Dividends soar as wages stagnate

Global corporate dividends are on course to beat an all-time high of $1.66 trillion, reached last year

Global dividend payouts to shareholders have risen 14 times faster than worker pay since 2020, according to analysis from Oxfam.

The charity's researchers found that global dividend payouts to shareholders jumped by 45% in real terms between 2020 and 2023, while workers’ wages rose by 3%.

Global corporate dividends are on course to beat an all-time high of $1.66 trillion, reached last year, according to the Janus Henderson Global Dividend Index, which covers the world’s largest 1,200 corporations and represents 90% of global paid dividends. 

Read more: Why we launched an employee share scheme

Charles Cotton, senior policy adviser for performance and reward at the CIPD, told HR magazine that employers could use all-employee share plans to ensure reward is linked to business success.

An HMRC evaluation report released in June 2023 highlighted that 81% of business leaders said that share incentive plans helped boost their business. Almost three quarters of respondents said that share incentive plans helped them retain and recruit staff. 

However, 31% of businesses that are aware of these schemes report that they are too complicated to set up.

Cotton said: “Companies offering all-employee share plans report that these plans had an overall positive impact in terms of employee recruitment, retention, creativity, and behaving like investors or owners.

“The CIPD encourages HR professionals to explore the case for offering shares to all employees, in terms of both the benefits for the firm and its investors, as well as for its employees.”

Read more: Employee ownership: Another way of doing business

Annual growth in employees' average regular earnings (excluding bonuses) was 6% in December 2023 to February 2024, or 1.9% adjusted for inflation, according to data from the Office for National Statistics released in April 2024.

Zofia Bajorek, senior research fellow at the Institute for Employment Studies, said that HR has a role in ensuring that pay decisions are made fairly and transparently.  

Speaking to HR magazine, she said: “Employees want to feel valued in an organisation. Fair pay is one way this can be done easily.  

“HR can also be there to support managers who have these discussions with their direct reports, who may not have the answers or the positional power to make changes to pay. HR needs to be available to understand staff concerns, to ensure that the correct information is provided and that organisational policies are being adhered to.”

Bajorek added that HR should make sure progression and pay gaps are measured, and that actions are appropriate.

She said: “One key issue is how pay progression is measured. Are progression arrangements discussed as part of an organisation’s strategy? Does it fit an organisation’s ethos and values? Doing this could help managers decide on when and how changes to pay are made.

“The second issue for me is about fairness and unlawful bias. What are decisions about pay made in relation to? Are the reasons transparent? It is important to recognise if there are any resultant biases in pay through gender, ethnicity, disability, and for HR to highlight if this is the case so that this can be rectified.”