Wage differentials in the UK

Research shows the ratio of Chief Executive pay ('remuneration') to average worker remuneration in the UK has increased significantly since 2012 (see Fig. 1). In 2021, Chief Executives at FTSE 100 firms in the UK earned 205 times more than a typical employee.

Fig. 1 Chief Executive-to-employee remuneration ratio (UK), 2012–2021

Source: High Pay Centre

Chief Executives earned an average of £4.9 million in 2021, a significant increase since 2020. In that year, the FTSE 100 stock market index, which shows changes in the share prices of top UK companies, also rose alongside executive compensation (see Fig. 2).

Fig. 2 Chief Executive remuneration and stock market performance (UK), 2012–2021

Source: High Pay Centre

This growth in Chief Executive remuneration has happened while wage growth for most UK workers has remained relatively low. To distract attention from their high earnings, some Chief Executives have taken voluntary pay cuts. However, this action is criticised because a large proportion of their total remuneration comes from share options (the right to buy shares at set prices) and bonuses. Other policies that may help reduce the remuneration gap between Chief Executives and typical employees have been suggested, including:

• reinstating higher top-band marginal income tax rates;
• linking corporation tax rates to the internal pay dispersion ratio of a firm;
• giving shareholders binding votes ('say on pay') regarding executive packages.

Society is increasingly recognising who the truly essential workers are. They harvest our crops, stock supermarket shelves, deliver parcels, and staff our health services. Yet they remain some of the lowest-paid workers in the country. In contrast, relatively non-essential support roles, in sectors like corporate entertainment, finance, and elite sports, are extremely highly rewarded.