Executives at some of the UK’s largest firms had a substantial pay rise the last year, even while the cost of living crisis was rumbling on.
Yes, as public sector workers were on strike day after day over real term pay cuts, pushing to keep their wages on par with double-digit inflation, those at the top of Britain’s most successful firms got to take home even more money than usual.
How much more are the UK’s top bosses earning now?
According to the independent think tank, High Pay Centre – which focuses on economic inequality and fair pay – the median pay of the chief executives in the FTSE 100 has increased by almost 16% on average in the last year.
FTSE 100 is shorthand for the Financial Times Stock Exchange 100 Index, a list of the companies with the highest market capitalisation on the London Stock Exchange.
And a 16% increase means these individuals were earning more than £500,000 compared to 2021.
The think tank calculated that the median pay for these bosses went up to £3.91 million in 2022, compared to £3.38 million last year.
That is a pretty large increase, no matter how you look at it – especially considering the average earnings of an FTSE 100 boss is already 118 times more than the typical UK worker who earns £33,000 a year.
The High Pay Centre said the highest pay individual on their list was the boss of the drugs giant (known for rolling out one of the Covid vaccines), AstraZeneca. Sir Pascal Soriot reportedly took home £15.3 million last year.
The then-chief executive of energy firm Shell, Ben van Beurden, was also high up there, took home £9.7 million, while BP’s chief, Bernard Looney, also secured a generous £10 million pay cheque.
This is not particularly surprising because both companies announced record profits after energy prices soared last year and consumers were paying more to heat their homes.
The think tank did note executives’ pay decreased at the height of the Covid pandemic, dropping to £2.46 million. That’s after it peaked at £3.97 million in 2017.
The think tank also speculated that there’s “strong incentive pay awards tied to profitability and share prices” for FTSE 100′s top executives.
In response to the report, AstraZeneca said 12% of Sir Pascal’s pay was fixed, the rest of it was subject to share price and performance.
It also said its chief executive pay was below other big pharmaceutical competitors.
Meanwhile, the energy companies claimed that the high figures compromises bonuses, incentives and pension pay, and that its senior leaders were “paid competitively”.
Why does this matter?
Workers across the UK have found their funds for basic necessities – like food and electricity – massively squeezed since 2021, because of the cost of living crisis.
Inflation, the rate at which the price of goods and services in a country increase over 12 months, has been driving up consumer prices.
While it was at 6.8% in July, it was much higher through 2022, peaking at 11.1% last October.
Latest figures from the Office for National Statistics (ONS) show that regular pay supposedly started to reach the same level as inflation over three months to June.
However, when you take inflation into account, that’s actually a decline of 0.6%.
Even the governor of the Bank of England, Andrew Bailey, told the BBC last year that people should not request large pay rises – even when public sector workers were striking over pay stagnation.
The government initially expressed similar concerns that this could cause a wage-price spiral, where higher wages meant companies had to charge consumers more to pass it onto employees – thus worsening inflation and triggering a vicious cycle.
Actually, real wages across every UK region were found to be lower now than in 2010 when you factor in inflation, according to a January study from the Labour Party.
The government has recently reached pay settlements with some public sectors after months of negotiations – but debates over these additional costs are in stark contrast to the hefty sums the FTSE 100 bosses are taking home.
Still, as director at High Pay Centre, Luke Hildyard, said: “At a time when so many households are struggling with living costs, an economic model that prioritises a half-a-million pound pay rise for executives who are already multi-millionaires is surely going wrong somewhere.”
However, Duncan Simpson, executive director at the Adam Smith Institute economic think tank, argued that there’s a wider picture at play.
He told the BBC: “Company leaders provide value to customers with the products and services they sell, to pensioners with dividends from profits they generate and to HMRC through tax receipts.”
He claimed: “Knee-jerk attacks remain an unhelpful way to look at the private sector which employs over 80% of workers in the UK and generates benefits across society.”