British CEO-Worker Pay Gap Widens

But American executives outearn average workers by even more

By Aliah D. Wright Sep 23, 2014
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U.​S. chief executive officers aren’t the only ones who earn far more than average blokes—British CEOs do, too.

According to a recent analysis by the independent think tank High Pay Centre, a British CEO can earn more in three days than one of his employees can make in a whole year. In fact, over the course of the last decade, the rate of disparity has increased so much that a CEO across the pond can get paid four times as much in a year as some employees will earn over the course of their entire lives.

Since 2013, according to the analysis, top executives at British organizations made 130 times more than the average employee—in 1998, that amount was just 47 times more. But that’s still not as much as American chief executives take home. In the U.S., CEOs are paid 300 times more on average than the average employee.

According to a report by the AFL-CIO, in 2013 the CEO-to-worker pay ratio was 331:1, and the CEO-to-minimum-wage-worker pay ratio was 774:1.

But Is It Fair?

“America is supposed to be the land of opportunity, a country where hard work and playing by the rules would provide working families a middle-class standard of living,” according to the AFL-CIO report, Executive PayWatch: High-Paid CEOs and the Low-Wage Economy.

“But in recent decades, corporate CEOs have been taking a greater share of the economic pie while wages have stagnated and unemployment remains high.”

In Britain, the High Pay Centre reports, many workers have been suffering economically since wages have failed to keep in step with inflation since early 2010.

The High Pay Centre, which advocates for pay equality, stated in its analysis that “the figures illustrate the dramatic rise in executive pay in relation to most U.K. workers over the past three decades.” 

“While government figures confirm that wages for ordinary workers keep falling, it’s clear that not everyone is feeling the pain,” High Pay Centre Director Deborah Hargreaves stated in a news release. 

“When bosses make hundreds of times as much money as the rest of the workforce, it creates a deep sense of unfairness.”

She added, “The only reason why their pay has increased so rapidly compared to their employees is that they are able to get away with it. The government needs to take more radical action on top pay to deliver a fair economy that ordinary people can have faith in.”

In its analysis, the High Pay Centre compared income from the Financial Times Stock Exchange’s FTSE 100 chief executives, as recorded by companies in their annual reports, to figures for the average pay at each company, which was provided by Pensions Investment Research Consultants (PIRC), in order to calculate the ratios.

To further illustrate the difference, the High Pay Centre pointed out that the highest pay gap was at WPP, a large communications services group employing 179,000 people in 110 countries. “WPP CEO Martin Sorrell took home a pay package nearly 800 times bigger than his employees, while [retailer] Next boss Lord Wolfson was awarded pay worth 459 times as much as his average employee, but [he] subsequently chose to distribute his bonus to staff,” the news release said. 

Aliah D. Wright is an online editor/manager for SHRM.

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