Fewer than half of the CEOs of major UK companies have faced pay cuts during the pandemic, despite widespread use of government aid and as many workers lose their jobs or see their pay cut.
According to a survey by the High Pay Centre, a British think tank, of the 216 companies surveyed for the survey between March and May 2020, only 104 were taking at least one measure to increase executive pay at the height of Britain’s lockdown measures. The UK government has rolled out billions of pounds in job support and emergency loans or grants to help businesses through the pandemic. Of the companies that cut wages, a 10 to 20% reduction in base salary was the most common measure, adopted by 50 companies, the report said.
High executive pay is regularly controversial in the UK, as it is in France. The very high salaries of CEOs in the UK reflect a wider gap between rich and poor than in most other European countries, the High Pay Center estimated in another report in August. “The inequalities exposed by the pandemic and the amount of public money being used to protect large companies could strengthen the case for limiting the pay of senior executives and for reducing the extreme pay disparities”the think tank argued.
Top spend for companies
The UK economy registered a historic contraction of 9.3% in 2020, while the median wage in the UK fell by 0.9%. According to the Resolution Foundation, another think tank, half of British workers have also experienced pay cuts between the start of the pandemic and the end of 2020. The salary of the chief executives of the FTSE 100, the index of UK’s top companies, averaged £2.69 million that year, 86 times the average salary of a UK worker. However, this represented a 17% drop compared to the median salary of £3.25 million in 2019, before the pandemic.
Salaries are one of, if not the largest, expense for most companies, and represent top salaries “a disproportionate share of these costs”, reports the High Pay Center. “Many senior managers and executives already have significant personal wealth and can therefore afford to sacrifice (a larger portion of their pay) without loss of standard of living”the think tank concludes.
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