Chief executives should have their pay capped to maintain a fair balance between workers and bosses, according to a survey that found a majority of respondents in favour of restricting top salaries.
A poll by the High Pay Centre thinktank of more than 2,000 people found that 55% agreed that chief executive pay should be set as a multiple of workers’ low or average earnings “so that pay differences between the high and low or middle earners don’t grow too wide”. Only 15% objected.
Against a backdrop of rows over bosses’ pay and bonuses in the water industry and calls by the head of the London Stock Exchange for chief executives to be paid more to retain “top talent”, the thinktank said the survey showed that there was a growing appetite for a rethink about the relationship between the boardroom and workers on the shop floor.
The thinktank, which said its survey was funded by the abrdn Financial Fairness Trust and conducted independently by the polling firm Survation, called on ministers to consider handing workers the right to be on company boards and to publish more information about top pay.
Asked if they supported the idea of voting for two workers on a board, 51% said yes and only 11% opposed. Enhanced transparency over the pay for top earners was supported by 70% of respondents, “meaning companies would publish more information on employees making over £150,000”.
The High Pay Centre will publish “A Charter for Fair Pay” this week ahead of the forthcoming Employment Rights Bill. It will argue that the UK needs to reset the relationship between workers and top executives to foster a more collaborative way of working and stronger economic growth.
Chancellor Rachel Reeves has made it her central mission for the UK to become the fastest-growing economy in the G7 group of rich nations.
In recent months the UK’s growth rate has slipped back to near the bottom of the G7, just ahead of Italy.
On Friday a survey of UK companies showed the first contraction in activity for a year as firms gave the government’s budget plans, which included extra costs on businesses to pay for enhanced public services, the “thumbs down”.
Reeves is also under pressure to tackle the UK’s income inequality, which the thinktank said was a “defining characteristic of the UK economy”.
The OECD, which includes Germany, Mexico, the US, Costa Rica and Slovenia among its 38 members, ranks Britain as the eighth worst in terms of income inequality. Figures show that among EU member states, only Bulgaria and Lithuania are more unequal than the UK.
In 2022, income inequality, as measured by the Gini coefficient (a measure of inequality) grew by 1.3%. The thinktank said the majority of the widening income gap was caused by a reduction in the disposable incomes of the UK’s poorest 20% of households by 3.4%, while the disposable incomes of the richest 20% of households grew by 3.3%.
Director of the High Pay Centre, Luke Hildyard, said there was an opportunity to use the new government’s legislative agenda “to strengthen worker voice and bridge the pay gap between top executives and the wider workforce.”
He said policies recommended by the thinktank did not dictate pay outcomes through extra government regulation, “but establish the framework for a more democratic, participatory business culture leading to higher pay for low- and middle-income workers and reduced inequality”.
