New data reveals bumper pay for CEOs and shareholders, real-term cuts for workers
This International Workers’ Day we investigated the winners and losers of the cost-of-living crisis.
The 1st of May, International Workers’ Day, is a celebration of the working class and the historic struggles of labour movements. Rallies and protests this Monday came against the backdrop of a cost-of-living crisis as many workers struggle to make ends meet. It’s no secret that large corporations are making record profits, which in turn is fuelling inflation, the ‘cost of profit’ crisis would be a better term.
Analysis by Oxfam of the latest data from the International Labor Organization and government statistics agencies revealed how workers around the world are getting steep real-term pay cuts while bosses and shareholders are getting bumper pay-outs. In this week’s Equals, we’re digging into those findings (methodology here).
Pay rises and cuts in numbers
CEOs get a real-term pay rise, what a surprise. 2022 executive pay data was available for South Africa, India, US and the UK, from various sources – on average the top-paid CEOs in these four countries enjoyed a 9% pay hike.
In India execs received $1 million on average last year, a real-term pay rise of 2% since 2021, in just four hours making more than an average worker earns in a year.
In the US and the UK, 100 of the highest-paid CEOs made $24 million and $5 million on average, a real-term pay hike of 15% and 4.4% from the previous year. The average worker in the US would have to work for 413 years to match what a top-paid CEO made last year.
Top-paid chief executives in South Africa made $800,000 on average in 2022, 43 times the pay of the average worker. Their real-term pay rose 13% last year.
Working for free. Across 50 countries where 2022 wage data was available, workers on average worked six days "for free” last year because their wages lagged behind inflation – a real-term pay cut of 3%.
Brazilian workers’ real wages for example fell 6.9% (equivalent to 15 unpaid working days) last year, while in the US and the UK, the average worker took a real-terms pay cut of 3.2% (6.7 unpaid working days) and 2.5% (5 unpaid working days), respectively.
Minimum wages. Minimum wages have also fallen behind inflation in most countries. Of the 41 African countries where data was available, wages on average fell by 6% in real terms compared to 2021. In India, the 2022 national floor wage fell by 6.7% in real terms compared to 2021.
Record pay-outs to shareholders. As big corporations cash in on crisis to make big profits, shareholders are the ones who’ve been reaping the benefits, not workers. Shareholder dividends hit a global record of $1.56 trillion in 2022. US corporations paid out $574 billion to their shareholders, more than double US workers’ total real wage pay cut. Brazilian shareholders received $34 billion, just shy of what the country’s workers lost in real wages.
Exorbitant shareholder payouts benefit the richest in society, exacerbating already high levels of inequality. The wealthiest 1% of South Africans own more than 95% of bonds and corporate shares, while the richest 0.01% own 62.7%. In the US, the richest 1% hold 54% of shares held by US households.
The only rise workers have seen is to unpaid care work. Unpaid care work by women is one of the most significant contributions by workers to the economy. Women and girls do 76.2% of all unpaid care work and globally are putting in 4.6 trillion hours of unpaid care work every year. If this work was valued at a minimum wage, it would be an industry worth $10.8 trillion per year (See Alex Bush’s fantastic blog for more on this).
New campaign to stop cowboy lenders. 54 countries have unmanageable debt, which big banks and hedge funds are making millions from interest payments – for example, they could make 200% profit from Pakistan alone. Big financial could make $30 billion in profit by resisting debt relief measures. People in the UK can write to their MPs and call on them to introduce a law to cancel debt for lower-income countries.
Greedflation: Of course, many have tried to blame increasing wages for rising inflation (despite the fact that they are below inflation, go figure) – a point we’ve been rebutting for a while now with a bulletin a few weeks ago, and our podcasts with Joe Stiglitz, Lyndsay Owens and Ann Pettifor.
There’s been a slew of articles out in the last couple of weeks about the extent to which excess corporate profits are fuelling inflation. Larry Elliot in the Guardian points to the IMF and ECB to make the case for greedflation and the Wall Street Journal points particularly to food company profits and food prices. Business Insider has a long read which looks at the evidence in depth. The FT’s analysis was more inconclusive, so they turned their dataset over to the readers, but The Economist isn’t quite so convinced with the questionable conclusion “If you are fuming at paying $10 for a coffee, blame the barista serving it to you as much as the owner.”
No doubt it’s something Equals will return to, so share any data or articles that you think could help in the comments below.