Austaxpolicy blog

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The ‘Inequality Wars’: CEO pay is one part of complex picture post-GFC
by Peter Whiteford, 12 December 2017

Over the past year, there has been considerable disagreement about whether inequality has been rising or falling in Australia. There has also been debate about what governments have actually been doing about inequality, with claims that the Turnbull Government has surrendered to “the politics of inequality”, according to researchers from the Centre for Independent Studies arguing for further cuts in public expenditure. At the same time, as economist and Fairfax columnist Ross Gittins recently pointed out, the Government is attempting to proceed with budget cuts in social security that will save $478 million over four years at the expense of some of those actually most in need.

The evidence for trends in inequality is mixed.

On the one hand, new analysis has found that CEO remuneration for ASX100 companies is now 78 times average weekly earnings. Over the year to May 2017, average earnings for full-time workers increased by about 2.1 per cent — barely more than the inflation increase of 1.9 per cent — while for CEOs the increase was 3.5 per cent.

This appears to continue longer-term trends.

Research by Andrew Leigh and Mike Pottenger in 2013 found that BHP CEO earnings were as low as six to seven times average earnings in the late 1970s, before rising to 50 to 100 times the average Australian earnings by the 2000s — and 150 to 250 times average earnings when including long-term incentives, such as share options.

Over the period since the late 1970s and early 1980s, it is not just CEOs who have done better than average workers.

Read the full article at Austaxpolicy blog.

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