‘Fat Cat Day’ will distract us from the biggest employment issue of 2026
As executive pay grabs headlines, rising unemployment could prove the bigger threat to the UK’s workforce, writes Edmund Greaves
‘Fat Cat Day’ returns on 6 January, serving as a stark illustration of the UK’s income inequality.
It marks the moment a FTSE 100 CEO’s year-to-date earnings overtake the entire annual salary of the average British worker according to the High Pay Centre. The numbers associated with this are typically mind-boggling but bely some important points around the disparity.
It goes under-remarked that UK CEO pay actually lags competitors such as the US by a wide margin, although thanks to pro-business reforms (such as scrapping the bonus cap) executive remuneration is starting to catch up with that on offer across the pond.
It is also of note that 2025 was rather a good year for FTSE 100 CEOs, if shareholder value was their goal. At the time of writing (30 December) the FTSE 100 is set to have risen 20% in 2025 – an astonishingly good year for an index that routinely gets denigrated for its lack of whizzy tech firms.
By way of comparison, the S&P 500 has grown a relatively paltry 17.7%. The former has a current yield of 3.02% vs 1.13% for the latter – meaning an even more handsome total return for lovers of big-ticket British shares. So much for American exceptionalism! UK CEOs are earning their supper, it seems.
Added to that, the average worker’s earnings have been rising ahead of inflation for some time now. Indeed, real pay has grown faster than inflation for more than two years – it was last behind inflation in May 2023. This is the longest period of sustained real average wage growth since 2016 (and could yet continue if disinflation persists).
But bigger than all this is what I think is perhaps going to be the biggest labour market story of 2026 – rising unemployment.
Employment has been stubbornly resilient for a long time now. This is both good and bad. Good because people having jobs is generally a net positive. Bad because of a lot of the work available is low quality and poorly paid (as the High Pay Centre points out).
Unemployment is only a positive if you are the most ‘glass half full person’ in the room. At the margins, yes, some people who find themselves without work will start those businesses they’ve always dreamed of. For millions of other though, this is not the reality of life in modern Britain.
Rising unemployment will condemn more people to dependency, some of whom once in never leave it. For many others, particularly the young, it may merely encourage more political radicalism to layer on top of what was already rising in 2025.
The labour market is cooling, that much is evident. Now that the Government’s package of labour market reforms, the Employment Rights Act 2025, is now law – we can only guess at what it will do to employment in 2026, but there’s a good bet it will harm it.
It remains to be seen. But it is more important at the moment to pay attention to than ‘Fat Cat Day’, to my mind at least.
What’s coming up in January 2026
January looks set to be a busy month for on-diary events. See our full schedule for more on that.
10 January is ‘Sunshine Saturday’, the first Saturday after the Christmas and New Year break, considered by the UK travel industry as typically the most popular day of the year to book a foreign trip. Meanwhile, Blue Monday, the ‘most depressing’ day of the year falls on 19 January this year.
ONS monthly GDP estimates fall on 15 January while the ONS Labour Market Overview: January 2026 is on 20 January. ONS UK Monthly Inflation figures are out on 21 January.
Finally on 28 January is the latest US interest rate decision. The Bank of England meanwhile, is on a break from rate decisions for the month.
Wishing you all a happy and productive new year from all of us here at MRM, Mouthy Money and Octo Members.