Think tank highlights corporate pay gap on "Fat Cat Tuesday"

The group says that top executives will earn more than the average worker's annual income by the end of today...

Think tank highlights corporate pay gap on "Fat Cat Tuesday"

Chris Radburn / PA

The UK's High Pay Centre (HPC) has dubbed today "Fat Cat Tuesday". The think tank's research aims to compare the earnings of top executives at FTSE 100 firms with UK average pay packets.

It found that typical annual earnings stood at £27,645 in 2015 - a rise of just £445 or 1.6% on the previous 12 months.

At the other end of the scale, the HPC said the FTSE bosses were handed an average of £4.96m - though that was in 2014 - with a chief executive's annual incentive award rising by almost 50% of salary.

It said that when assumptions were made that the bosses worked 12 hours a day, including most weekends and holidays, it would only take around 22 hours of graft for them to earn the UK average salary.

The think tank expected the milestone to be reached "late Tuesday afternoon," assuming everyone began work for the year on Monday 4 January.

It said: "The figures will raise doubts about the effectiveness of government efforts to curb top pay by giving shareholders the power to veto excessive pay packages.

"The HPC has argued that further measures are necessary, such as representation for ordinary workers on the company remuneration committees that set executive pay, and publication of the pay gap between the highest and median earner within a company."

However, the report faced criticism from a free market think tank. Sam Bowman, the executive director of the Adam Smith Institute, said: "Despite consistent attacks on chief executive pay, the HPC has never told us how much they think CEOs are actually worth.

"Their complaints are the hand-waving of pub economics, not serious analysis ...Can the High Pay Centre tell us how much CEOs are worth? If not, how can they say that they are overpaid?

"Chief executives can be worth quite a lot to firms, as is shown by huge moves in company share prices when good CEOs are hired, or bad CEOs are fired."

He added: "The High Pay Commission’s complaints only make sense if you assume firms don’t actually care about making money – which is to say, they don’t make sense at all."

Those sentiments were not shared by union organisation, the TUC.

Its general secretary, Frances O’Grady, said: "Every worker deserves a fair share of the wealth they help create.

"But the average weekly wage is still worth £40 a week less than before the financial crisis.

"The government must start making the right choices to deliver a fair economy with fair pay, like giving workers more collective pay bargaining rights."