The TUC has claimed that it took the the UK’s highest paid chief executive (CEO), Martin Sorrell, less than 45 minutes to earn what an average UK worker earns over an entire year, following its analysis published at its annual congress held this week.
Sorrell, the CEO of WPP, was paid £70 million in 2015, which according to the TUC’s study of the pay of FTSE 100 top directors, is more than 2,500 times the average UK salary of £27,645. The TUC has calculated that that Sorrell’s salary in 2015 was the equivalent of £38,437 per hour. His annual salary could have paid the wages for 2,218 nurses, 1,920 paramedics, or 4,479 teaching assistants, the TUC estimates.
The TUC’s analysis also revealed that the median total pay (excluding pensions) of top FTSE 100 directors increased by 47% between 2010 and 2015, to £3.4 million. By contrast, average wages for workers rose just 7% over the same period and are still way less in real terms as compared to before the financial crash of 2008. The rise in director earnings has meant that in 2010, the average FTSE 100 boss earned 89 times the average full-time salary. By 2015, this had risen to 123 times.
The gap between low-paid workers and top directors is even starker, the TUC said claiming that the average FTSE 100 top director earned a year’s worth of the minimum wage in a day.
The TUC said the findings of its report highlighted why the prime minister, Theresa May, needed to deliver on her promise to tackle executive pay, by putting workers on company boards and remuneration committees. The TUC also wanted the government to compel firms to disclose full information about employee pay across the company, and the ratio between the CEO’s pay and the average worker in the business.
Currently, however, employees and investors do not have access to robust information that would allow them to assess the gap between top directors and staff in the rest of their company, the TUC said despite academic research showing that companies with high pay inequality between bosses and workers perform less well.
TUC General Secretary Frances O’Grady said, “While millions of UK families have seen their living standards squeezed, directors’ pay has reached stratospheric levels. These shocking new figures show why Theresa May must deliver on her promise to put workers on company boards.
“This would inject a much-needed dose of reality into boardrooms and help put the brakes on the multi-million pay packages that have damaged the reputation of corporate Britain. Other European countries already require workers on boards, so UK firms have nothing to fear. It improves performance and contributes to companies’ long-term success.”
In her speech to the TUC Congress O’Grady highlighted the role of the trade unions in campaigning for better worker rights at Sports Direct indicating that it showed the benefits for everyone of trade union membership.
“After months and months of Unite’s brilliant patient organising; Sparking public outrage about the disgraceful working practices at Shirebrook. And solidarity in action – unions using our shareholder power at the Annual General Meeting.
We got a result. For retail staff, an end to zero hours. No more six strikes and out. And, at long last, the chance to get agency workers onto permanent contracts. A proper win for workers.
Of course, it’s not over yet. And Sports Direct may be in the spotlight now. But lets be clear they are not the only one. There are other big companies that bring shame on our country.”
Meanwhile the TUC also lent its backing to a call from anti-poverty charity Oxfam, for employee representation on company boards. The prime minister, Theresa May, has suggested this approach to improve the corporate governance of companies. Oxfam believes employee representation could help to tackle inequality within the UK.
In its report, How to Close Great Britain’s Great Divide: The business of tackling inequality, Oxfam said, “Many companies have driven up inequality by working for the benefit of their senior executives and shareholders to the exclusion of their staff and broader society.” Oxfam also called for greater pay disclosure suggesting that companies should publish data on the ratio of highest to median pay, and aim to meet the ratio of 20:1 and argued for further government action to tackle aggressive tax avoidance and to put an end to the era of UK-linked tax havens.
Last Updated: 18 September 2016