LONDON (Reuters) – British chief executives’ pay is on track to exceed their employees’ median earnings by more than before the COVID-19 pandemic as profits and executive bonuses rebound, a report from Britain’s High Pay Centre showed this week.
The ratio of executive pay to median earnings had fallen sharply during the COVID-19 pandemic, due to lower profit-related bonuses, which make up a high proportion of CEO pay.
Looking at Britain’s 350 largest listed companies, the ratio of median CEO pay to median employee pay fell to 44:1 in the 2020/21 financial year from 53:1 in 2019/2020. For FTSE-100 companies, the ratio fell to 67:1 from 73:1.
However, that trend now appears to be going into reverse.
Across 69 companies which reported in the first quarter of this year, the ratio of chief executive pay to median pay rose to 63:1 from 34:1 a year before.
“Pay gaps are set to rebound post-pandemic,” according to the think tank, which focuses on economic inequality.
House-builder Barratt BDEV.L and homeware retailer Dunelm DNLM.L were two companies to see a particularly big widening in the pay gap, in Dunelm’s case after the CEO took a 90% temporary pay cut between April and June 2020.
The widening pay gap comes as many British households are struggling with a soaring cost of living, after consumer price inflation hit its highest in 40 years at 9.0% in April.
A survey of 2,061 Britons last week showed more than a quarter had skipped meals recently to save money.
Across employees as a whole, pay for the top 10% of earners rose by 11.1% in the year to March, compared with a median of 5.5% and just 0.9% for the bottom 10% of earners, according to figures from Britain’s Office for National Statistics last week.
“Neither pay stagnation nor the cost of living crisis are unavoidable: both are the result of political choices,” the think tank said.
Britain’s deputy finance minister, Simon Clarke, ruled out on Monday reinstating a temporary pandemic supplement to the country’s main welfare benefit.
(Reporting by David Milliken, editing by Andy Bruce)