We all want to lead long and healthy lives, where all children can flourish and learn regardless of their background, and where our streets and neighbourhoods are happy and safe.
But communities with high levels of income and wealth inequalities see a very different reality. Healthy life expectancy is reduced, educational attainment is lower, as are reported levels of happiness. Where the gap between rich and poor is big we also see higher rates of crime, with more people in prison, and more people affected by mental health issues, including addiction problems and eating disorders.
Extreme pay helps concentrate wealth at the very top, driving inequality and its consequences across the country. CEO pay, in particular, has soared by nearly 1000% in four decades, and today, the High Pay Centre has revealed yet another boost for the UK’s CEOs. By 1pm on 4 January, FSTE 100 CEOs will already have made the UK’s yearly median wage. That’s a 9.5% increase to £3.81 million for CEOs, well ahead of the pay growth for median workers — making it another year where the gap grows.
How quickly will FTSE 100 CEOs make your yearly salary?
As well as exacerbating our inequality crisis, soaring CEO pay comes with its own problems for society. Research has found links between excessive CEO pay and lower trust of corporations, worse relations with employees, worse job satisfaction, worse products, and higher inflation. And of course, today’s data from the High Pay Centre only looks at salary: the vast majority of CEO compensation comes from other bonuses. As executives make vast and growing sums through stock options, it encourages the kind of toxic focus on share price that leads companies to damage society, their workers, and their long-term sustainability as a company.
This is not inevitable. These systems, structures and business practices are not laws of nature; so we can choose to change them and work towards creating a world with greater equality, greater happiness, and stronger communities.
Our economy is prejudiced towards an extractive and financialised business model — with a few fat-cats at the top extracting profits from the system and hoarding it for themselves.
But there are other models to follow. In co-ops, employees often have a stake in the ownership of the company. Profits are shared among members, fostering a sense of shared responsibility and collective success. This shared ownership model can contribute to reducing income inequality by aligning the interests of all members. Their focus on rewarding workers and long-term decisions mean that the survival rate after 5 years for co-operatives is almost double that of corporations. Instead of profits being diverted to executive compensation, members democratically chose how to use them. We’ve seen co-operatives chose to lower their prices, invest in community programmes like free school breakfasts or local sports teams, and focus on strengthening other local businesses, all while growing at comparable rates to corporations.
In the UK, successive governments have tried to shift more and more responsibilities from the state onto civil society. Webs of charities, social enterprises, and other third-sector organisations now handle housing, healthcare and support, and millions of food parcels for the UK’s vulnerable in areas the state has retreated. This Victorian-style safety net has encouraged many organisations to behave like public services themselves, operating within our flawed system without challenging it. Genuinely democratic and community-based co-operatives could offer a real alternative.