With City bonuses under the political spotlight, and the recovery still struggling to get off the ground, it's not surprising that bonus payouts in the Square Mile were down by 7% last financial year. But according to the Centre for Economics and Business Research, which compiled the data, City firms also boosted basic pay by 7% during the same period. So in other words, City workers are basically ending up with more or less the same amount of money, but without the performance-related element. How is that progress?
The CEBR reckons the total City bonus pot fell from £7.3bn to £6.7bn in the year to April - an 8% drop. Now that's well below the £11.6bn figure recorded in 2007/8, at the peak of the boom. But it's also noticeably higher than the £5.3bn paid out in 2009 in the wake of the banking crisis. So although it's not quite business as usual, the general trend is still upwards.
What's more, the CEBR figures suggest the banks have reacted to all this political heat (and the various levies) by switching more of people's income to basic salaries, which have apparently jumped by 7% in the last 12 months. To put that into context, average incomes have gone up by about 2%, while prices have been rising by about 5%. So in other words, while most of us have been getting poorer, City workers have been getting (even) richer. Warms the cockles, does it not?
Figures like this will only add to the pressure on the independent banking commission to take a harder line on City pay - a subject it has largely avoided so far. The FT reports today that the Treasury Select Committee wants Sir John Vickers and co to recommend that banks be more transparent about bonus structures - on the not-unreasonable grounds that if these are a source of systemic risk (which they surely are) they need closer scrutiny.
The banks themselves argue that if they're too constrained on pay they won't be able to compete for top talent. And here at MT, we're inclined to concur that it would be self-defeating to regulate the City out of existence and drive all its occupants to Singapore and Hong Kong. So it's true that the Goverment has a difficult line to tread. But it's important to avoid unintended consequences; and if the current rules are just incentivising banks to pay out the same amount of money, but with a smaller performance-related element, something is clearly going wrong somewhere.