Research by think tank the High Pay Centre showed that today marks first time since at least 2011 that CEOs have had to work a fourth day to surpass the median worker’s annual earnings.
In previous years the milestone had been reached after only three working days.
Similarly, figures obtained by the think tank for the current financial year showed that while 2020 saw a cut to executive compensation, 2021 is likely to have seen a bounce back to form.
CEO pay fell 17% to a median of £2.7 million (down from £3.25M in 2019) during 2020’s lockdown, as part of a pattern of temporary pay cuts and bonus cancellations taken in sympathy with staff.
This year, however, 57% of FTSE 100 firms that have announced this year’s remuneration for their CEOs have recorded an increase on 2020 levels, indicating a movement back towards pre-pandemic reward levels.
Luke Hildyard, director of the High Pay Centre, said that in the context of the hardships suffered by many during COVID, the gulf between CEOs' pay and that of their employees may become harder to justify.
He said: “Some of the lowest-paying jobs have played the most important role to keep society functioning through the pandemic.
“With the value of the UK economy reduced, there’s also greater pressure to share what we do have more evenly.”
He added that traditional defences of high pay levels, such as harder work or higher skill, hold little sway with the public.
A High Pay Centre survey found that two thirds (63%) of the public disagree with the notion that high earners work harder than low and middle earners, and more than half (59%) disagree that high earners perform more valuable work.
Duncan Brown, principal associate at the Institute for Employment Studies, told HR Magazine that while the temporary dip in CEO pay during the pandemic was positive, the public would still find the disparity too much.
“As the High Pay Centre’s opinion polling shows, most of the public feel it’s still an unfair and excessive level – and even more relevant, survey data from CIPD and other research houses shows employees themselves think the gap is too wide and find it demotivating.”
IES’ own research, he said, supports the importance of perceptions of fairness to employee engagement.
Brown added: “COVID has heightened this importance as much greater awareness developed, for example, of the low pay of care and key workers.
“A minority of large company CEOs did rightly sense the mood, and took voluntary pay cuts of around 20% to parallel the cut that furloughed employees were taking under the CJRS.”
He said more effort should be made to bring employees on board with reward strategies, so that businesses don’t lose employees to low engagement,
Brown said: “More employees should be enfranchised with rewards for the success of their efforts rather than just executives, and our research shows the importance and positive effects of all employee share and profit sharing plans.
“COVID has hopefully stimulated much greater interest and use of such plans. And fair pay policies and agreements can often be a really good way of progressing fairer pay and building stronger employee engagement.”