The Front Page: Public sector v private companies – Which CEOs earn more?

Some CEOs are sitting very pretty on huge salaries. Photo / Getty Images

A 2021 report in the United States found that CEOs typically earn 399 times as much as an average worker and that their salaries had risen 1460 per cent since 1978.

The divide, according to Otago University research, is only 30 to 50 times in New Zealand, but the eye-watering figures that some CEOs earn in the local market have also led to questions about whether those remuneration packages are justified.

These questions will only become more pointed in the coming months as unemployment starts to tick upward amid the economic strain.

Despite the clear divide between bosses and their workers, NZME managing editor of business Duncan Bridgeman tells The Front Page podcast that we aren’t likely to see many CEOs take pay cuts in a show of solidarity with struggling staff.

“Now’s the time when they need to earn their keep the most,” says Bridgeman.

“You’re coming into recession and you’re coming out of what has been a really challenging time already. Now you’re looking to grow your business out of stifled demand, so you need your chief executive to be firing on all six cylinders. I wouldn’t expect any [paycuts], but I suspect there might be some austerity around perks and travel.”

Bridgeman says that in the public sector we are likely to see salary growth of around 2 to 3 per cent across the next 12 months for those holding the top jobs. While some might question whether public sector bosses deserve more pay, Bridgeman notes that chief executives working across government-run agencies often earn far less than their counterparts in the private sector.

“There are some agencies that are quite big and complex, and the chief executive has a big job to do, but there’s a massive gap between what he or she is being paid and their comparison in the private sector,” says Bridgeman.

“If you look at the Ministry for Primary Industries or MBIE for example, their salaries are in the $500,000-$600,000 range. If you put that up against a big private enterprise, they’ll be well short, as much as 10 times less.”

Bridgeman says this can make it difficult for government agencies to attract and retain top talent, simply because they can’t compete with the huge salaries being offered in the private sector.

• So which company bosses are particularly well paid?
• Which private sector jobs look overpaid?
• How are private and public sector CEOs tracking in diversity rankings?
• Could public sector bosses benefit from spending time in the corporate sector?
• And which pay packets were the most surprising?

Listen to the full episode of The Front Page podcast to hear Bridgeman detail his findings after researching chief executive pay across the private and public sectors.

The Front Page is a daily news podcast from the New Zealand Herald, available to listen to every weekday from 5am. It is presented by Damien Venuto, an Auckland-based journalist with a background in business reporting who joined the Herald in 2017.

You can follow the podcast at iHeartRadio, Apple Podcasts, Spotify, or wherever you get your podcasts.