FAT CATS NOW EARN 145 TIMES MORE THEN THEIR EMPLOYEES
Fears are growing that the UK could turn into a two-tier society: the rich – and the rest of us.
New figures show that the pay gap between workers and bosses is widening at an alarming rate – fat cats now earn 145 times the average salary of their employees. This is likely to have a huge impact on the earning potential of recent graduates – and those who are about to finish university this summer.
In 2010, the average annual salary of FTSE 100 chief executives was more than £3,747,000 – yet the national median full-time wage is just £25,800. And the pay gap between the bottom and the top of the corporate ladder has widened considerably in the past decade. In 1999, the boss typically earned just (!) 69 times their workers’ average salary.
The chairman of the High Pay Commission, Deborah Hargreaves said:
“The gap between pay of the general public and the corporate elite is widening rapidly. It is out of control. We have to ask ourselves whether we are paying more and getting less.”
Asked what they think about executive pay, more than 70% of adults told researchers that it makes this country ‘grossly unequal’.
Nicola Smith, chief economist with the TUC, said that the report raised concerns about the wider workings of the economy:
“Average pay growth was slowing before the recession, wages took a real hit during the recession and we’re now seeing very slow wage growth coupled with high consumer inflation. There are real issues of fairness at a point when workers are facing the greatest squeeze in living standards for decades.”
Her comments echo those of her boss Brendan Barber – general secretary of the TUC – who earlier this month reminded bosses that they neglect their workers’ salaries at their peril. At the Institute of Directors he warned the UK’s top company executives:
“Pay your workers more. Unless workers can see their pay packets their pay packets grow, we wo’nt be able to build sustainable economic demand. Now is surely the time for a real change in direction, to build a fairer, stronger economy, to nurture demand based on wages, not debt.”
In other words, don’t forget that your workers are also your customers – they’re the same people. If they’re skint because you’re not paying them enough, they won’t keep buying your products and services.
The Observer’s business editor Andrew Clark spoke to several attendees at the conference, who seemed to have dismissed Barber’s comments. Clark wrote:
“Britain’s directors are foolish to dismiss these concerns. During the good times, every multinational boss loves to waffle that talented staff are a company’s most valuable asset. Loyalty works both ways – companies will ultimately benefit if they stand by their people in the depths of a downturn, too.”
Graduate Fog reported on Tuesday that graduates outside London earn up to £10,000 less per year than their peers in the capital. But there are real concerns that all graduates are feeling the squeeze – even those earning a ‘decent’ wage in London.
The twentysomething journalist Richard Godwin penned a brilliant piece in last night’s London Evening Standard, in which he wrote about his struggle to pay his soaring rent, despite the fact that he and his wife are earning around the average salary. He wrote:
“For my generation, owning a home is not just a distant dream, it’s not even an aspiration. At the moment, that’s the beginning of demographic catastrophe.”
This week it was announced that the average rent in London has topped £1,000 per month. My own (middle aged) landlord has just raised mine by 5% – for no other reason than because he can. Are older people just going to keep squeezing every penny out of the young? Don’t they get it? The poorer we feel, the less we’re going to spend in shops, restaurants, bars and cinemas… We won’t have holidays, or cars – or children…
*Do you agree that bosses are overpaid – and workers are underpaid?
Do you worry that getting your career started in these conditions will be difficult? Do you worry about your future wages – or is your immediate concern getting a job, any job? If you have a job, are you surprised that you’re still struggling to make ends meet?