McDonnell labels pay disparity between bosses and workers “grotesque”
A report from the CIPD, the professional body for HR, has found that the average salary for chief executives is 117 times higher than the average pay of a full-time worker in the UK.
The CIPD, alongside the High Pay Centre think tank, analyse executive pay every year.
They found that the average salary for a chief executive of one of the UK’s top 100 companies earns £3.5 million every year. In contrast, the average full-time worker in the UK earns £29,574.
Responding to this report, John McDonnell, the shadow chancellor, described this disparity as a symptom of the “grotesque levels of inequality we see today.”
Arguing that this difference was caused by “years of believing the market knows best”, McDonnell said: “In the same year that the United Nations rapporteur found that UK government policies have caused misery and hardship for millions, pay at the top continues to soar beyond anything most people could ever dream of earning.
“Labour will tackle the scourge of high pay while introducing a £10 Real Living Wage as part of our pledge to end in-work poverty in a Parliament.”
Although the average salary for chief executives has fallen by 13 per cent between 2017 and 2018, the gap between bosses and workers remains wide.
Peter Cheese, the chief executive of the CIPD, described the gap as “unacceptably wide” and said: “We must question if CEOs are overly focused on financial measures and are being incentivised to keep share prices high rather than focusing on the long-term health of their business.”
The CIPD and High Pay Centre made a number of recommendations to address this issue.
Among these, they called for the disclosure of the pay for the top 1 per cent of earners, the linking of chief executive pay to financial and non-financial measures of performance and a consideration of wider workforce reward practices, including an understanding of organisational culture, fairness and investment in people.