Life in The Boardroom 2023/24: how have companies responded to the cost-of-living crisis?

June 6, 2024

The continuing cost-of-living-crisis saw its apogee when we collected data for our new exclusive survey of Chairs and NEDs – Life in The Boardroom 2023/24. With the ONS reporting a 7.9% inflation rate in 2022, only mildly declining to 6.8% in 2023, such rates have not been seen for thirty years.

We found that salary raises were very similar between executives and the wider workforce. Both saw a 6% raise on average.

Executive directors salary increase Wider workforce average salary increase
Average 6% 6%
Received zero increase 14% 5%

However, the above result only considers those who received an increase. Receiving a 0% increase was far more common among executives than it was in the wider workforce, among whom only 5% saw no raise in contrast from 14% of executives.

But this is not the end of the story regarding executive pay. Executives typically have relatively more dimensions to their remuneration than just salary, yielded in various way from firm to firm. For example, via annual bonuses, share awards, and some may postpone executive pay reviews, as was frequently seen during the COVID pandemic.

We continued to find that a strong majority thought their remuneration policy responds adequately to the increased needs of their staff in light of the crisis (59%). Only 8% out-right disagreed. Many respondents, particularly from the not-for-profit sector, pointed to difficulties in increasing pay due to growing financial stress on the Company.

Looking at ONS statistics on median wage growth seems to roughly support these responses. Though inflation was indeed high in 2022 and 2023, wage growth was also unusually high in these years at 6.9% and 6.8%. A cynical viewpoint may expect businesses to take advantage of inflation to mask cost savings. But the past decade indicates that wages do follow inflation to an extent. Conventional economic policy seeks that wages grow beyond inflation rather than simply keep apace but the past decade has barely seen that. From 2013 to 2023, median wages grew by 36% while the CPI inflation index grew by 31%, leaving only 5% ‘real’ growth. Contrast from a 22% ‘real’ growth from 1999 (the earliest data) to 2009 when wages grew by 43% and CPI inflation by 21%.  Note these are median wages so a worker’s experience of inflation may vary based on factors like their location, industry, personal demographics, etc.

Much more data on the earnings growth and many other compensation statistics, time use, opinions, and experiences of Chairs and NEDs can be found in our 80+ page report on 788 boardroom positions. Click here for a free preview.

For further discussion on this article or information on MM&K’s products and services, do not hesitate to contact James Sharp.

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