UK firms are being urged to explain the level of executive pay after new research found top bosses receive about 117 times the annual wage of the average worker.
Chief executives of companies in the FTSE 100 need to work until just before 5pm today to make the same amount of money a typical full-time employee does in the entire year, according to the study.
The Chartered Institute of Personnel and Development (CIPD) and think tank the High Pay Centre (HPC) said their findings showed the average Footsie chief executive was paid £3.46 million in 2018, equivalent to £901.30 an hour.
The average full-time worker took home an annual salary of £29,559, equivalent to £14.37 an hour.
In their research findings report, CIPD and HPC said high pay would be a key issue in 2020 as this is the first year that publicly listed firms with more than 250 UK employees must disclose the ratio between chief executive pay and that of their average worker, and explain the reasons for their executive pay ratios.
The two organisations called on businesses not to treat the new reporting requirements as a “tick-box” exercise and to use it as an opportunity to fully explain chief executive pay levels.
CIPD chief executive Peter Cheese 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.”
HPC director Luke Hildyard added: “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 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.”
Business Secretary Andrea Leadsom said the new figures would be “eye-watering for the vast majority of hard-working people across the UK”.
Ms Leadsom added: “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.”
TUC General Secretary Frances O’Grady said: “This tells you everything
about how unfair our economy is.
“Every working person plays a part in creating Britain’s wealth but people at the top are taking more than their share.
“We need a real plan from the government to tackle excessive pay.
“Reporting on it is only the start – there should be seats for workers on pay committees and company boards to stop fat cats taking more than their fair share.”
GMB general secretary Tim Roache added: “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.”