While the first week back to work in the New Year represents a test for many – Monday has come to be known as ‘Divorce Monday’ and social media has been flooded with cries for help in the form of memes – for FTSE 100 CEOs the week traditionally brings cause for celebration.
The last two years have seen ‘Divorce Monday’ followed immediately by ‘Fat Cat Tuesday’, the day in which the average earnings of CEOs of FTSE 100 companies surpass the average annual salary of a UK worker. Much like ‘Equal Pay Day’ – the day from which women ‘effectively stop earning relative to men’ – the labelling of days in this way is not perfect methodologically, yet the practice does capture the public imagination in a way that facts and figures alone simply do not.
In order to calculate the hourly rate of FTSE 100 CEOs The High Pay Centre assumes, perhaps generously, that these individuals work “12 hours a day including three out of every four weekends, and take fewer than 10 days holiday per year”. Using this assumption alongside the UK average salary for each year we can see growing pay inequality expressed in the number of hours it takes for a FTSE 100 CEO to surpass the salary of the average UK worker.
For 2014 we can see how – using the assumption of 12 hour working days for these elite earners – it took just over two working days to surpass the UK average, for 2015 we see ‘Fat Cat Wednesday’ become ‘Fat Cat Tuesday’ and for 2016 we see a continuation in the trend – taking just under 22 hours for a FTSE 100 CEO to earn the annual salary of the average UK worker.
These figures serve to illustrate growing inequality in pay and for campaign groups such as The High Pay Centre in this instance or The Fawcett Society in the case of ‘Equal Pay Day’ this temporal expression of inequality serves as an incredibly powerful and emotive device through which to stir both public and journalistic imaginations. For the Director of The High Pay Centre, Stefan Stern, such inequality in pay will only increase the scrutiny surrounding the boardroom, stating that: “Over-payment at the top is fuelling distrust of business, at a time when business needs to demonstrate that it is part of the solution to harsh times and squeezed incomes, and is promoting a recovery in which all employees can benefit.”
Despite the proposed correlation between over-payment and distrust the latest wave of Trajectory Global Foresight, our exclusive global consumer values and attitudes survey shows that while inequality may be growing, distrust certainly isn’t. Our figures show that rather than seeing increased distrust in business leaders fuelled by a widening pay gap we have seen a significant decrease in distrust of business leaders in the last twelve months; falling 11% for multi-national business leaders and 7% for national business leaders.
Milestones such as Fat Cat Tuesday have the ability to awaken the consciousness of the individuals the monikers reach through the significant number of column inches, shares and tweets generated by coverage of the event, but it appears that their impact on society as a whole is limited. The reason for this can perhaps be found in the aforementioned Steven Stern quote; business needs to demonstrate that it is part of the solution to harsh times, promoting a recovery in which all employees can benefit. With the recovery ongoing and individuals’ financial situations improving there is a failure to engage critically with the issue of overpayment, and as such the distrust that grew throughout the recession is gradually dissipating.
It is likely that as the economy continues to recover inequality will continue to grow. Failure to sustain growth, or worse, another recession, could see the renewed scrutiny of salaries at the highest level, with subsequent scapegoating leading to a deterioration in trust.
Whether this will matter or not is another issue – our data shows that the extent to which the UK public feel that “buying trusted, reliable brands” is important has fallen from 2014 to 2015, showing that when times are good important questions are not always being asked.
During recovery citizens are less likely to ask the questions of business leaders that were so abundant during the recession and at this point the onus falls on Government to act in the best interests of its citizens.