Bonuses in the City have reached an all-time high and are growing six times faster than salaries, according to a new TUC report released today (Monday).
Bonuses in the banking and insurance industry increased by 27.9 percent over the last year, six times faster than average salaries, which increased by 4.2 percent during the same period.
The average bonus in the banking and insurance industry increased from £3,146 in the first quarter of 2021 to £4,021 in the first quarter of 2022 as a result of this growth rate.
During the same period, the average monthly wage in the United Kingdom increased from £2,315 to £2,415. (in nominal terms).
It is usual for highly compensated City executives to get substantial bonuses on top of their wages. The TUC emphasises that there are also a substantial number of low-wage workers in the financial services industry, who earn considerably less.
These numbers place City bonuses at an all-time high, surpassing average salary in nearly all industries.
In March 2022, banking and insurance bonuses were 2,4 times the typical worker’s basic monthly pay, and greater than the average basic monthly pay in every other sector of the economy, excluding mining and quarrying.
The entire value of City bonuses in March 2022 was £5.9 billion.
The TUC fears that record-high payouts imply the return of City bosses’ huge bonuses from before the financial crisis.
With the recent revelation that the energy price ceiling would increase by more than £800, the cost-of-living crisis is intensifying.
There is “no justification” for such “obscene” City incentives, according to the TUC, especially at a time when the nation’s costs are skyrocketing.
A year ago, real earnings throughout the economy were £68 per month lower.
The situation is even more dire for public sector employees, whose actual incomes have decreased by £131 per month over the past year.
The union organisation says that salaries have remained stagnant for almost a decade, putting working people at “breaking point” and extremely vulnerable to growing costs.
According to the TUC, outside the financial and insurance industry, other industries are resorting to one-time payments, which might impede continuous wage increases.
New study from the union organisation reveals unprecedented bonus payments in a variety of industries, some of which are facing labour shortages, indicating that employers may be utilising incentives instead of consolidated pay increases to attract and keep employees.
These industries include real estate, arts and entertainment, administrative and support services, construction, wholesale commerce, and housing and food.
The TUC argues that this is a “sticking plaster solution” and will not address the underlying issues in the labour market that have generated supply-chain turmoil and worker shortages.
TUC General Secretary Frances O’Grady said: “There is no justification for such obscene City bonuses at the best of times – let alone during a cost-of-living crisis.
“While City executives rake it in, millions are struggling to keep their heads above water.
“Working people are at breaking point, having been left badly exposed to soaring bills after a decade of standstill wages and Universal Credit cuts.
“Ministers have no hesitation in calling for public sector pay restraint, but turn a blind eye to shocking City excess.
“It’s time to hold down bonuses at the top – not wages for everyone else.
“The government needs to clamp down on greedy bonus culture by putting workers on company pay boards and introducing maximum pay ratios.
“And it’s time for the government to get wages rising across the economy by boosting the minimum wage immediately, funding decent pay rises for all public sector workers and introducing fair pay agreements for whole industries.”