By lunchtime on Friday 4th
January, the UK’s top Chief Executives had earned more than their average
employees would over the course of this entire year, taking home astronomical
figures more like telephone numbers than salaries.
Whilst the average employee has seen
their salary stagnate, the pay packet for a FTSE 100 CEO has risen by 11% over
the last year alone, soaring to a staggering average of £3.9 million per year.
How can that be right, just or fair?
For perspective, a FTSE 100 CEO is paid
an estimated 132 times more than a police officer, 140 times more than a
teacher, 165 times more than a nurse, and an astronomical 312 times more than a
care worker! These indefensible ratios are a slap in the face for hard-working employees
across our country who, at the very least, expect to take home a fair day’s pay
for a fair day’s work.
For some commentators, this is a debate about
those at the top being paid well. Others argue for a salary cap or for a
widespread cut to Chief Executive pay. My call is far simpler: for consistency,
parity, and fairness. For the importance of the contribution of those at the
bottom to be recognised in tandem with the contribution of those at the top. For
organisations to determine the pay and reward schemes of all their
employees in one whole company pay policy.
Take Sainsbury’s, a pillar of the Great
British High Street. Under the guise of an ‘increase in basic pay’, Sainsbury’s
is set to slash the salaries of 9,000 loyal and longstanding staff by up to
£3,000 per year from 2020. And whilst new contracts for shopfloor staff will
see their bonus scheme scrapped, CEO Mike Coupe takes home an eye watering
bonus of £427,000 as part of his £3.4 million pay packet. This is a monumental
injustice that, I believe, would have been prevented had the Sainsbury’s
Remuneration Committee considered the pay and reward scheme for all employees
at the same time in one whole company pay policy.
I’m not calling for extraordinary
executive incentives like this to be scrapped. I appreciate the demands of
running one of the UK’s biggest organisations. But if an incentive scheme is
made available for some staff then it should be on offer for all staff, on the
same terms, within the organisation. Why should any organisation have a rule for
some employees that is not a rule for all?
But inconsistency and injustice has
grown to become the norm throughout the FTSE 100, and across the high street,
with treasured organisations like Marks and Spencer and B&Q falling foul of
the expectation of organisational fairness. It is the absence of a whole
company pay policy in organisations like these that has led to this unjust
disparity.
The Government has introduced
regulations to enforce organisations to disclose and explain their pay ratios.
This is a small step. But how will this ensure that such extreme pay ratios do
not occur in the first place? And what will happen if, and when, they are shown
to continue?
That’s why I brought a debate on ‘Fat Cat
Friday’ to Parliament. The enforcement of whole company pay policies would be the
first step back to a country where hard working employees can expect to receive
a fair deal at work.
(This
piece was previously written for ‘The House’ magazine).