One consequence of the pandemic was that pay ratios between CEOs and their employees began to fall, but new research has indicated that these ratios are once again rising to new highs.
MoneyTransfers.com has analysed new data in the field and here is what we found:
- A correlation between the industries with the lowest CEO/employee pay-ratio and the highest paying UK companies. Media and finance have the lowest average pay ratio, 29:1 and 30:1, respectively. This could be due to the fact that employees in these industries are likely to be highly-skilled and therefore earn a higher median salary than more service-based industries such as retail.
- The median CEO/median employee ratio across FTSE 350 was 44:1 in 2020/2021 – a drop from 53:1 in 2019/2020. This drop suggests that the pandemic impacted pay-ratios with CEOs salaries decreasing significantly as a consequence of lost business performance.
- However, data from the first quarter of 2022 shows that the median CEO/median employee ratio has almost doubled compared to the same period last year – 63:1 in Q1 2022 compared to 34:1 for the same companies last year. This indicates that the diminished pay ratios in 2020 were merely a result of impacted business performance due to the pandemic, rather than a shift in attitudes from CEOs.
- A survey of the public opinion shows that 62% of respondents think that CEOs should earn between 1 and 20 times that of an employee and 29% think they should earn between 1 and 5 times more. For reference, public opinion is more in-line with the typical pay-ratios seen in the 1980s than the astronomical differences in pay we can see now.
“The poll clearly shows that the public are strongly in favour of a fairer distribution of income within companies – something likely to be only more changed by the fact that incomes are not rising comparably with inflation, energy bills, and other daily expenses,” says Jonathan Merry, CEO of MoneyTransfers.com.
You can read the full analysis here.