Top bosses starting work on Thursday 2 January only needed to work for three days (33 hours) in order to make same amount of money that the typical full-time employee earns in an entire year.
Dubbed High Pay Day, the milestone moment took place this week on Monday 6 January. The calculation for High Pay Day is based on data and analysis by professional HR body the CIPD and independent think tank the High Pay Centre.
Their findings show that:
- Top bosses earn 117 times the annual pay of the average worker;
- In 2018 (latest available data), the average FTSE 100 CEO earned £3.46 million, equivalent to £901.30 an hour;
- The average (as defined by the median) full-time worker took home an annual salary of £29,559 in 2018, equivalent to £14.37 an hour.
The CIPD has warned that pay will 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 CEO pay and the pay of their average worker.
Under changes to the Companies Act (2006), firms must now provide their CEO pay ratio figures and a supporting narrative to explain them. The first round of reporting will be seen in annual reports published in 2020.
The CIPD and the High Pay Centre are calling on businesses not to treat the new reporting requirements as just a tick-box exercise. "This is the first year where businesses are really being held to account on executive pay," said Peter Cheese, chief executive at the CIPD.
"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. Expectations on businesses behaving and acting responsibly are rising, and greater transparency around how they are treating and managing all their people is a vital part of building long-term sustainability."
Luke Hildyard, director of the High Pay Centre, said: "How major employers distribute pay across different levels of the organisation plays an important role in determining living standards. 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 that 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."
Written by Rachel Miller.