x

close ad

City bonuses slashed

Do you want to follow this topic? You need to be signed in for this feature
Do you want to save this article to read later? You need to be signed in for this feature

New research suggests bonuses for City workers will fall significantly this year. But they are still at the top of the bonus pile.


This year's City bonuses are set to be at their lowest level in more than a decade.

That’s according to new research by the Centre for Economics and Business Research (CEBR), which forecasts the bonus pool for the Christmas and New Year period will drop to just £1.6 billion. That equates to an average of £6,400 per person.

That’s down from more than £4.4 billion in the corresponding period of 2011/12 and represents a huge fall from the peak of £11.6 billion in 2008.

Here’s how bonuses have changed over the last few years, and how the CEBR expects bonuses to shape up in the years to come.

Year bonus paid

Bonus pool

2003

£3.33 billion

2004

£6.40 billion

2005

£6.95 billion

2006

£9.65 billion

2007

£11.38 billion

2008

£11.57 billion

2009

£5.33 billion

2010

£7.34 billion

2011

£6.75 billion

2012

£4.40 billion

2013

£1.59 billion

2014

£1.27 billion

2015

£1.26 billion

2016

£1.27 billion

2017

£1.30 billion

Why bonuses are falling

As you can see the next few years are likely to see far more restrained levels of bonuses for City workers.

The CEBR believes there are two main reasons for the lower levels of bonuses. And no, neither of them is “this mess is all their fault”.

The first is the vastly reduced level of City activity from the summer onwards. In terms of value gilt trading is down by a third, UK mergers and acquisitions activity is down by a third, equity trading is down 20%, even currency trading is down by 5% – the first fall in three years. Without that activity, there’s less cause for bonuses.

The other reason is politics. Bonuses have become a big source of public interest in recent years and City firms don’t want to be on the front pages for the wrong reason, splashing the cash on huge bonus payments to their staff. Instead they are upping the basic salary for top performers.

How City bonuses compare

Earlier this year the Office for National Statistics (ONS) broke down how the average annual bonus per employee looks across different industries.

And while it found a yearly fall for those working in finance and insurance, the size of the bonus was still substantially bigger than those on offer in other professions.

Here’s what the ONS found:

Industry

Average bonus in 2010/11

Average bonus in 2011/12

Financial and insurance activities

£13,500

£12,000

Mining and quarrying

£6,300

£6,900

Information and communication

£3,800

£4,400

Wholesale trade

£2,100

£2,500

Real estate activities

£1,600

£2,400

Manufacturing: chemicals and man-made fibres

£2,500

£2,300

Professional , scientific and technical activities

£2,000

£2,300

Electricity, gas and water supply

£1,800

£2,000

Manufacturing: engineering and allied industries

£1,100

£1,200

Manufacturing: basic metals and metal products

£1,000

£1,000

Construction

£900

£1,000

Manufacturing: food, beverages and tobacco

£1,100

£900

Other manufacturing

£800

£900

Retail trade and repair

£800

£800

Administrative and support service activities

£700

£800

Other service activities

£800

£700

Arts, entertainment and recreation

£600

£600

Manufacturing: textiles, leather and clothing

£700

£600

Transport and storage

£600

£600

Agriculture, forestry and fishing

£600

£500

Accommodation and food service activities

£300

£300

Public administration

£200

£200

Education

Under £100

Under £100

Health and social work

Under £100

Under £100

What I found interesting about this report is that an awful lot of industries, beyond finance, will see bonuses increase, or at the very least frozen. Not bad for an economy that’s not exactly thriving.

Are you expecting a bonus this year? How will it compare to years past? Do you agree with the very concept of the annual bonus? Let us know your thoughts in the Comment box below.

More on the economy

Eight weeks until the advice revolution!

Should you go to a financial adviser?

How to keep your Child Benefit

Would you give up work if you won the lottery?

Ten weird and wonderful jobs that really do exist

Comments (5)

Do you want to comment on this article? You need to be signed in for this feature

Comments



Close

Advertisement