Bonuses paid to bankers, insurance brokers and other finance sector workers in the UK have reached a record high and are rising more than six times faster than average wages in the UK, unions have found.
The Trades Union Congress said its analysis suggested the city’s bumper bonuses from the pre-financial crash era were back, even as much of the country struggles with soaring costs of living. which exceeds salary increases.
Analysis of official figures showed that premiums in the financial and insurance sector increased by 27.9% over the last year, while average wages over the same period increased by only 4.2%. Almost £6billion was paid out in City bonuses in March alone.
Frances O’Grady, the TUC general secretary, said: “There is no justification for such obscene city bonuses at the best of times – let alone during a cost of living crisis. As city leaders rake in, millions are struggling to keep their heads above water.
“Workers are at breaking point, having been severely exposed to skyrocketing bills after a decade of stalled wages and universal credit cuts. Ministers are quick to call for public sector pay cuts, but turn a blind eye to the city’s shocking excesses. It’s time to keep bonuses at the top — not everyone else’s salaries.
O’Grady called for a series of measures to limit city bonuses and drive up wages across the economy. They include the introduction of maximum pay ratios, so that bonuses do not exceed 10% of total pay; ensure that bonus systems are open to all employees under the same conditions; and ensuring that workers are included on company compensation committees.
Last month, the Institute for Fiscal Studies think tank found that the financial industry‘s return to windfall payments meant the top 1% of workers were becoming further removed from the rest of the workforce. Britain’s labor in the city’s biggest bonus and wage boom since the 2008 financial crisis.
The average premium awarded in the finance and insurance sector rose to £4,021 in the first three months of this year, from £3,146 in the same period last year, according to TUC analysis. By contrast, the average monthly wage in the UK has risen to £2,413 from £2,315 previously. Those figures put City’s bonuses at their highest since records began, eclipsing the average salary in almost every sector.
In March, finance and insurance premiums were 2.4 times the average worker’s basic monthly salary. They were higher than the average basic monthly salary in all other sectors of the economy, with the exception of mining and quarrying.
The research comes as the cost of living crisis worsens, with an annual inflation rate of 9% and regulator Ofgem announcing that the energy price cap is set to rise by more than £800 in the future. fall. This follows a 54% increase in April and will bring the average annual household energy bill to £2,800.
Real wages across the economy, adjusted for inflation, are down £68 a month from a year ago. The situation is even worse for public sector workers, whose real monthly wages are on average £131 lower.
Beyond finance and insurance, other industries are turning to one-time payments to hire more people amid labor shortages, which could hamper more sustained wage increases, according to the TUC.
Its analysis showed record premium payments in a number of sectors, including professional, scientific and technical services, real estate, arts and entertainment, administrative and support services, construction, wholesale trade, accommodation and catering.
The TUC urges the government to tackle the crisis by introducing fair pay agreements across all industrial sectors and allowing trade unions access to workplaces to inform workers of the benefits of union membership.
He wants to see the minimum wage raised immediately to at least £10 an hour for all workers, regardless of age, and called for ‘decent pay rises’ for all public service workers. He also reiterated his calls for more public holidays, saying British workers have fewer than people in other countries.