FTSE 100 chief executives will have earned the same amount of money in the first three working days of 2020 as the average employee will earn in the entire year, research has found.
According to figures from the CIPD and the High Pay Centre, the average FTSE 100 boss earned £3.46m in 2018, equivalent to £901 an hour and 117 times the salary of the average worker.
By comparison, the median full-time salary was £29,559, equivalent to £14.37 an hour.
- UK slips further down global gender equality ranking
- Most CEOs have no financial incentives around sustainability, research shows
- Is your business ready to be transparent about CEO pay?
This means that FTSE 100 bosses who began the working year on Thursday 2 January will have earned more than the average full-time wage by 5pm today.
Business secretary Andrea Leadsom said today’s figures were “eye-watering for the vast majority of hard-working people across the UK”.
“The numbers are better than they were… but the situation is still concerning, especially in those cases where executives have been rewarded despite failing their employees and customers,” Leadsom said.
Get more HR and employment law news like this delivered straight to your inbox every day – sign up to People Management’s PM Daily newsletter
The figures come as publicly listed companies with more than 250 UK employees will, for the first time, be forced to disclose the ratio between their CEO’s pay and that of their average worker as part of their annual reports, as well as a narrative explaining their figures. The first round of such reporting will be seen in reports published this year.
Peter Cheese, chief executive of the CIPD, called on employers to consider pay ratio reporting as an opportunity to build trust with employees and other stakeholders, and not just another tick-box exercise.
“Pay ratio reporting will rightly increase scrutiny on pay and reward practices, but reporting the numbers is just the start,” he said. “We need businesses to step up and justify very high levels of pay for top executives, particularly in relation to how the rest of the workforce is being rewarded.
“Expectations on businesses behaving and acting responsibly are rising, and greater transparency around how they are treating and managing all their people is a vital part of building long-term sustainability.”
Luke Hildyard, director of the High Pay Centre, added that how employers choose to distribute pay across different levels of their organisations played an important role in living standards.
“CEOs are paid extraordinarily highly compared to the wider workforce, helping to make the UK one of the most unequal countries in Europe.” Hildyard said. “New reporting requirements mean that publicly listed firms will have to be more transparent over how and why they reward their CEOs relative to the wider workforce. Hopefully this will lead to a more sensible balance between those at the top and everyone else.”
The CIPD and High Pay Centre said it was important that, in their narratives, employers discussed the reasons for any year-on-year changes to executive pay ratios and whether or not the organisation believes its median ratio was consistent with wider policies on pay.