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Pay gap widens as bosses earn 63 times more than their employees

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·Finance Reporter, Yahoo Finance UK
·3-min read
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Pay gap
Pay gaps were widest in retail and lowest in media and financial services. Photo: Hannah McKay/Reuters

The pay gap between FTSE (^FTSE) bosses and the rest of the workforce is running at a record high this year after falling during the height of the COVID pandemic.

FTSE 350 (^FTLC) chief executives are expected to collect 63 times the average median pay of workers at their companies, according to the High Pay Centre think tank.

Pay ratios, which compare chief executives to average employees, were widest in retail and lowest in media and financial services.

The 69 companies that reported their pay ratios in the first quarter of 2022 revealed a rise to 63:1 – almost double the 34:1 ratio those firms reported a year earlier.

Read more: European markets rise as IMF head warns of 'biggest test since Second World War' at Davos

Luke Hildyard, the director of the High Pay Centre, 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 emergency hopefully reduces, it would be a shame if the spirit of solidarity it generated fades away as well."

The High Pay Centre said pay cuts during COVID meant the average FTSE 350 chief executive was paid 44 times as much as their average employee last year – down from a record 53 the previous year.

Mubin Haq, the 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 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.”

Read more: Cost of living crisis: 10 top tips to save money on tax

The High Pay Centre's most recent chief executive pay analysis said the average FTSE 100 boss was paid £2.69m in 2020. The figure was 86 times the average full-time UK worker.

Frances O’Grady, the TUC general secretary, 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.”

Watch: How to save money on a low income

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