Pay workers more, CBI chief says
The GMB union says the
value of national average earnings has fallen by 14% since the start of
the recession in 2008. Photograph: Alamy
Companies benefiting from the economic recovery must pay
their long-suffering workers more next year, the head of the CBI in an
unprecedented attack on firms he accuses of keeping "far too many
people stuck in minimum-wage jobs".
John Cridland, director-general of the CBI, Britain's biggest business lobby group, will criticise many of the 240,000 companies he is paid to represent for failing to pass on their new-found prosperity to employees. He will tell employers – who in the FTSE 100 are paid 136 times the national average – that they must ensure that all citizens benefit from the recovery.
In an unusually forthright new year message, Cridland says businessmen and women must do more to help those paid the least. "The recovery is taking root and business leaders have a spring in their step compared to this time last year, but this is no time to rest on our laurels," he will say in his annual message to business leaders. "As the financial situation of many firms begins to turn a corner, one of the biggest challenges facing businesses is to deliver growth that will mean better pay and more opportunities for all their employees after a prolonged squeeze."
The intervention in the national debate on living standards comes as the GMB union warns that the real value of national average earnings has fallen by 14% since the start of the recession in 2008. Citing data from the Office for National Statistics, the GMB said average pay in 2013 was £27,174, compared with £26,137 in 2008. That emerged as a 13.8% drop in real terms when inflation and the rising cost of living were factored in, the union said.
Paul Kenny, the GMB's general secretary, said: "These alarming figures show how hard-pressed working people across the UK are struggling to pay their bills after years of wage declines and attacks on the living standards of families throughout the land. Working people deserve and need a decent pay rise to halt the drop in living standards."
The GMB data show that real earnings have dropped by more than 20% in
London, with workers in Hammersmith and Fulham experiencing a 49%
decline. By contrast, the average FTSE 100 boss collected £3.7m last
year.
Sarah Wilson, chief executive of the corporate governance consultancy Manifest, has said Britain's quantitative easing stimulus programme has been "printing money for CEOs" by boosting the economy and stock market.
The rise in share prices has helped trigger many executive bonus schemes, with FTSE 100 directors collecting an average of 58% more from share-related bonus awards, according to research by Income Data Services. Overall, the average pay of FTSE 100 executive directors increased by 14% to an average of £2.1m in 2012.
The annual CBI new year message normally focuses on lobbying for tax cuts and red-tape reform, but this year there is a clear focus on living standards. Cridland, who replaced Richard Lambert as CBI director-general in 2011, will tell bosses they must do more to help the army of 890,000 workers "stuck in minimum-wage jobs without routes to progression".
He predicts that wages will pick up next year, but says far too many people are still collecting only the minimum wage "and that's a serious challenge that businesses and the government must address".
"Businesses must support employees in every part of the country to move up the career ladder, while also giving a helping hand to young people taking their first tentative steps into the world of work," he will say. The CBI is funded by businesses and lobbies government on their behalf.
Cridland's comments are difficult for the coalition because they suggest he has sympathy with the argument offered by Ed Miliband and the shadow chancellor, Ed Balls, that not enough is being done to share the proceeds of the recovery with ordinary people. Just three months ago Cridland attacked the Labour leader's plans for an increase in the minimum wage as a "real setback for Labour's pro-enterprise credentials". He said many companies could not afford to pay employees more than the £6.31 minimum wage for adults, and £5.03 for those aged 18 to 21.
Miliband has said he will offer companies tax breaks if they commit to paying workers the living wage, which is set at £7.65 an hour. Cridland's call for better pay comes after Mark Carney, the governor of the Bank of England, last month declared the economic recovery had "finally taken hold", with the Bank increasing its growth forecasts for this year from 1.4% to 1.6% and from 2.5% to 2.8% next year. Earlier this month the ONS said the unemployment rate had fallen to 7.4%, the lowest level since 2009.
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John Cridland, director-general of the CBI, Britain's biggest business lobby group, will criticise many of the 240,000 companies he is paid to represent for failing to pass on their new-found prosperity to employees. He will tell employers – who in the FTSE 100 are paid 136 times the national average – that they must ensure that all citizens benefit from the recovery.
In an unusually forthright new year message, Cridland says businessmen and women must do more to help those paid the least. "The recovery is taking root and business leaders have a spring in their step compared to this time last year, but this is no time to rest on our laurels," he will say in his annual message to business leaders. "As the financial situation of many firms begins to turn a corner, one of the biggest challenges facing businesses is to deliver growth that will mean better pay and more opportunities for all their employees after a prolonged squeeze."
The intervention in the national debate on living standards comes as the GMB union warns that the real value of national average earnings has fallen by 14% since the start of the recession in 2008. Citing data from the Office for National Statistics, the GMB said average pay in 2013 was £27,174, compared with £26,137 in 2008. That emerged as a 13.8% drop in real terms when inflation and the rising cost of living were factored in, the union said.
Paul Kenny, the GMB's general secretary, said: "These alarming figures show how hard-pressed working people across the UK are struggling to pay their bills after years of wage declines and attacks on the living standards of families throughout the land. Working people deserve and need a decent pay rise to halt the drop in living standards."
The GMB data show that real earnings have dropped by more than 20% in
London, with workers in Hammersmith and Fulham experiencing a 49%
decline. By contrast, the average FTSE 100 boss collected £3.7m last
year.Sarah Wilson, chief executive of the corporate governance consultancy Manifest, has said Britain's quantitative easing stimulus programme has been "printing money for CEOs" by boosting the economy and stock market.
The rise in share prices has helped trigger many executive bonus schemes, with FTSE 100 directors collecting an average of 58% more from share-related bonus awards, according to research by Income Data Services. Overall, the average pay of FTSE 100 executive directors increased by 14% to an average of £2.1m in 2012.
The annual CBI new year message normally focuses on lobbying for tax cuts and red-tape reform, but this year there is a clear focus on living standards. Cridland, who replaced Richard Lambert as CBI director-general in 2011, will tell bosses they must do more to help the army of 890,000 workers "stuck in minimum-wage jobs without routes to progression".
He predicts that wages will pick up next year, but says far too many people are still collecting only the minimum wage "and that's a serious challenge that businesses and the government must address".
"Businesses must support employees in every part of the country to move up the career ladder, while also giving a helping hand to young people taking their first tentative steps into the world of work," he will say. The CBI is funded by businesses and lobbies government on their behalf.
Cridland's comments are difficult for the coalition because they suggest he has sympathy with the argument offered by Ed Miliband and the shadow chancellor, Ed Balls, that not enough is being done to share the proceeds of the recovery with ordinary people. Just three months ago Cridland attacked the Labour leader's plans for an increase in the minimum wage as a "real setback for Labour's pro-enterprise credentials". He said many companies could not afford to pay employees more than the £6.31 minimum wage for adults, and £5.03 for those aged 18 to 21.
Miliband has said he will offer companies tax breaks if they commit to paying workers the living wage, which is set at £7.65 an hour. Cridland's call for better pay comes after Mark Carney, the governor of the Bank of England, last month declared the economic recovery had "finally taken hold", with the Bank increasing its growth forecasts for this year from 1.4% to 1.6% and from 2.5% to 2.8% next year. Earlier this month the ONS said the unemployment rate had fallen to 7.4%, the lowest level since 2009.
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