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  • Shareholder pay-outs have soared £440bn above inflation since 2008, while wages have been squeezed, growing £510bn less than inflation
  • Analysis demonstrates that the UK economy has the capacity for wage increases that workers are being denied
  • Truss should crackdown down on shareholder pay-outs that deprive British industry of investment instead of pitching herself against workers, says TUC

A new TUC report published today (Sunday) details how UK businesses have prioritised the interests of shareholders over workers, and how profits have been directed away from wage growth and investment in favour of dividend growth.

Redistribution from wages to dividends

New TUC analysis shows that over the last decade UK businesses have rewarded shareholders over workers, with dividends growing three times faster than wages.

The report outlines how the Conservative government’s failure to reform company law that favours shareholders over other stakeholders has left workers missing out.

The TUC compared the rates of wage growth and dividend growth (including share buybacks) before and after the financial crisis:


Average annual rate of growth

Wages/dividends growth ratio

CPI inflation














Before the financial crisis, dividends grew at double the rate of wages. Since the financial crisis, the gap has widened with dividends growing at more than three times the rate of wages.

Dividends above inflation, wages below inflation

Despite Conservative government promises since 2010 that ‘we are all in this together’, shareholders took inflation-busting dividends, while wages have been devalued.

If both wage growth and dividend growth had matched inflation since 2008, TUC analysis estimates that cumulatively £510 billion more would have gone to wages and £440 billion less to shareholders.

The TUC says this shows that the UK pay squeeze results in part from decisions companies make to favour shareholders over the workforce.

These outcomes are shaped by government policy. In the last decade, Conservative ministers have chosen to hold down pay across the economy, cut back the rights of workers and their unions, and leave Victorian era corporate governance structures untouched. And this has left workers losing out at the expense of shareholders.

The TUC says that the shift from wages and investment to excessive dividends holds back business growth and productivity gains. The results are shown in how poorly the UK compares with our counterparts in the OECD for business investment and productivity.

A stronger, fairer economy

Today’s report Companies for People looks at how we can fix some of the core problems that mean UK businesses fail to reward and value their staff – and fail to create the kind of sustainable economic growth that everyone in the UK can share in.

While big businesses are a vital part of our economy, generating much of our national wealth, they are not being run in a fair, efficient, or sustainable way for Britain.

Many of the laws and regulations that govern firms have been in place since Victorian times. They need modernising to make sure that firms give as much weight to the interests of their workers, and to the wider community that they operate in, as to shareholders.

Pay bargaining and employment laws also need modernising, so that working people get job security and more power to bargain for a fair share of the wealth that they create. This will also recycle the wealth that Britain creates through spending within our economy, instead of much of it leaving the UK.

The TUC proposes five key actions to ensure that UK companies better serve the national interest:

  1. Modernise company law: Current law prioritises shareholders and denies equal weight to the interests of staff and other stakeholders. UK law needs updating so that boardrooms serve the interests of all stakeholders in how they manage the firm, and so they are required to focus on long-term company success as their primary aim.
  2. Seats for workers on company boards: The TUC proposes a requirement for elected worker directors to comprise one-third of the board at companies with more than 250 staff. This is standard practice already in many countries and is associated with greater pay equality and higher levels of research and development investment.
  3. Stronger pay bargaining rights: Working people need stronger rights to negotiate collective pay settlements. This should include fair pay agreements to set minimum pay across whole sectors and, where a union is recognised in one site, union rights to contact workers at all sites run by the same company. 
  4. Stronger employment rights for supply chain staff: Businesses should be held responsible for basic employment rights for all workers in their UK supply chain.
  5. A £15 minimum wage: The government should set a new minimum wage target at 75% of median hourly pay, with a roadmap to reach £15 per hour as soon as possible, for workers of all ages.

TUC General Secretary Frances O’Grady said:

“If you work for a living, you should earn a decent living. But too many businesses are lining shareholders’ pockets without giving workers a fair deal.

“British companies are being used as cash machines for shareholders – because boardrooms have been given the wrong incentives.

“When you see working people fighting for better pay, they just want a fair share of the wealth they create. But boardrooms are raiding company coffers for shareholders, instead of funding fair pay rises and investment.

“We need a government that will create a fair balance of power between workers and employers – not one that pushes pay down, attacks workers’ rights and refuses to update Victorian company laws.  

“It’s time to get back to solid wage growth and sustainable economic growth that everyone in the UK can share in. For this we need responsible firms that serve their workers and communities – not just their shareholders.”

On the Prime Minister’s plans for workers and business, she added:

“The new Prime Minister has pitched herself against Britain’s workers, calling them lazy and overpaid. And she’s planning new laws to cut workers’ rights and hold down pay.

“If she drags down workers, she will drag down the economy too. To strengthen our economy, she should crack down on pay-outs that deprive British industry of the investment we need.”

Editors note

- TUC analysis and report: The methodology for the analysis above is explained in an annex to the report Companies for People, which the TUC has published today. The report gives further policy detail on policy on modernising company law and giving workers a fair balance of power with employers. The full report is here:

- Ownership of shares in UK firms: 56% of UK shares are now owned by overseas investors up from 12% 1990. And less than one in fifty shares are held by UK pension funds. Excessive dividends therefore remove wealth that could circulate back into the UK economy through household spending (via wages) and business spending (via investment).

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