At the start of 2023 it seems that the cost of living crisis caused by the knock-on impact of Brexit, Covid and the war in Ukraine is set to be with us for the year. And yet, whilst two out of three of these factors were unexpected and unavoidable, in my view, this has been a disaster waiting to happen.

Since the financial crisis in 2008 there has been a marked increase in the inequality in our society. The billions pumped into the system via quantitative easing simply benefited the hedge fund managers, financiers and property owners and certainly did not ‘trickle down’ to normal people. Since 2008 the ratio between CEO remuneration and average worker salary has increased to abhorrent levels and became even more extreme during Covid. By lunchtime on 2nd January, the CEOs of Tesco and Sainsbury’s have already earned more than their average workers. Over this past weekend I heard that the CEO and co-owner of Bet365 awarded herself a £213m pay award for the past year with another £100m in share options. And this from an industry that exploits addiction and makes many poorer people struggle even more.
How can any normal, good society think that these levels of inequality are acceptable and let them go unchallenged?

So, whilst there are circumstances beyond our control that have exacerbated the cost of living crisis, I strongly believe that the inequality in pay within the UK’s businesses are a contributory factor. And there is an onus on business to do something about the crisis. For sure, workers expect leaders in their business to be paid more than them for the extra responsibility and skill required to do those jobs, but not at more than 300 times their own salary.

As another example of how absurd this has become, I calculated last year that the average worker at Apple (which is far higher than the average for the USA) would have had to start work for them in 545 CE for a cumulative salary of what their CEO was paid in 2022. And by buying Apple products you are contributing to this large societal inequity. But I don’t blame you: my Samsung is probably doing just the same, it is the system that desperately needs changing.

However, as business leaders we do have some ability to start the change. One of the questions in the workers section of the B Corp questionnaire, which now over 1,100 UK businesses have certified through, asks about the pay ration between the highest and lowest employee at the business. To score maximum points there must be a ratio of 5:1 or less. This seems to be a much better place to start from. What would this ratio be at your company?

There are several other ways we can help and most of these were mentioned at the Cost-of-Living Criss event ran by Ethical Reading at the end of last year. Many businesses represented there had paid a one-off cost-of-living bonus to their people, and several plan to do the same this year. I suggest if you do this, that is heavily skewed towards those at the bottom end of your pay scale as they are the ones who will feel the pain the most. Other businesses are reviewing their pay and ensuring there is bias towards those at the bottom and so reducing the high-low pay ratio.

I know a couple of businesses that have paid a ‘working at home’ payment to allow workers to equip their home to work at home more effectively. Of course, allowing workers to work more days at home reduces their commuting costs too. One business at the meeting were planning on using some extra space within their offices as a “warm zone” for people to come and keep warm during the extremely cold weather and save their home heating bills.

I am a strong believer that those businesses that ‘do good’ will be the ones that prosper in the future. They are the companies that good people want to work for, they are the ones that see less churn in their workforce, and they are the ones that are attracting more equity investment. Being a good company and being a profitable company are not mutually exclusive. In fact, it is by putting people first that will generate the profits of the future, which will allow us to do more to benefit those whom we impact as a business.

Yes, we still need to push for the systemic change we need to see, but let’s start today by doing what we can.

Paul Hargreaves is chief executive of Cotswold Fayre.