ICTU: Time for Tough New Rules to Tackle Fat Cat Pay

The Irish Congress of Trade Unions has today published the fourth in a series of annual reports on chief executives’ pay – Because We’re Worth It: The truth about CEO pay in Ireland.

Based on the 2018 filed accounts of 26 companies – 20 of some of the biggest companies listed on the Irish Stock Exchange and 6 Irish based companies listed on the London Stock Exchange – the report shows that CEO pay increased in 11 companies, ranging from 9% in Permanent TSB to a 99% increase in Smurfit Kappa. Meanwhile, the average full-time worker’s wage was up just 2.6% on 2017.

Annual pay and benefits were close to or above €1 million for 22 of the 26 CEOs, and as much as €8.2 million.

Congress researcher, Eileen Sweeney, who has tracked the changes in the pay packets of each chief executive since 2015 said: “The building materials company, CRH continues to have the highest CEO-to-average-worker pay ratio, at 212-to-1.

“That is, it would take an ordinary worker 212 years to earn what the CRH boss took home in 2018.

“This is marginally narrower on the previous year as a result of a €296,000 reduction in the bonus paid to the chief executive to €2.04 million in 2018. However, a wide divide persists.

“It would take an average worker more than 50 years to earn what half of the bosses at top Irish companies take home each year” she added.

Commenting on the findings, Congress General Secretary Patricia King said: “The telephone number-like-salaries and the unjustifiable gap between the top and rest of the workforce needs to be urgently tackled. This is now recognised by the European Commission and the OECD – institutions not known to be natural bedfellows of trade unions.”

Earlier this year, the European Commission pointed out that market income inequality (i.e. income before taxes are deducted and social welfare top-ups are added) in Ireland is the highest in the EU28. The OECD’s 2018 economic survey of Ireland also pointed out that income inequality and poverty in market income are high.

“The new EU Shareholder Rights Directive, which was due to have become Irish law by June of this year but has not yet happened, is a good first step in pay transparency and tackling wage inequality” said Congress Social Policy Officer, Dr Laura Bambrick.

The directive, for the first time, requires listed companies explain how the pay of their employees were taken into account when determining the salaries for company bosses.

“However, despite the efforts of Congress, as detailed in our report, Government refuses to grasp the opportunity the directive presents to include more ambitious provisions – such as legally obliging listed companies to make pay ratio disclosures” said Dr Bambrick.

She added: “Publicly listed companies are required by stock market rules to publish certain information, including pay of their management team. Private companies are under no such obligation and their executives’ pay remains shrouded in secrecy. But, there is nothing to prevent a future Government making such reporting a requirement of firms tendering for public contracts.”

“Government ignores the enormous economic and social consequences of excessive executive pay at our collective peril” warns Ms King.