New study reveals the true size of the gap between the pay of CEOs and employees
Australians massively underestimate the pay gap between themselves and chief executive officers, according to a new study.
The research from the Melbourne Institute of Applied Economic and Social Research, at the University of Melbourne, found Australians believe CEOs of companies listed on the Australian Stock Exchange earn just seven times more than the average full-time worker.
In reality, the study reveals, the typical CEO earns 103 times as much as the average worker, well above the amount people would prefer, which was about three times as much as the average worker.
The wage gap findings are much higher than the recent report from the Australian Council of Superannuation Investors, which also showed a growing wage gap between CEOs and average employees.
According to the ACSI report, the average pay for ASX100 CEOs was 55 times the average earnings of an Australian worker.
There was a slight narrowing over 11 years of pay data, but the gap has remained between $5 million and $6 million every year since 2014, except for FY17 and FY21, the report added.
Underestimating the wage gap
Employees' underestimation of the pay difference is also evident across other parts of the world, according to the Melbourne Institute of Applied Economic and Social Research study.
In the United States, Americans estimate that CEOs earn only 18 times more than the average worker. In reality, however, the typical CEO earns as much as 269 times the average worker's salary.
Dr Christopher Hoy, a University of Melbourne research fellow and co-authior of the study, told The Sydney Morning Herald most people are "astronomically off the mark" when asked what the average CEO earns.
"There is a genuine misunderstanding of just how widespread wage inequality is," Hoy said.
Compensations received by CEOs across the world have been going up since 2019, according to an analysis from Oxfam this year.
It found that the average CEO pay went up by 50% in real terms since 2019, much higher than the 0.9% growth among average workers.
Separate findings from the International Labour Organisation (ILO) also revealed that the real wages of regular workers grew by just 2.7% in 2024.
