The gap between the pay of company executives and other workers will widen again this year after falling during the pandemic, according to the High Pay Centre.
Cuts in executive pay between 2020 and 2022 led to a narrowing of pay between executives in FTSE 350 firms and employees. However, the think tank said that recent data indicate that pay gaps will widen again this year. A report based on its analysis found pay ratios were widest in the retail industry and lowest in media and financial services.
High Pay Centre director Luke Hildyard said: “Our report indicates that companies and their stakeholders showed some sensitivity to the need to treat workers fairly and reduce vast pay inequalities during the pandemic. However, as the Covid-19 emergency hopefully reduces, it would be a shame if the spirit of solidarity it generated fades away as well.
“With the dire outlook for the UK economy, how we share existing resources will become increasingly important. Major employers have a key role to play balancing their pay awards so that high, middle and low earners are all paid fairly and proportionately.”
Mubin Haq, chief executive of the abrdn Financial Fairness Trust, which helped with the research, said: “The significant fall in pay ratios during the pandemic shows change is possible. As inflation starts to bite, it’s more important than ever that companies do the right thing and ensure pay is distributed fairly.
“Going back to past practice, where pay ratios increase year-on-year, is one area where we do not want to see a return to normal following the pandemic. However, this increasingly seems unlikely, as evidence from a number of companies shows pay at the top rebounding.
“Wage growth for those on lower incomes will be critical to ensuring millions can weather the cost-of-living crisis we are now facing.”
TUC general secretary Frances O’Grady said: “Pay inequality has gone much too far. Even for the best-performing executives, pay can be out of all proportion compared to hard-working staff on the frontline. It’s time we had maximum pay ratios to bring some fairness back. We need an emergency budget to help families with the cost-of-living crisis, and it would be a great opportunity to announce plans for this too.”
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