It is becoming increasingly difficult to claim that the UK's economic model works for everyone. Pay for top executives has soared to nearly £5 million a year, up from 40 or so times the average worker in the late 1990s to over 150 times today. Little progress has been made in closing the yawning gap between rich and poor that opened up in the 1980s. The UK is now far more unequal than other advanced European economies.
As our inequality briefing video shows, if total incomes in this country remained the same but were divided as equally between the richest 1% and the remaining 99% as they are in the Netherlands or Denmark, the 99% would have roughly £3,000 extra per household every year.
Over the past year, we have seen some good progress in respect of policies designed to tackle this problem. The Government has committed to introducing measures advocated by the High Pay Centre including the publication of pay ratios between CEOs and their workers, and representation for workers on company boards.
However, these changes have not come without a struggle. The risk remains that they will be watered down or inadequately implemented. Furthermore, these two flagship policies alone will not be enough to deliver an economy that rewards everybody fairly and proportionately to their needs and the work that they do.
Over the coming weeks, months and years, the voice of the High Pay Centre will be more important than ever. We will continue to scrutinise the pay practices and governance of leading companies and institutions, while also monitoring the implementation of pay ratios and workers on boards, and making the case for other measures to deliver a fairer, more prosperous economy.
Luke Hildyard, April 2018
Since 1 January 2020 the average FTSE 100 CEO has earned:
Income inequality in the UK
Wealth inequality in the UK
- Conditions are critical: publicly-funded bail-outs for private companies
Government bail-outs of large businesses affected by the coronavirus must include social and environmental conditions including fair pay, fair tax contributions and worker representation on company boards
- Purpose Beyond Profit: Where Next for Business?
WATCH IN FULL: an expert panel discuss the future of business and what action is needed to tackle climate change and reduce economic inequality
- Billionaires and poverty should not coexist
It's ludicrous to suggest that we need billionaires to incentivise work and wealth creation.