Real wages have still not recovered to their pre-2008 levels, while chief executive pay (CEO) has seen a dramatic rise in recent years, according to the Chartered Institute of Personnel and Development (CIPD).
The CIPD, in association with the High Pay Centre, has today (January 4) revealed its “Fat Cat Friday” research for 2019 executive pay.
The research found the average FTSE 100 CEO only needs to work until 1pm today to earn the same amount as the average full-time worker in the UK.
It also revealed CEOs of leading UK companies are paid 133 times more than the average worker. The average FTSE 100 CEO is paid £1,020 per hour and £3.926m a year, an increase of 11 percent on the previous year.
To help combat this pay gap, The Companies (Miscellaneous Reporting) Regulations 2018 came into force on January 1 2019 and will require listed companies, with more than 250 employees, to report their CEO/worker ratios along with other employee engagement information.
The CIPD said its research shows the current structures in many organisations are not fit to meet these new requirements and are failing. Therefore, it’s calling for company boards to remodel their remuneration committees to become new People and Culture Committees (PACCs).
The institute said these new committees would have a wider remit, which would see them draw heavily on the expertise of the people profession. It said they’d be responsible for ensuring that reward practices incentivise behaviours that are in the long-term interests of individuals, businesses and the societies they operate in, and that organisational culture more broadly reflects the company’s core purpose.
Over the coming year, the CIPD and High Pay Centre will be calling for boards, shareholders and policy makers to make this change.