These charts show how the richest are pulling away from the rest
Nice work if you can get it: FTSE 100 CEOs have seen huge pay increases Photo: AFP
A new report produced
by the TUC claims that we're in the middle of the worst pay squeeze
since the 1860s, with real wages falling for the seventh year in a row. Not
the best time for another report, by Incomes
Data Services, to show that FTSE 100 directors have received a bumper 21
per cent pay increase over the past year. While their actual salaries only
rose by 2.5 per cent, rising share prices and juicy bonuses saw their median
pay packet reach £2,433,000. The typical CEO now rakes in £3,344,000, or 120
times more than the average UK worker.
The chart below, taken from the IDS report, compares the wages of the
highest-paid director of each FTSE 100 company (which usually means the
chief executive) with the average UK salary. It shows how, since 2000,
bosses' salaries have increased almost six times more quickly than their
workers'. (Pay packets at smaller companies, in the FTSE 350, have also
risen much faster than ordinary wages, but not quite as spectacularly.)
Can such pay packets possibly be justified? Even for those of us on the
free-market end of the spectrum, it's very hard to see how. You can make the
argument that these executives are part of a global marketplace for talent,
that the international focus of the FTSE means it's relatively unmoored from
the UK economy per se, or that the companies themselves have become larger
and more profitable and their managers are reaping their just rewards.
But none of these arguments quite holds up. If you take the salary data for
those FTSE 100 chief execs, and ask a Bloomberg terminal for the total
revenues and profits of the companies they run over the past few years, you
see that CEO pay has massively outpaced anything with which it can possibly
be correlated - let alone the FTSE 100 Index itself, which is the blue line
on the bottom.
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