Britain’s best-paid bosses will make more by midday Wednesday than workers will all year

PUBLISHED : Wednesday, 04 January, 2017, 12:35pm
UPDATED : Wednesday, 04 January, 2017, 9:15pm

The UK’s top bosses will have made more money by lunchtime on Wednesday than the typical UK worker will earn all year, according to an analysis that exposes the gulf between executives and the rest of the workforce.

On “Fat Cat Wednesday” campaigners say that public anger with elites will intensify unless action is taken to tackle excess among executives at a time when pressures on household budgets are rising .

The High Pay Centre calculated that the average FTSE 100 boss now earns more than £1,000 (US$1,225) an hour, meaning they will pass the UK average salary of £28,200 by around midday on Wednesday. The thinktank said that after enjoying rapid earnings growth in recent years, leading bosses now typically earn 129 times more than their employees.

It hopes its stark findings will act as a spur to the prime minister, Theresa May, to act on her promises to create an economy that works for everyone. In the political fallout from last year’s Brexit vote that catapulted her to power, May tapped into voters’ frustrations over inequality and since being made prime minister she has vowed to reform capitalism.

Stefan Stern, the head of the High Pay Centre, said forcing companies to publish pay ratios would be a good start.

“Our new year calculation is not designed to make the return to work harder than it already is. But ‘Fat Cat Wednesday’ is an important reminder of the continuing problem of the unfair pay gap in the UK,” he said.

“We hope the government will recognise that further reform to pay practices are needed if this gap is to be closed.”

He said giving workers a seat at the table when pay is set, something May aproposed but has recently softened her approach on, would help restrain executive rewards.

The rise in pay for FTSE 100 bosses such as Sir Martin Sorrell of the advertising company WPP and Bob Dudley of BP is in stark contrast to the fortunes of average workers, who have seen their living standards stagnate as a result of slow earnings growth since the financial crisis.

Frances O’Grady, the TUC general secretary, said the prime minister must stick to her commitment to put workers on boards.

Responding to the High Pay Centre analysis, she said: “Working people deserve a fair share of the wealth they help create. But while the pay of top executives has been rocketing up, the average weekly wage is still worth less than it was nine years ago.”

Campaigners at the Equality Trust highlighted the gulf between UK executives and key workers. Using High Pay Centre figures for 2015, it found average annual pay for a FTSE 100 boss was £5.48million, or 401 times that of a minimum wage worker. It was also 172 times more than a nurse’s pay and 145 times more than a teacher’s.

The trust’s executive director, Wanda Wyporska, said: “Bosses continue to rake in millions even when they fail, but those who care for us, protect us and teach our children are left struggling to get by. It’s clear our priorities are all wrong.”

The Fat Cat Wednesday calculation assumes bosses started back at work after Christmas on 2 January and is based on median FTSE 100 chief executive pay of £3.97m in 2015 – up from £3.87m in 2014.

The hourly pay rate of £1,009 is calculated on the assumption that FTSE bosses work 12 hours a day, including three out of every four weekends, and take fewer than 10 days holiday a year. The “national living wage” is £7.20 an hour for over-25s.

Stern said the big increase in executive pay in recent years appears to have been driven by “performance-related” awards, but highlighted new research published last week that poured cold water on the link between pay and performance, suggesting it had been negligible .