The independent high pay commission, set up in November to investigate the ever-fattening pockets of our highest earners, found that the average annual salary of a FTSE-100 chief exec in 2010 was more than £3.7m. That’s a Dickensian 145 times greater than the national median full-time wage of £25.8k.And the commission says that at the current rate, pay for the top 0.1% of UK earners will rise from 5% to an estimated 14% of national income by 2030. By 2020 they’ll be earning a staggering 214 times the average.
Now, eyebrow-raising remuneration for the few might not be quite so eyebrow-raising if UK plc is storming ahead, since that means more in the pot for everyone to share. But it becomes hard to justify when most people are enduring a collapse in living standards, with wages stagnant, inflation on the up and public services being hammered. ‘Set against the tough spending measures and mixed company performance, we have to ask ourselves whether we are paying more and getting less,’ said Deborah Hargreaves, chair of the high pay commission.
Its findings are backed up by last week’s figures from the Institute for Fiscal Studies, which found that income among the top 1-2% of earners grew much faster during the Labour era than for the majority of workers. Meanwhile an ICM poll shows how poorly all this is sitting with the public: 72% of people think high pay makes Britain a grossly unequal place to live, while 73% say they have no faith in government or business to tackle excessive pay. And according to yet another poll, this time by the Institute for Public Policy Research, two thirds of people reckon the pay gap where they work is too wide.
We’re always wary about stigmatising high pay per se; in a competitive world, visionary leaders who can make their company outperform the market are worth their weight in gold. But the worry is that the link between performance and pay is getting weaker. And since today’s Britain is a much more open and egalitarian place than it was in Victorian times, it’s hard to imagine this kind of disparity being allowed to persist for long.