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New Study Shows Massive Salary Disparity in UK FTSE Salaries

The Vlerick Business School in Belgium carried out a study recently which showed that British companies have the most noticeable disparities in salaries. The study looked at different corporate salaries in Europe and noticed that British bosses in the country's FTSE 100 companies are taking home over 94 times the normal wage of their employees. That's a big jump in pay to say the least!

In addition to these results, Vlerick's study also discovered that some of the best companies in the region pay their employees at a significantly lower rate. These findings add more fuel to the fire of capping high salaries for executives.

When it comes to pay rations between top management and the average employee, Britain leads the pack at a 94 to 1 ratio. French executives are getting paid nearly as much with a 91 to 1, with Germans next on the list with a 89 to 1 ratio. The two lower scorers are executives from the Netherlands at 71 to 1 and Sweden which has a very humble 41 to 1 ratio of payment.

Sky News

The report showed that there was a clear difference in pay ratios between the United Kingdom and Europe. The report also revealed that 59% of the executives in Europe got a significant jump in pay between 2014 and 2016 and most European CEOs had a package that was in the region of €4.9 million per annum. The survey also took a look at lower-ranked companies. For FTSE 250 companies, the ratio is significantly lower. Surveys reveal that the ratio is just 47 to 1, nearly half of the ratio of higher-ranked companies.

Though quite a few companies subscribe to the idea that better company performance is only possible by rewarding your people at the top, this idea is not supported by the evidence. Xavier Baetens, a professor of management practice at Vlerick and one of the people behind the study, says that companies who perform well usually try to make a more efficient use of their money than CEO bonuses and pay increases.

The British government is already in the process of instituting laws that will require companies to publish their pay ratios publicly on an annual basis. This public sharing of salary ratios is just one step that is being taken to reduce the inequality in pay for the British employee. With the current inflation rate pegged at 3.1%, those in the lower salary bracket will no doubt be angry at the disparity in pay.

One of Prime Minister Theresa May's earlier promises was to curb the fat cat salaries that many British CEOs enjoy. However, these promises have not materialized into anything substantial as of now.


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