Global shareholder payouts rise 14 times faster than worker pay
On International Workers’ Day, wealthy shareholders have more to celebrate than workers.
Today is a celebration of the hard-won rights for workers around the world but also a reminder that the struggle remains, and even more so, as conditions for many are regressing.
In this week’s Bulletin, we’ve analysed new data and found worrying trends in shareholder payouts and wages. While it paints a gloomy picture, there are rays of hope.
Read our full press release and methodology note.
Shareholders vs. Workers in numbers
Record-breaking dividend payouts. Global dividend payouts to rich shareholders jumped by 45% ($195 billion) in real terms between 2020 and 2023. This is another new record for shareholders and Janus Henderson forecasts dividends will hit a new record of $1.72 trillion in 2024. Shareholder payouts seem to be affordable for corporations, though the same apparently isn’t true for wages.
Falling and stagnating wages. As Equals reported last year, the era of pandemic followed by war-fuelled inflation brought with it possibly the largest pay cut in recent history. Despite easing inflation, in many countries wages are still failing to keep up. Wages in the 31 countries (where there was both 2023 wage and shareholder data available) grew on average by just 3% in real terms. China lifts this average significantly, and if excluded, between 2020-2023 wages fell in real terms by 3%.
Minimum wages are not enough. We compared data from the Global Living Wage Coalition to statutory minimum wages from countries across Africa, Asia and Latin America. Living wages is one way to estimate a wage that allows workers to meet basic needs, such as housing, food, healthcare, clothing and transportation. Only 2 out of 37 countries have a minimum wage above the living wage and minimum wages on average provide just 38% of the wage needed for a living wage. Bangladesh’s minimum wage provides a mere 6% of a living wage, and in Ghana it provides just 12%.
Increasing in-work poverty. Using ILO data, we found that nearly 1 in 5 workers globally earns a wage below the $3.65 PPP poverty line. 66% of workers in low-income countries earn a wage below the $3.65 PPP poverty line. This is a 1% increase since 2020, which marked the reversal of a long-term decline. Afghanistan (22%) and Sri Lanka (9%) have seen some of the largest increases in in-work poverty at the $6.85 PPP poverty line.
Canary in the coalmine of inequality. Shareholder payouts rising 14 times faster than worker pay is a warning sign of worsening inequality. According to Oxfam commissioned Wealth-X research, the richest 1% own 43% of all global financial assets. That means that of the total $1.6 trillion dividends recorded by Janus Henderson, $719 million went to the top 1%. That means that, on average, people in the top 1% pocketed $9,000 each, just from owning company shares. It would take the average worker, eight months of hard work to earn that much. The relationship between returns on capital and labour is a major driver of inequality.
Corporate inequality footprint. Colleagues in Oxfam America have developed a framework for evaluating how large corporations are contributing to inequality – looking at indicators of their inequality footprint on people, power, profit and planet. Of the 200 largest US corporations, the findings were damning:
Less than 5% of corporations are committed to paying a living wage.
Women and people of colour are overrepresented in low-wage categories and underrepresented in corporate leadership positions.
Shareholder payouts, along with CEO pay, have risen to record levels in the aftermath of the COVID-19 crisis.
On average, corporations increased their emissions by 3% between 2020 and 2021.
A shareholder first model that fuels inequality. Oxfam France’s research of CEO and shareholder pay found equally worrying trends among the 40 largest French companies:
CEO pay increased by 27% while the average salary within their companies only increased by 9%.
76% of corporate profits went to shareholders.
CEOs are two times more likely to be named Jean than to be a woman CEO.
This corporate model is designed to put shareholder interest first, and workers and planet second. This is driving economic, gender and racial inequality while also fuelling in-work poverty and planetary destruction. But it doesn’t have to be this way.
Alternatives exist. Injecting democratic ownership and governance into mainstream business could help fight these inequalities. This is not unthinkable: in 2018, nearly 23 million employees, representing more than 19% of all US workers, owned some share in their employer. The former billionaire owner of clothing company Patagonia put the company’s ownership into a trust that will benefit environmental efforts and declared that “Earth is now our only shareholder.” Many companies are converting from privately owned to employee- or community-owned businesses.
The transformative effect could be huge. If just 10% of US businesses were employee-owned, this could double the wealth share of the poorest half of the US population, including doubling the average wealth of Black households.
Something to apply for, read and listen to
Amazing job alert! Our friends at the Fight Inequality Alliance are on a recruitment drive with seven posts open. They are a fantastic organisation so please take a look at the jobs and spread the word.
Read this open letter by ministers from Brazil, Germany, South Africa and Spain: Why we need a global tax on billionaires” – a huge moment in the tax the rich campaign.
Read this article by Jason Hickel, Michail Moatsos and Dylan Sullivan, who have developed new and more robust ways to measure global extreme poverty, based on people’s access to essential goods. This data presents a more complex – and more troubling – story of poverty than existing narratives would suggest.