Shareholders have proved to be more successful at securing bumper payouts than workers have at winning higher pay, according to two studies that show dividends outstripping wages by a considerable margin in recent years.
Oxfam said analysis of global data showed that dividend payments to shareholders over the last three years grew an average of 14 times faster than worker pay across 31 major economies.
The charity said the division of profits in economies that account for 81% of global income, or gross domestic product (GDP), is heavily skewed to shareholders, creating “a yawning gap” between the rich and those on middle to low incomes.
Published to coincide with International Workers’ Day, the analysis shows that in the UK, after taking inflation into account, dividends increased by 13% between 2020 and 2023, while average wages remained stagnant.
A separate study of UK data over the last 30 years by the left-of-centre Common Wealth thinktank found that between 2000 and 2019, dividend payments grew 5.5 times faster than workers’ pay on average each year.
If pay had kept pace with dividend payments, workers would each be £2,844 better off a year, it concluded.
If employee compensation and dividend payments had grown at an equal pace between 1988 and 2019, the report found, hourly labour compensation on the eve of the pandemic would have been almost 9% higher than it actually was.
To calculate the pay/dividend gap, the thinktank used a weighted average that compensated for the relatively small amount of dividend payments compared with much larger salaries and pensions that make up the bulk of worker compensation.
Between 1988 and 2019, Common Wealth found that labour compensation increased by an average of 1.6% a year, while the figure for dividends grew by 4.2%. If both had risen at the same pace of 1.9%, which represents a weighted split, labour compensation would have been 8.9% higher an hour by 2019.