Pay gap disparities are not new to most. But new research shows FTSE 100 chief executives in Britain earn more than the average worker’s salary in the first three working days of the year. By Wednesday afternoon, bosses would have made more than the average £31,461 salary full-time workers earn in a year.
High Pay Centre research highlights the huge gap in earnings. In the UK, chief executive pay is around 120 times that of a typical worker. The gap has increased in the past few decades, although bosses’ pay remained flat last year. It took 34 hours for FTSE 100 bosses to beat the median annual wage this year compared to 33 in 2020.
The High Pay Centre’s model assumes a demanding workload for CEOs with the calculations based on a 12-hour workday. But it still equates to an hourly wage of £941! On minimum wage, it would take 212 years for the average UK worker to earn what the average CEO does in just one year!
Luke Hildyard, the director of the High Pay Centre, said there are various factors behind the increasing pay gap. These include the considerable role the finance sector plays in the economy, the shift to outsourcing low-paid work, and the falling influence of the trade unions.
The organisation also warns that the data behind its current model doesn’t fully reflect the impact of the Covid-19 pandemic. The pandemic has led to increasing unemployment, and research suggests it could cut average pay as well. The Resolution Foundation said average UK wages could be £1,200 a year lower than pre-virus predictions.
Need for a debate on income inequality
Some analysts criticised the findings. Daniel Pryor, head of programmes at the Adam Smith Institute, told the BBC how vital 'good management' is for the average worker. He went on to say, "It makes sense for firms to open their wallets to attract the best talent," because good leadership can keep the ship steady, impacting profitability and growth.
The High Pay Centre says the huge disparities should prompt an open debate. Hildyard called for discussion around the impact “high levels of inequality can have on social cohesion, crime, and public health and wellbeing.”
During the pandemic, the country has been kept running by low-wage workers such as carers, shops assistants and delivery drivers. Not only are workers earning much less than their bosses, but research reported by The Guardian shows they also face the most health risks from the pandemic.
Calls for an open conversation about wage disparities and fairness continue to grow louder.