Unfair and discriminatory pay set to continue with this government

Victoria Phillips is head of employment rights at Thompsons Solicitors

Another damning indictment of this government came last month when the High Pay Centre released its report on the pay of CEOs in FTSE firms. The figures clearly show that those at the top are continuing to command ridiculous wages at the expense of the average worker.


Extreme pay has been increasing year-on-year, which now means that a FTSE 100 CEO is paid 183 times that of their average full time worker. While so-called reforms introduced by the Con-Dem coalition in the shape of the Enterprise and Regulatory Reform Act 2013 at least allow us to see the absurd levels of pay, the ‘reforms’ themselves have made no difference.


At the time, the then business secretary, now former MP, Vince Cable, promised that the reforms, which included giving shareholders a binding veto on annual remuneration, would tackle the “disconnect between pay and performance”. Do the beneficiaries of such levels of pay really believe that their contribution to the company is 183 times that of their average employee? Or are they still getting away with paying themselves huge salaries because the legislation was, and is, weak?


Far from tackling the culture of high pay, the High Pay Centre report shows that the top ten CEOs alone were paid £156 million and that the average pay for FTSE 100 CEOs has risen by almost £1 million since 2010. Let’s remember that this is while three quarters of FTSE 100 companies are shamefully failing to pay the living wage.


This is a clear reminder that those in the highest positions are treated very differently when it comes to employment and remuneration. While average pay continues to fall in real terms, as big businesses increase their profit margins by restricting pay at lower levels, the very few are rewarded with ever-growing pay packets.


The last government’s superficial and half-hearted move to encourage shareholders to challenge excessive pay company at AGMs was a failure. Instead of taking it upon themselves to do what is best for the vast majority of employees, shareholders have, too, bought into the morally derelict culture of excessive pay for some, low pay for the rest. So much so that the average vote against remuneration policies at FTSE 100 companies was just 5.9% in 2014.


Shareholders that are eligible to vote on remuneration packages must now show some responsibility and leadership. A survey carried out by the Institute of Directors showed that 52% of their members thought that excessive pay was a threat to public trust in businesses – but an equivalent poll of employees themselves would provide a far more important body of feeling.


It is also a worrying trend that those in the most senior positions are not simply content with dividing themselves from their workforce, but also from one another. 40 years on from the Equal Pay Act, women in executive positions are getting significantly less pay than their male counterparts. According to a survey carried out by the Chartered Management Institute and XPertHR, women in directorships at FTSE 100 companies earn over £13,000 less than their male colleagues and just half of their bonuses. This is despite women in their twenties tending to earn more than men of the same age; an indication that the glass ceiling of gender discrimination is still present once women start to progress into more senior roles.


It is a disgrace that these trends look likely to continue. Certainly they will without a proactive response from this government to reform pay. The pay gap is such that the UK is now one of the most unequal countries in the apparently ‘developed’ world. As many people struggle to get by, it is a clear injustice that poverty wages at the bottom continue to supplement luxury pay at the top.



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