It’s no secret that the cost-of-living crisis is having a tremendous impact on the UK workforce. A lack of wellbeing being seen in companies is being increasingly linked to a decrease in the financial wellbeing of employees.
Simultaneously, reports show that executives are being paid more than ever in many industries. The average pay for FTSE 100 executives was 118 times more than the average salary of a UK worker at the end of last year. The average FTSE 100 CEO received £3.91m in 2022, up from £3.38m in 2021, according to the latest research, representing a 16% rise in executive pay.
However, whether we want to recognise it or not, not everyone is cut out to be an executive at a company. And some would argue that because of their hard work and dedication to leading the company, as well as the contribution they make to society, executives deserve to be paid in alignment the level of expertise needed to be in this role – which tends to be a heck of a lot.
With this in mind, is it just for these leaders to be paid as much as they are, even in a cost-of-living crisis?
Is it OK that executives are paid so much even in a cost-of-living crisis?
The issue of executive pay in the midst of a cost-of-living crisis has sparked significant debate. Despite the cost-of-living crisis, the pay of top executives has continued to rise. A study by Deloitte revealed that the median FTSE 100 chief executive saw their pay rise by 12% in 2022.
While some argue that such steep pay rises for executives are inappropriate during a cost-of-living crisis, others attribute the increase in CEO pay to good business performance and strong incentive pay awards tied to profitability and share prices.
While some argue that such steep pay rises for executives are inappropriate during a cost-of-living crisis, others attribute the increase in CEO pay to good business performance and strong incentive pay awards tied to profitability and share prices
The disparity between executive pay and the wages of the average worker has also been a point of concern for many HR practitioners. With CEOs earning significantly more than the median UK full-time worker, the regular worker earning much less may become disengaged and unenthusiastic towards their job.