The independent High Pay Commission (HPC) said on Tuesday that top executive pay needs to be altered and simplified in order to put an end to massive salaries that are promoting wealth inequality and are “corrosive” to the British economy.
The Commission listed out a full 12 proposals advising how to overhaul executive pay, which it hopes will fuel government action amid rising public anger about runaway pay increases that dwarf the figures of average wages.
The HPC spent a year in its research and found that the pay for some top executives has risen by over forty times their rate in the past 30 years. Comparatively, average wages for workers in Britain are only three times higher than they were 3 decades ago.
The Commission says that it included a broad range of opinions in its research, including fund managers, pension funds, and trade unions.
The timely report comes as ministers are considering enacting new rules on maximum pay for executives, especially considering rising unemployment and falling living standards that are plaguing many in Britain.
Last month, David Cameron said that he was concerned over figures showing that executives from Britain’s top 100 companies received a total pay raise of 49% last year.
Business secretary Vince Cable has also expressed concerns and possibilities for legislation on pay to be proposed next year. Cable said that many of the options that the government has been considering are also reflected in the High Pay Commission’s final report.
Among the measures being considered are a binding vote for shareholders on deciding pay, and the HPC’s suggestion to include ordinary workers on remuneration committees.
The latest data shows that the chief executive of oil company BP earns 63 times the amount of an average employee, while Barclays’ top boss earns 75% that of the average worker. These figures are up from 16.5% and 14.5% more in 1979, the HPC noted.
Considering the trend, the HPC has calculated that the top 0.1% will hold 14% of Britain’s national income by 2035. This is a level of income disparity not seen since the Victorian era.
However, British companies are quick to point out that the remuneration gaps are not as bad as in the United States, where the average CEO makes 142 times the slary of a normal employee.
Still, HPC chief executive Deborah Hargreaves has said that the “rampant, runaway excesses on pay and bonuses” is “corrosive” to the British economy. She called it a crisis at the top of the pay scale that is trickling down and hurting the rest of the UK’s citizens.