The issue of high pay has come to fore in recent years as people have begun to speak out against the soaring sums of cash being doled out to the country’s well-heeled executives. According to the High Pay Centre, the average FTSE 100 CEO makes 183 times the average full-time worker's pay, fuelling ever-louder calls to bring executive remuneration back down to a sensible level.
The nation’s workers certainly aren’t happy. According to a report published by the Chartered Institute of Personnel and Development (CIPD) this morning, 71% of employees believe chief executives’ pay in the UK is too high, and 45% believe their own CEO is paid too much.
You might think that this antipathy has been driven by the sky-high pay of the FTSE 100’s top brass. Martin Sorrell’s £43m package is pretty eye-catching and even the median pay of a FTSE boss is a not-too-shabby £3.87m. But it’s actually public sector workers who are by far the most aggrieved about how much their bosses are raking in.
Just 38% of those working in the private sector think their own chief executive’s pay is ‘too high’ or ‘far too high’, compared to 62% (!) of public sector workers. Third sector staff aren’t happy about their bosses’ pay either – 46% think their CEO is paid too much. That might not come as a surprise; earlier this week a Times investigation revealed that more than 1,000 charity execs are on six-figure salaries, including 12 who are on more than £300,000 per year.
Regardless of where the blame lies, the clear message from the report is that ‘unfair’ levels of pay can be bad for business. Almost two thirds (59%) of workers said they felt demotivated by the high level of CEO pay and 55% said it was bad for firms’ reputations.
‘The growing disparity between pay at the high and lower ends of the pay scale for today’s workforce is leading to a real sense of unfairness which is impacting on employees’ motivation at work,’ said Charles Cotton, reward adviser at the CIPD. 'The message from employees to CEOs is clear: "The more you take, the less we’ll give."
‘At a time when the average employee has seen their salary increase by just a few percentage points over the last several years, we need to take a serious look at the issue of top executive reward.’ That might be true, but it’s not just the eye-watering salaries of the private sector that need to be kept in check.