Most employees have seen salary freezes. The freezes are accepted because the economy is bad. Some have lost jobs. Companies are trying to survive the worst economic crisis since World War II. Yet, according to a new study, if you are an executive in the UK then your average pay package increased the past year.
Employment consultancy Hewitt New Bridge Street reported in a study of the FTSE 100 companies that executive pay has risen. The average pay of the highest paid executives in the FTSE 100 was 2.5 million pounds a year ago, and now it has risen 500,000 pounds to 3 million. Many of the leading FTSE 100 have issued job cuts.
The authors of the report pointed out that there was a change in the companies making up the FTSE 100 and that the study could merely be showing a new list of pay scales that had not changed but were higher initially. However, the study did show that bonuses had risen for executives. Executives are paid through salary and bonus incentive pay. The report showed that the highest paid directors earned bonuses that totaled 120 per cent of their salaries, up from the 90 per cent of last year.
Executives at UK banks were a part of the group with the highest increase. While failing to earn bonuses during the financial crisis, banks are now in the black and executives will be taking home higher bonuses thanks to their contracts. Stephen Hester, the chief executive of bailed out RBS saw his pay incentive increase by 684.2 per cent.
Communication Worker’s Union general secretary, Billy Hayes, said: “To make the rich work harder you pay them more, to make the poor work harder you pay them less – or so it seems.
“This report exposes the enduring double standards when it comes to executive pay. It’s incredible that the disgraced banker’s bonus culture has survived the anger of the public.”
Analysts have warned a long recovery is in store. Some have predicted as long as a decade for full recovery. With looming job losses in the public sector from budget cuts and private companies cutting costs and jobs for survival, it will be interesting to see how the information from the study is received.