimum wage.
Tim Roache, the general secretary of the GMB union, said the pay gap between bosses and workers was “simply obscene”.
“Does anyone really think these fat cats deserve 100 times more than the hard-working people who prop up their business empires?” he said. “Workers who have to scrimp and save to feed their families and put a roof over their head – and like most of Britain’s working population will now be feeling the pinch after the festive period?”
Roache said the prime minister had failed in her promise to tackle excessive executive pay: “Last year Theresa May broke her pledge to guarantee worker representation on company boards, a move which would have helped shed light on corporate excess and redress the balance towards fairer pay.”
O’Grady agreed that workers should be given seats on pay committees to “bring some common sense and fairness to boardroom pay”, and called for the minimum wage to be lifted to £10 an hour. The minimum wage for over-25s is set to rise from £7.50 to £7.83 on 01 April. Under-18s can be paid as little as £4.05 and apprentices £3.50.
The highest paid chief executive in the analysis, which is based on 2016 figures, was Sir Martin Sorrell, who was paid £48m by advertising firm WPP. In 2015 WPP paid Sorrell £70m. His reduced pay helped bring down the FTSE 100 chief executives’ median pay packages down from £3.97m in 2015 to £3.45m in 2016.
The title of highest paid listed company boss this year will almost certainly be Jeff Fairburn, the chief executive of housebuilder Persimmon, who is on track to collect a £110m bonus.
Stefan Stern, the director of the High Pay Centre think tank, said it was encouraging that remuneration committees had exercised “a tiny amount of restraint” on pay last year. “[But] there are still grossly excessive and unjustifiable gaps between the top and rest of the workforce,” he said.
Stern said the gap between bosses and workers pay had more than tripled in 20 years.
Peter Cheese, the chief executive of the CIPD, said the nation needed a “significant rethink on how and why we reward CEOs”. Cheese said bosses pay awards should more widely reflect the impacts of businesses on all stakeholders from employees to society more broadly.
Labour said the figures demonstrated how out of control inequality in Britain had become. Rebecca Long-Bailey, the shadow business secretary, said: “The next Labour government will tackle rampant pay inequality with a real living wage of at least £10 per hour, with an excessive pay levy and by rolling out maximum pay ratios of 20:1 in the public sector and in companies bidding for public contracts.”