Top pay seen as ‘out of control’ and bad for economy

Most people believe pay and bonuses for top executives are “out of control”, according to a study to coincide with a report that describes excessive high pay as “corrosive” to the economy.

A year-long inquiry by the High Pay Commission revealed yesterday that the pay of top executives has soared by more than 4,000 per cent in the last 30 years, undermining productivity and “damaging” trust in UK business. The report criticised “stratospheric” increases that have seen wealth flow upwards to the top 0.1 per cent of people in the UK.

The study detailed the pay of Barclays’ top executive Bob Diamond who, the study said, earned £4,365,636 – 169 times more than the average UK worker today, and an increase of 4,899.4 per cent since 1980 when Barclays’ top pay was just 13 times the UK average.

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The chief executive in the part state-owned Lloyds Bank has seen his pay increase by 3,141.6 per cent to £2,572,000 over the same period – 75 times the firm’s average employees – when in 1980 it was just 13.6 times that of the average Lloyds worker, said the report.

Average UK wages today are a “modest” £25,900 – up from £6,474 in 1980 – a three-fold increase.

The commission called for reforms including a “radical simplification” of executive pay, putting employees on remuneration committees, forcing companies to publish pay ratios between highest paid executives and the company median, and making firms reveal executive’s total pay.

The report, Cheques With Balances: Why Tackling High Pay Is In The National Interest, showed that decisions to award huge pay packages are set by a “closed shop”, shrouded in highly complex detail, effectively hidden from shareholders, staff and the public.

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TUC general secretary Brendan Barber said: “Top directors seem to think that austerity is just for the little people. This is not just unfair, but bad for the economy as this vital report makes clear. The truth is that the extraordinary transfer of wealth from ordinary people to those at the top is not just morally repulsive, but a key ingredient in the economic crash.”

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