More pay clarity call

It takes WPP CEO Martin Sorrell — the UK’s highest paid boss — less than 45 minutes to take home what an average British worker earns in an entire year.

This fact was among the shocking findings in a new TUC analysis singling out ‘stratospheric’ executive pay as a main driver of inequality in the UK which must be curbed.

The analysis comes ahead of the TUC’s annual conference which started today (September 11) and will call for jobs, rights and investment for all.

‘Fat cat’ pay of top directors has grown exponentially even as working people’s living standards have stagnated under years of depressed wages — in the past five years alone, median total pay (excluding pensions) of FTSE 100 executives has skyrocketed by nearly 50 per cent to £3.4m.

Most lavishly paid among these bosses last year was Sorrell, who took home ÂŁ70m, which amounted to 2,500 times that of the average UK annual full-time salary of only ÂŁ27,645.

The TUC study highlighted that Sorrell’s salary in 2015 would have been enough to pay for the wages of more than 2,000 nurses, nearly 4,500 teaching assistants and 1,920 paramedics.

Other FTSE 100 bosses living it up on runaway pay last year include Berkley Group Holdings boss Tony Pidgely, who earned in excess of ÂŁ23m, Sky broadcasting giant chief Jeremy Darroch, who raked in nearly ÂŁ17m and Shire head Flemming Ornskov, who took home ÂŁ15m.

Not only is executive pay skyrocketing but the pay gap between workers and their bosses is also becoming ever more cavernous with each successive year. In 2010, an FTSE 100 chief earned 89 times that of the average worker but only five years later, this has increased to 123 times.

Bad for business

The TUC noted that not only is this pay disparity deeply unfair, it’s bad for business, too — academic research has indicated that companies with wider pay gaps have poorer overall performance.

TUC general secretary Frances O’Grady said that these shocking new figures “show why Theresa May must deliver on her promise to put workers on company boards.

“This would inject a much-needed dose of reality into boardrooms and help put the brakes on the multi-million pay packages that have damaged the reputation of corporate Britain,” she noted.

“Other European countries already require workers on boards, so UK firms have nothing to fear. It improves performance and contributes to companies’ long-term success.”

The TUC has also called for the government to compel firms to disclose full information about employee pay across the company, and the ratio between the CEO’s pay and the average worker in the business.

The call comes as a new research has shown that enhanced pay disparity reporting requirements first introduced by the government in 2013 have done nothing to help curb executive pay.

The regulations require large and medium-sized public companies in the UK to publish comparative information about bosses’ and employees’ pay, but a study carried out by the University of Cambridge found that in practice companies engaged in “opportunistic reporting for the sake of reputation management”.

That’s because companies have been given huge latitude by the government in reporting pay disparities. As a result, many companies have only reported, for example, employee pay in one geographical area such as London or have only reported managerial pay which can effectively help obscure any existing pay gaps between the general workforce and top bosses.

Unite assistant general secretary Steve Turner welcomed the TUC’s call for greater, more meaningful pay transparency requirements as well as worker representation on company boards. But he emphasised that these measures are only part of the puzzle if growing income inequality in the UK is to be tackled.

“Growing inequality over the past 30 years has its parallel in a weakened trade union movement and the collapse of collective bargaining,” Turner said. “A return to a strong, well-organised and effective trade union movement coupled with sectoral collective bargaining is the answer.”

“Publishing the executive-worker pay ratio in annual reports will identify the obscenity [of executive pay] but won’t address it.

“It is a failure to introduce proper, effective and enforceable structures of corporate governance — structures that give workers a powerful collective voice in the companies they work for — that is at the heart of runaway corporatism both here at home and across much of the globe,” he added.

“The government must act to address both if we are to tackle gross inequalities and build a fairer, more just Britain.”