Chief Executives getting paid 143 times more than the average employee ñ Government action needed to combat exponentially growing pay gap
Britainís highest earning head honchos appear to be revelling in the economyís newfound era of growth, as a new study undertaken by the High Pay Centre reveals that the bosses of Britainís 100 leading companies are raking in an average 143 times their employeesí salary.
There have been undertones of disenchantment rippling through society in recent times at the perceived disparity between the salaries of CEOs and their staff, and this data confirms what has been suspected for a long time; the pay gap is exponentially widening.
BUSINESSES WITH DEEPEST IMBALANCES
The gap between CEO and an average employee is at its broadest at Rangold Resources, a gold mining business which operates primarily in Mali, but has head offices in London. CEO, Mark Bristow, took home a cool £4.4m in 2013, which amounts to 1500 times that of an average employeesí salary at Rangold Resources ñ many of whom toil away in the Malian mines.
The High Pay Centre also denounced WPP, the advertising and PR giants as their chief executive, Sir Martin Sorrell, pocketed £30m last year which transpired to be 780 times the amount earned by his average worker.
Lord Wolfsonís decision to relinquish a £3.8m bonus so that it could be divided out amongst his company, the high street retailer Nextís, staff. The generosity which outwardly accompanies such a move could, in usual circumstances, be lauded. However when you juxtapose Wolfsonís yearly paycheque of 4.6m with his staffís average yearly salary of £10,000, the thought of not splitting an extra 3.8m amongst the masses would not only indicate a rapacious appetite for self-indulgence on the part of Wolfson, but it would expose a selfishness not befitting of anyone who purports to call themselves leader of a company or otherwise.
These businesses are just a few of the plethora of companies perpetuating cheap labour protocols which are leading to low-income households struggling with rising bills, and the many, much talked about ramifications of falling wages in real terms, especially for young people.
A spokesman for the Department for Business, Innovation and Skills said: "The government has introduced comprehensive reforms to give shareholders more powers in order to restore the link between top pay and performance, which in recent years has become excessive and increasingly disconnected. "In October 2013 new laws reforming the governance of top pay came into force, boosting transparency by arming shareholders with more information and giving them the power to hold companies to account. "Business secretary Vince Cable also wrote to all the members of the remuneration committees back in April urging restraint, and while we will need to wait until the end of the season before we can reflect on the full impact of these actions, many firms have already seen top pay voted down."
The High Pay Centreís (HPC) study concludes that the gap between CEO and average employee is widening exponentially. This perspective is also adopted by the Manifest/MM&K, with their findings showing that the average CEO of a top 100 listed company had a salary of £4.7m in 2013, a £0.6m increase on the previous year. The average employee of a top 100 company earnt roughly £33,000 a year. "When bosses make hundreds of times as much money as the rest of the workforce, it creates a deep sense of unfairness," said High Pay Centre director, Deborah Hargreaves. "Britain's executives haven't got so much better over the past two decades. The only reason why their pay has increased so rapidly compared to their employees is that they are able to get away with it.
"The government needs to take more radical action on top pay to deliver a fair economy that ordinary people can have faith in. "Bosses of the 100 companies with the highest levels of market capitalisation were paid an estimated 174 times more than UK average earnings, which stood at £27,000 for 2013.
The significance of contract security organisation, G4S, entry into the FTSE 100 on average wages is irrefutable. Salaries were so staggeringly small at G4S that the average yearly earnings for all companies in the FTSE 100 plunged from £31,000 to £26,000.
Recent figures from the Office for National Statistics showing that despite falling levels of unemployment, wages fell for the first time since 2009ís financial crisis in the second quarter of this year. There has been clamour from campaigners across the UK for the government to show more strength in their efforts when tackling the disparity between the FTSE 100ís bossesí yearly pay and that of their staff.
Their opinion is clear; 100 men do not deserve to be have such disproportionately weighted salaries whilst their workforce, numbering 30 million, are struggling to tackle essentials such as mortgage repayments and rising bills.
Reformatory measures include:
ï A legally binding goal to ensure reduction in pay discrimination
ï The implementation of a maximum pay ratio ( e.g. TSBís fixed ratio of 65:1)
ï Workers to be placed on company boards
At present, Vince Cable compelled companies to release a yearly report which reveals exactly how much their top executives are paid on an annual basis, instilling shareholders with greater voting power on salaries.
However, the High Pay Centreís study shows that this move ought to act as a mere precursor to a thorough government crackdown on the exponentially widening gap between FTSE 100 CEOs and their staffsí wages.