The bosses of Britain’s biggest companies will have made more money in 2024 by Thursday lunchtime than the average UK worker will earn in the entire year, according to analysis of vast pay gaps amid strike action and the cost of living crisis.
The High Pay Centre, a thinktank that campaigns for fairer pay for workers, said that by 1pm on the third working day of the year, a FTSE 100 chief executive will have been paid more on an hourly basis than a UK worker’s annual salary of £34,963, based on median average remuneration figures for both groups.
Paul Nowak, the general secretary of the TUC, the umbrella body for UK trade unions, said: “While working people have been forced to suffer the longest wage squeeze in modern history, City bosses have been allowed to pocket bumper rises and bankers have been given unlimited bonuses.”
Nowak blamed politicians for allowing the gap between bosses’ and workers’ pay to increase. “The Conservatives are presiding over – and enabling – obscene levels of pay inequality,” he said. “It doesn’t have to be this way. We need an economy that rewards work – not just wealth.
“That means putting workers on company boards to inject some much-needed common sense into boardrooms. It means taxing wealth fairly. And it means a government that is willing to work with unions and employers to drive up living standards for all.”
The average pay of CEOs has increased by 9.5% since March 2023, while workers’ median pay has increased by 6%. The average pay of FTSE 100 CEOs dropped slightly during the pandemic, but has since increased by about a quarter.
Some City figures have called for UK CEOs to be given big uplifts in pay in order to compete with the amounts paid to the bosses of US firms. Legal & General Investment Management, one of the largest UK pension and insurance firms, last month called for “necessary flexibility” in pay in order to attract the best talent with “remunerations structures that are more closely aligned to US-style pay”.
The High Pay Centre also calculated how long it would take for other top earners to surpass the median UK worker’s full-time earnings:
Other FTSE 350 executives (comprising FTSE 100 executives other than the CEO, plus CEOs and other executives of FTSE 250 companies) earn an average of £1.3m, so would only need to work until 10 January for their pay to overtake the average worker.
Partners at so-called “magic circle” law firms earn an average of £1.9m, so would need to work until 8 January to do the same.
Partners at the “big four” accountancy firms have an average pay of £870,000, so would need to work until 16 January.
Top bankers (so-called “material risk takers”) at the UK’s five biggest banks earn £807,000 on average, and will also overtake average workers by 16 January.
Everyone in the top 1% of full-time UK earners earns at least £145,000, so will overtake average median full-time worker by 29 March.
Last year the government scrapped an EU rule capping the bonuses of bankers at 100% of salary, a measure that had been introduced in 2014 with the aim of avoiding another banking crisis.
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Luke Hildyard, the director of the High Pay Centre, said: “Lobbyists for big business and the financial services industry spent much of 2023 arguing that top earners in Britain aren’t paid enough and that we are too concerned with gaps between the super-rich and everybody else. They think that economic success is created by a tiny number of people at the top and that everybody else has very little to contribute.
“When politicians listen to these misguided views, it’s unsurprising that we end up with massive inequality, and stagnating living standards for the majority of the population.”
Laurence Turner, the GMB union’s head of research and policy, said: “The widening pay inequality at work is bad for businesses and bad for the economy.
“Instead, of channelling profits to those at the top, we need a sustainable recovery with more money in working people’s pockets.”