Researchers at the London School of Economics have found that rent sharing among 300 London-based companies, including G4S and Tesco, has decreased significantly since 1983, which has led to an increased wage gaps between employees at the bottom and top percentiles of the salary rates for each company.
Rent sharing refers to the relative rises in employee pay at the bottom and top of a company compared to the companies net increases in profits.
The study has also highlighted that companies that saw higher increases in profits, due to a larger monopolisation of their respective markets, actually saw lower rent-sharing and higher income inequalities as profits rose.
in the 1980s, companies that experienced higher profits would on average pay their employees 50% higher wages directly due to rent-sharing, when compared to companies that didn’t experience an increased profit. However, at present day, this difference is now aw low as 10% on average, which means that many companies are less likely to share increased profits with workers on the lower end of the business hierarchy.
While the extent of inequalities driving the most profitable businesses in Britain appears shocking, it may not come as much of a surprise for many, as income inequality is a national scandal that the political turmoil of Brexit has helped to shroud over recent months. A recent survey of European countries found that the UK had the second highest poverty rates of country in Europe, beaten only by Romania.
The lastest World Inequality Report for 2018 also showed that in almost all regions of the world, the top 1% of earners globally have taken twice as much of the global growth for themselves as have the poorest 50%