Wages for everyday Australians have been stagnant, and growth in profits has significantly outpaced growth in average wages.
Current evidence shows that the average total pay of ASX100 CEOs rose by 9 per cent recently – over four times the speed of average wage growth. The median ASX100 CEO earned more than $4 million.
The best-paid of Australian CEOs made $37 million in 2016-17. That’s $10 every eight seconds.
This is a local response to a global problem. In 2015, CEOs of S&P500 companies in the US averaged a pay packet 335 times the size of the average American worker.
Labor will address public concern that CEO salaries are growing at an unfair rate and leaving workers behind.
A Shorten Labor Government will require listed firms with more than 250 employees to report the ratio of their CEO pay to the pay of the median employee.
Alongside their pay ratio, firms would be encouraged to provide a public explanation of the remuneration strategy.
By extending current market reporting requirements for public companies, it will help inform investors as they calculate risks and decide where to invest their money.
This is a pro-growth reform and complements other transparency initiatives announced by Labor, including the public release of gender pay gap information within firms, our Tax Haven Transparency package, and the annual release of tax data for more large private firms.
The requirement parallels measures introduced in the United States and Britain.
The measure would apply from the 2021 financial year, to allow the Australian Securities and Investments Commission time to issue appropriate guidance, and for firms to comply with the new requirements.