City bonuses are rising six times faster than wages, according to new analysis released today by the TUC.
The trade union organisation’s general secretary Frances O’Grady said that “obscene” payouts in the financial and insurance industries had returned to the levels of before the 2008 crash, with bonuses totalling £5.9bn paid out in March alone.
Ms O’Grady called for the introduction of maximum pay ratios to limit bonuses to 10 per cent of total pay, as well as the appointment of workers to company boards to give them a say on remuneration decisions.
Bonuses paid in March were 27.9 per cent up on the same period in 2021, compared to a rise in average wages over the year of just 4.2 per cent.
And the average City bonus of £6,327 that month – paid on top of often generous salaries – was 2.4 times the size of the average worker’s £2,665 monthly pay packet, according to TUC analysis of figures from the Office for National Statistics.
Meanwhile, the value of average wages is being eroded as pay fails to keep pace with inflation running at more than 9 per cent. After inflation is taken into account, the real value of the average wage is down by £68 a month – or £131 in the public sector – compared to a year ago.
“There is no justification for such obscene City bonuses at the best of times – let alone during a cost of living crisis,” said Ms O’Grady. “While City executives rake it in, millions are struggling to keep their heads above water.”
She added: “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.”
The TUC research also uncovered a trend in sectors outside the City for businesses to offer one-off bonuses to key staff, though of a much smaller size than the bumper payouts in the finance and insurance world.
The organisation believes that bonuses are being used as a way to retain staff in areas of the economy like construction, real estate or accommodation instead of offering permanent pay rises to match inflation.
The TUC warned that this was a “sticking plaster approach”, which would not fix the fundamental problems in the labour market causing worker shortages.
