Today, dear readers, I returned to work after the Christmas holiday break drew to a close. It is indeed a painful, heartwenching experience when one must return to the office after enjoying some rest and relaxation, but alas, such is the world we live in that we must earn money through labour. But I digress.
I work part-time so that I may study my Masters part-time, a little routine I term ‘learn while you earn/earn while you learn’. It can be stressful and hectic, trying to balance my revision and reading alongside work, but so far I have been able to manage it.
I earn a modest salary which ensures I can afford to pay for my tuition, plus invest in textbooks, article subscriptions, and so on. I am fortunate to have a steady job and a stable income, especially as a recent graduate.
And then come days such as these, and I ask myself why I bother. No, not days when you must return back to work after a holiday. I am, of course, referring to the infamous ‘Fat Cat’ days.
It was estimated that the UK’s leading bosses made more money by lunchtime today than the typical UK worker will earn all year, per an analysis that exposes the gulf between executives and the rest of the workforce.
The Fat Cat Wednesday calculation assumes bosses started back at work after Christmas on 2nd 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.
The High Pay Centre calculated that the average FTSE 100 boss now earns more than £1,000 an hour, meaning they passed the UK average salary of £28,200 by around midday on Wednesday, 4th January 2017. The think tank said that after enjoying rapid earnings growth in recent years, leading bosses now typically earn 129 times more than their employees.
On “Fat Cat Wednesday”, campaigners took the opportunity to note that public anger with elites will only increase unless action is taken to tackle excess among executives at a time when pressures on household budgets are rising. Moreover, the rise in pay for FTSE 100 bosses is in stark contrast to the fortunes of average workers, who have seen their living standards stagnate and even decline as a result of slow earnings growth since the financial crisis.
The High Pay Centre said it hopes its stark findings will serve as a reminder to the Prime Minister to act on her promises to create an economy that works for everyone. In the political fallout from last year’s Brexit vote which saw assume the leadership of the Conservative party and consequently become Prime Minister, May tapped into voters’ frustrations over inequality. She pledged to focus on reforming capitalism. Fat Cat Wednesday has highlighted the stark inequalities which persist in the current system, proving the Prime Minister has a job on her hands to fulfill her promise.
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,”
“We hope the government will recognise that further reform to pay practices are needed if this gap is to be closed.”
He added that providing worker represention on company remuneration committees when executive pay is discussed and finalised, something May originally proposed but has recently softened her approach on, would help restrain executive rewards.
It appears the increase in executive pay in recent years appears to have been driven by “performance-related” awards, but new research published last week disparidged this link between pay and performance, suggesting it had been negligible.
The Guardian notes that the Equality Trust has also worked to highlight the sheer gap between UK executives and key workers. Using High Pay Centre figures for 2015, it found average annual pay for a FTSE 100 boss was £5.48m, or 401 times that of a minimum wage worker. (Gulp.) 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 concern is that this might be set to continue. This is because despite continued talk of reforming executive pay, the gulf between top bosses and average workers was likely to widen this year: employers will continue to hold off pay rises due to Brexit uncertainty, and cost pressures from a weak pound. In addition, the pound sterling’s fall since the EU referendum has raised import costs, and is expected to stoke inflation. The consequence of this is that those workers who do get a pay rise are still likely to be worse off in real terms.
Ministers are apparently considering plans to make firms disclose the pay gap between their senior executives and average workers, presumably in a ‘name and shame’ move. But this is not enough. There must be genuine, extensive reform in executive pay practices, and urgently. The floated figures today are shameful. No one should earn the average annual salary of a worker in a few days. No one.