Andrew Dismore

At today’s Mayor’s Question Time, Labour London Assembly Member for Barnet and Camden Andrew Dismore AM, questioned London Mayor Sadiq Khan over the implications of the pay gap between CEOs and their companies’ workers.

Mr Dismore asked the Mayor:

‘The executive pay gap is rising and in the first few working days of the year, executives can earn more than the average worker earns in the whole year. How can you encourage businesses in London to ensure that all employees benefit from any successes?

‘4^th January was “Fat Cat Friday” – the date by which, just three days into the working year,  the average CEO of a FTSE 100 company received an amount  equivalent to the  take-home pay of a UK full-time worker on average pay for the whole of 2019. Up 11% compared to last year, the gap is wider still, when compared to those on the national minimum wage. What does this enormous executive pay gap mean for economic fairness in London?

‘Do you agree with the Chartered Institute of Personnel and Development (CIPD) and the High Pay Centre in their call for a major overhaul of how executive pay is set in the UK, including corporate remuneration committees being more diverse in terms of gender, ethnicity and professional background; and for executive performance to be based on benchmarks including employee wellbeing and workforce training;  and also what is your view of the implications of the Prime Minister breaking her promise  to  include workers on company boards?’

The Mayor said that corporate achievement is not shared fairly. Employers should pay the London Living Wage and provide flexible opportunities. Pay is demonstrably unequal, and the gap is growing. Transparency is best, which is why he voluntarily published his GLA pay gap audits. We need action plans to rectify the gaps even for small companies, who should publish data. Representation on boards is important, meaning those getting big rises have to justify them to those who don’t. These are good points to setting out the criteria to be looked at when setting pay.

After Question Time Mr Dismore added:

‘Londoners have faced years of stagnating pay, particularly jobs in the public sector such as nurses and teachers. ‘Fat Cat Friday’ and the rate of CEOs’ increasing pay rubs salt in the wound to all those working hard yet struggling to get by.

‘Calculations by the High Pay Centre think tank and the professional HR body the Chartered Institute of Personnel and Development show top executives are earning 133 times more than the average worker, at a rate of around £1,020 per hour or £3.9m annually. That’s up 11% compared to a year earlier.

‘It means CEOs working average 12-hour days would only have to clock in for 29 hours in 2019 to earn the median £29,574 of British staff. It would be a lot less for those earning the National Living Wage of £15,269 per year, or £20,572.50 for those earning the London Living Wage.

‘Government policy requiring businesses to report on their pay ratio between their highest and lowest paid staff is a first step but it does not go nearly far enough.

‘All Londoners should earn a decent day’s wage for a proper day’s work. Paying the London Living Wage is the best way for employers to ensure their employees have enough to live on. If the Government truly cared about workers’ pay, they would ensure that the National Living Wage is increased to an actual living wage like the Mayor of London has promoted.’

Notes:

Andrew Dismore is the Labour London Assembly Member for Barnet and Camden