Could you manage on £4.2 million a year?
In an earlier posting, I invited you to check your income against the average for the UK, and a range of other countries around the world. I doubt whether you earn as much as the chief executive of a top British company. The average annual pay of a FTSE 100 boss now stands at £4.2 million, according the employment research group Incomes Data Services.
How can this happen? According to a new report from the High Pay Centre, it is because the remuneration committees of these companies are full of current or former company bosses who are busy awarding each other outrageous pay packages. The report reveals that 46% of people sitting on remuneration committees are current or former lead executives.
I am Chair of a Remuneration Committee of an organisation which is currently debating whether we can afford to give staff their first cost of living pay increase in three years. Meanwhile senior levels of the private sector are making a mockery of the Government’s assertion that “we’re all in this together”.
Of course, people with special skills and responsibilities deserve to be paid more than others, but £4.2 million is 170 times the UK average salary. Does anyone really deserve or need such a scale of remuneration?
Does it matter that the UK – like the USA – has such massive differentials in pay which are growing wider all the time? There is an impressive body of research that suggests that nations with wide income differentials perform much worse on a whole range of social incomes than countries – like the Scandinavian nations – with a narrower range of incomes. I recommend the examination of this thesis in the book “The Spirit Level” [my review here].