Britain's leading bosses earn 'the average UK salary in three days'
6 January 2020, 11:37 | Updated: 6 January 2020, 11:59
Firms are being forced to defend themselves after it was revealed that the average FTSE 100 boss earns 117 times the average UK salary.
CEOs at some of Britain's biggest companies only need to work until just before 5pm on 6 January to earn the average salary of their employees.
It was found that the average CEO was paid £3.46 million in 2018, equivalent to £901.30 an hour.
In comparison, the average full-time worker took home an annual salary of £29,559, equivalent to £14.37 an hour.
The Chartered Institute of Personnel and Development and tank the High Pay Centre said its findings revealed that high pay will be a key issue in 2020 as this is the first year that firms will have to disclose the ratio between chief executive pay and that of their average worker and explain the reasons behind this.
Peter Cheese, chief executive at the CIPD, said: "This is the first year where businesses are really being held to account on executive pay. Pay ratio reporting will rightly increase scrutiny on pay and reward practices, but reporting the numbers is just the start.
"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.
"Greater fairness and openness in pay is essential in building trust, amongst employees as well as external stakeholders and investors."
Business Secretary Andrea Leadsom said: "Today's figures will be eye-watering for the vast majority of hard-working people across the UK.
"The numbers are better than they were - down a quarter since 2012 and 13% on average since last year - but the situation is still concerning, especially in those cases where executives have been rewarded despite failing their employees and customers.
"Our world-leading legislation shines a light on excessive pay and forces companies to disclose and explain the pay of their CEOs, with new reforms this year to increase transparency around how directors meet their responsibilities and future plans to ensure companies cannot shy away from required reporting on executive pay."
Luke Hildyard, director of the High Pay Centre, said: "CEOs are paid extraordinarily highly compared to the wider workforce, helping to make the UK one of the most unequal countries in Europe.
"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."
Tim Roache, GMB General Secretary, said: "It should be a source of national shame that in just a handful of days, company fat cats will have made more money than the typical UK full-time worker will earn in the entire year."
But the director-general at the Institute of Economic Affairs, Mark Littlewood, said: "Comparing CEO salaries to the average salary serves to stoke public hostility, and misleads workers to believe that cuts at the top end will directly translate to top-ups at the bottom.
"In today's globalised economy, the role of the chief executive has become significantly more important; the successes, failures and sudden departures of CEOs can increase or diminish a company's worth by billions of pounds - which can also result in the gain or loss of thousands of jobs.
"By continuing our obsession with high pay, we dismiss the achievements of successful CEOs which benefit employees and customers alike; and we distract ourselves from tackling the critical issue of low pay and the cost of living crisis."
John McDonnell MP, Labour’s Shadow Chancellor, said the figures showed the "grotesque levels of inequality" in society.
He told reporters: “These figures demonstrate the grotesque levels of inequality within our economy.
"There is understandably a growing level of anger at this unjust distribution of rewards within our society. Lessons clearly haven't been learnt.”