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There is something wrong with our society when reports on two consecutive days highlight the enormous gap between the rich and poor. Today’s Annual Survey of Hours and Earnings shows just how many young people are being paid less than the minimum wage. The total is a staggering 299,000 – or just over 1 per cent of all jobs in the UK.
At the same time, earnings for the rest of us (well, all bar some senior executives) rose much more slowly that the rate of inflation. In practice, the Office for National Statistics (ONS) found that the “median average gross weekly earnings” across the UK, full-time or part-time, hadn’t changed in the last year.
There was some good news, however. The pay gap between men and women narrowed slightly. Women’s annual earnings rose by almost 2 per cent to an average of £22,900. It means that the gender pay gap has fallen below 10 per cent for full-time workers, and that the pace of change has started to increase.
But the pay gap only reflects the “average”. Some female workers – non-teaching school assistants, for instance – remain some of the lowest paid in the country. And curiously, the gap widens again among the highest paid in the country. These figures from the ONS add fuel to the debate over the levels of executive pay.
The High Pay Commission’s report yesterday argued that some of the sums paid annually to senior executives were "corrosive" to the UK economy. The commission pointed out that there has been, over the last 30 years or more, an increasing disparity between what top executives earn and what the rest receive in their pay. It went so far as to claim that “high pay [was] creating inequalities last seen in the Victorian era”.
In a year-long inquiry, the commission found that top executives at a number of FTSE companies had seen their take-home pay rise by more than 4,000 per cent since the 1980s. The banks came in for particular criticism. For instance, the former Barclays chief executive, John Varley, was said to earn £4,365,636, which is 169 times more than the average worker in Britain today.
The commission also claims that the salary paid to the chief executive at Lloyds Bank, now partly owned by the taxpayer, had gone up by more than 3,000 per cent since 1980, to more than £2.5m. In both cases, the difference between the chief executive and the “average” bank employee had grown many times over, although both banks dispute the findings.
The business secretary, Vince Cable, said that these disparities in pay were not good for society. “It's not right,” he said, “that we have the situation that's been happening over the last decade where we have vast extreme awards paid on completely unrelated to the performance of companies. And that's not good for the consumers, it's not good for people who own the companies, it's not good for the people who work for them, and that's really got to be addressed.”
The findings led Deborah Hargreaves, who chaired the High Pay Commission, to say that there was “a crisis at the top of British business and it is deeply corrosive to our economy. When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality, it represents a deep malaise at the very top of our society.
“The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society – the top 0.1 per cent – continues to enjoy huge annual increases in pay awards. Everyone, including each of the main political parties, recognises there is a need to tackle top pay.”
It also prompted the leading employee engagement expert, Alan Crozier, to say that top earners were damaging the UK’s ability to weather current economic conditions by undermining the motivation of employees. “Engagement,” he said, “is the driver of performance and it is being sacrificed perhaps unconsciously by a few at the top.
“In today’s knowledge-based economy, businesses need employees’ cooperation, inspiration and ability to build relationships, but there’s precious little motivation in knowing that directors' pay has risen almost 50 per cent in a year – unrelated to performance – when pay increases are pegged at 3 per cent and inflation is rising.
“The old chestnut that you need to pay top-whack to retain top talent ignores the fact that top talent needs talent around them to deliver results. It beggars belief that directors are so oblivious to the consequences of allowing such disparity. Of course senior executives should be well rewarded, in line with their contribution and the internal relativities of their business. But if those funds are available for reward, surely they could be distributed more equitably.”
Clik here to view.
There is something wrong with our society when reports on two consecutive days highlight the enormous gap between the rich and poor. Today’s Annual Survey of Hours and Earnings shows just how many young people are being paid less than the minimum wage. The total is a staggering 299,000 – or just over 1 per cent of all jobs in the UK.
At the same time, earnings for the rest of us (well, all bar some senior executives) rose much more slowly that the rate of inflation. In practice, the Office for National Statistics (ONS) found that the “median average gross weekly earnings” across the UK, full-time or part-time, hadn’t changed in the last year.
There was some good news, however. The pay gap between men and women narrowed slightly. Women’s annual earnings rose by almost 2 per cent to an average of £22,900. It means that the gender pay gap has fallen below 10 per cent for full-time workers, and that the pace of change has started to increase.
But the pay gap only reflects the “average”. Some female workers – non-teaching school assistants, for instance – remain some of the lowest paid in the country. And curiously, the gap widens again among the highest paid in the country. These figures from the ONS add fuel to the debate over the levels of executive pay.
The High Pay Commission’s report yesterday argued that some of the sums paid annually to senior executives were "corrosive" to the UK economy. The commission pointed out that there has been, over the last 30 years or more, an increasing disparity between what top executives earn and what the rest receive in their pay. It went so far as to claim that “high pay [was] creating inequalities last seen in the Victorian era”.
In a year-long inquiry, the commission found that top executives at a number of FTSE companies had seen their take-home pay rise by more than 4,000 per cent since the 1980s. The banks came in for particular criticism. For instance, the former Barclays chief executive, John Varley, was said to earn £4,365,636, which is 169 times more than the average worker in Britain today.
The commission also claims that the salary paid to the chief executive at Lloyds Bank, now partly owned by the taxpayer, had gone up by more than 3,000 per cent since 1980, to more than £2.5m. In both cases, the difference between the chief executive and the “average” bank employee had grown many times over, although both banks dispute the findings.
The business secretary, Vince Cable, said that these disparities in pay were not good for society. “It's not right,” he said, “that we have the situation that's been happening over the last decade where we have vast extreme awards paid on completely unrelated to the performance of companies. And that's not good for the consumers, it's not good for people who own the companies, it's not good for the people who work for them, and that's really got to be addressed.”
The findings led Deborah Hargreaves, who chaired the High Pay Commission, to say that there was “a crisis at the top of British business and it is deeply corrosive to our economy. When pay for senior executives is set behind closed doors, does not reflect company success and is fuelling massive inequality, it represents a deep malaise at the very top of our society.
“The British people believe in fairness and, at a time of unparalleled austerity, one tiny section of society – the top 0.1 per cent – continues to enjoy huge annual increases in pay awards. Everyone, including each of the main political parties, recognises there is a need to tackle top pay.”
It also prompted the leading employee engagement expert, Alan Crozier, to say that top earners were damaging the UK’s ability to weather current economic conditions by undermining the motivation of employees. “Engagement,” he said, “is the driver of performance and it is being sacrificed perhaps unconsciously by a few at the top.
“In today’s knowledge-based economy, businesses need employees’ cooperation, inspiration and ability to build relationships, but there’s precious little motivation in knowing that directors' pay has risen almost 50 per cent in a year – unrelated to performance – when pay increases are pegged at 3 per cent and inflation is rising.
“The old chestnut that you need to pay top-whack to retain top talent ignores the fact that top talent needs talent around them to deliver results. It beggars belief that directors are so oblivious to the consequences of allowing such disparity. Of course senior executives should be well rewarded, in line with their contribution and the internal relativities of their business. But if those funds are available for reward, surely they could be distributed more equitably.”
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