Payouts to shareholders have increased three times faster than workers’ wages since the 2008 financial crash, according to a new analysis that unions claim shows companies can afford to pay higher salaries.
Shareholder handouts, through both dividends and companies buying back their own shares, have soared £440bn above inflation since 2008. Meanwhile, wages have fallen, growing £510bn less than inflation. The gap has widened since the financial crash. Before the crisis, dividends grew at double the rate of wages.
The analysis, carried out by the TUC, is being used as evidence by the union movement that firms do have the capacity for wage increases if they allow their workers a greater share of the business’s wealth.
It comes after similar research found bankers’ bonuses had doubled since the 2008 crash, with bonuses in finance and insurance reaching a record £20,000 a year on average. Kwasi Kwarteng, the former chancellor, announced plans last month to scrap the bankers’ bonus cap.
The TUC accused ministers of helping to hold down pay for the last decade, cut back the rights of workers, and leave “Victorian-era corporate governance structures untouched”. Public-sector wages have been repeatedly held down below inflation under austerity measures pursued by successive governments. The TUC is calling for an overhaul of company law, seats for workers on boards and a £15 minimum wage.
“Too many businesses are lining shareholders’ pockets without giving workers a fair deal,” said Frances O’Grady, TUC general secretary. “British companies are being used as cash machines for shareholders – because boardrooms have been given the wrong incentives. It’s time to get back to solid wage growth and sustainable economic growth that everyone in the UK can share in. For this we need responsible firms that serve their workers and communities – not just their shareholders.”
O’Grady accused Liz Truss of planning measures that would cut workers’ rights and hold down pay further. “To strengthen our economy, she should crack down on payouts that deprive British industry of the investment we need,” she said.
Downing St is said to have ruled out any major changes to the working time directive as part of its dash for growth, but is yet to announce the supply-side reforms it says will generate growth.