City workers still banking on bonuses despite gloom
James Moore is the Independent's Associate Business Editor and writes the Outlook City comment column from Tuesday to Friday. He also has a keen interest in disability issues and when not attempting to further injure himself playing wheelchair basketball.
Monday 28 November 2011
City workers are counting on a bumper round of bonuses despite desperate economic conditions and a string of poor results from investment banks.
Typical workers expect to enjoy payouts of nearly a quarter of their basic salaries – most of which have risen sharply in theory to compensate workers for lower bonuses forced on banks by regulators, according to a poll by headhunter Astbury Marsden.
The survey, the results of which will be released today, also found that managing directors expect to enjoy windfalls of up to 70 per cent of their salaries.
Based on average salaries of £83,000, a payout of 24 per cent would translate into a bonus of £19,920. A managing director would receive a bonus of £166,000 if their expectations are realised based on an average salary of £237,000.
City workers have enjoyed rises of around 12 per cent to their basic pay, according to Astbury Marsden, at a time when most other workers are dealing with either below-inflation rises or pay freezes as the economy stumbles.
The higher expectations of those at managing-director level come because the more senior a banker is, the greater the proportion of pay linked to performance when compared with more junior staff.
At director level within investment banks the expectation on average is for a bonus worth 42 per cent of basic pay.
Such bonuses will prove hugely controversial with the general public given the economic situation. They may also prove out of step with what banks are willing to pay.
Royal Bank of Scotland, for example, did not set anything aside for investment bankers' bonuses at its operation in the third quarter because of an exceptionally poor performance which meant that the unit was only barely profitable.
Others, because of performance as much as negative public perception, may also force restraint on their staff.
Mark Cameron, the chief operating officer at Astbury Marsden, said that even though they might appear high, expectations on bonuses are substantially weaker than this time last year. He said at least 12 per cent of City workers are not expecting any bonus.
Mr Cameron added: "Just over half of City employees that we recently polled said they were unsure whether they were getting a bonus or not. That is a real shift in sentiment."
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