What is Fat Cat Wednesday? Inequality campaign exposes vast pay gap between workers and bosses

Today is "Fat Cat Wednesday", the day when Britain's top bosses will have already earned more than the average worker in the UK makes all year.

Figures from the High Pay Centre think tank show that pay for top company executives returning to work this new year will pass the UK average salary of £28,200 by around mid-day on Wednesday 4 January, highlighting the pay gap between workers and the elite.

In 2015, the Median FTSE 100 CEO pay was £3.973m, according to the group, which is equivalent to a rate of pay of over £1,000 an hour – even if bosses work long hours with few holidays. The "national living wage" for over 25s is £7.20 an hour.

High Pay Centre director Stefan Stern said: "Our new year calculation is not designed to make the return to work harder than it already is. But 'Fat Cat Wednesday' is an important reminder of the continuing problem of the unfair pay gap in the UK.

Ben Willmott, head of public policy at the Chartered Institute of Personnel and Development, said there was a "shocking disconnect" between pay for those at the top and the rest of the workforce, despite recent efforts to rein in executive pay.

"The situation is likely to get worse before it gets better, as higher inflation in 2017 means many frontline workers will face a pay squeeze at a time when FTSE 100 CEO pay is already 129 times that of the average employee," he said.

The discrepancy is a key reason for demotivated staff, Willmott suggests, with a recent CIPD study showing that nearly six in ten (59%) employees identifying CEO pay as an issue that demotivates them at work.

"Government can also play a role in helping to provide more transparency over chief executive pay by requiring companies to publish the pay ratio between what the chief executive earns and median pay in their organisation," Willmott adds.

"This will help place more scrutiny on whether top pay is proportionate to the performance of the business and improve overall fairness in organisations, at a time when many pay packets are being squeezed."

Some groups criticise the calculations behind "Fat Cat Wednesday". The HPC uses a calculation to estimate the number of hours the average FTSE 100 chief executive has to work to earn the average annual salary of a full-time worker in the UK. However, it uses a mean average for the chief executive pay and a median average to calculate the employees' pay.

Speaking on "Fat Cat Tuesday" in 2015, the Adam Smith Institute argued the calculations were based on "pub economics" rather than "serious analysis". Executive director Sam Bowman, said: "None of these complaints are valid unless the High Pay Centre thinks it has a better way of estimating the value of executives to firms than those firms themselves. Can the High Pay Centre tell us how much CEOs are worth? If not, how can they say that they are overpaid?

"Chief executives can be worth quite a lot to firms, as is shown by huge moves in company share prices when good CEOs are hired, or bad CEOs are fired. Steve Jobs can make a firm; Steve Ballmer can break a firm. The High Pay Commission's complaints only make sense if you assume firms don't actually care about making money – which is to say, they don't make sense at all."