Top 0.1% of earners enjoy pay boom, says report
The top 0.1% of UK earners, just 47,000 people, have seen their incomes rise much faster than the rest of the population, according to a report.
Their incomes rose by 64% in the 11 years to 2007-08, according to the High Pay Commission, an inquiry set up by the left-wing Compass pressure group.
The bottom 50% saw their incomes rise by just 7% in the same period.
The report says the top earners, many of whom are company directors, could be receiving 10% of all income by 2025.
"This is the clearest evidence so far that the gap between pay of the general public and the corporate elite is widening rapidly and is out of control," said Deborah Hargreaves, chair of the High Pay Commission.
The commission analysed income statistics gathered regularly by HM Revenue & Customs (HMRC).
It found that between 1996-97 and 2007-08:
- the earnings of the top 0.1% had risen from an average of £328,000 to £538,600
- the earnings of the bottom 50% had risen from £16,000 to £17,100.
Extrapolating, the commission says that if those trends continue, then by 2019-20 the top 0.1% will have average incomes of £901,600.
By contrast, the bottom 50% will see their incomes rise to just £18,700.
Trend to accelerate
The commission says there are a number of reasons for top pay far outstripping those of other workers in recent years.
Among them are bonuses in the banking industry; complex pay arrangements for top executives which supposedly link their pay to company performance; and cronyism among non-executive directors and pay consultants who set pay levels for top executives.
Other causes identified were opaque information about how much top directors are paid; little supervision of pay by shareholders; and greed.
"Recent figures show that take-home pay fell for the first time in 30 years in 2010 as prices rose faster than incomes, and this trend is expected to accelerate this year," the commission said.
"By contrast, boardroom remuneration appears immune from financial constraints and some estimates suggest it rose by 55% last year, continuing a so-called 'arms race' in pay as companies rush to reward their executives with ever greater packages," it added.