Income differences between employees and CEOs have risen dramatically in just one year

Palkat ja palkkaus

There is clear evidence that the income gap between employees and publicly listed company chief executives has widened significantly in the past year. Now, a private sector employee must work for 47 days to earn what a major listed company CEO earns in a day. A year before, it took 34 days’ work.

March 9 was the moment at which the average private sector employee earnings of this year surpassed a private company chief executive’s daily pay. A year before the date was February 18.

The figures are calculated annually by the Finnish Confederation of Professionals STTK. They take into account the longer working hours of CEOs, too. The calculations are inspired by the Fat Cat Day in the UK.

In 2018, the median total income of a major private company CEO was 2.3 million euro. For the same period of time a private sector employee earned an average of 40,975 euro. In 2017, the figures were 1.6 million euro for CEOs and 40,250 euro for employees.

Small income differences positively impact welfare and economic growth

Antti Koskela, an STTK economist wishes to point out that the confederation is not against discrepancies in incomes but it is important to curtail their growth.

“According to economic research relatively small income differences positively impact welfare and economic growth. Major income differences slow down economic growth, encourage populism and make extremist movements stronger.”

STTK stresses that a share of the outcome belongs to everyone. Reward should not be the privilege of the top leaders only.

“Good results during periods of economic boom should not only benefit CEOs”, Koskela says. “For example pay incentive systems and staff funds are good ways to reward all the staff. The logic behind such systems must be transparent in working places.”

Read more:

Finnish employee must work 34 days to reach a single day’s pay for CEO (18.02.2019)



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