Bonuses in the financial services sector rose 9.7 per cent to £15bn last year, official data has shown - although the total is still well below the £18.4bn the figure peaked at in 2008.
Research by the Office for National Statistics showed the average payout in the sector hit £14,800 in the year to the end of April, a 1.6 per cent rise from £13,200 the year before. The figure was up 93.8 per cent from the average £7,620 in the year ending 2001.
Mining and quarrying was the second most generous sector, with average bonuses of £6,500, although that was down 0.5 per cent from the previous year's £7,000.
March this year, the peak of bonus season, was the biggest month in five years for City bonus payouts, with £5.5bn paid to finance workers, up from £4.8bn in the same month the year before.
Bonus payments made up 24.2 per cent of City workers' total pay during the year, the highest figure since the financial year ending 2014. That is almost four times the amount as the economy as a whole, where bonuses made up 6.2 per cent of total pay.
Bonuses paid by the financial services and insurance sector accounted for just under a third of of the £46bn of bonuses paid out in the UK economy last year. Including financial services, the payouts made up 7.4 per cent of total pay in the private sector.
“A jump in bonus payments received in high-growth industries including financial services, reflects the war for talent in which we’re currently engulfed," pointed out Phil Sheridan, senior managing director at recruiter Robert Half.
"Skilled professionals are in growing demand but in short supply, and thus bonuses are being used to reward existing staff and acquire new talent."
Data from the Recruitment & Employment Confederation (REC) has found that there is an “especially high demand” for roles like financial directors and business analysts.
“Employers are competing to secure the talent they need and that clearly includes offering bumper bonuses to attract new people and to retain the talent in their organisations. This is becoming even more important in the context of Brexit – financial firms will be mindful of the need to avoid losing talent to Frankfurt and other European financial centres,” said REC chief executive Kevin Green.
Meanwhile, recruitment firm Robert Walters’ latest jobs index found that employers are facing an acute skills shortage, with 1.9 jobs available per candidate.
“City firms are continuing to struggle to secure top talent, with demand significantly outstripping supply.
“Regulatory pressure continues to help shape recruitment strategies, with compliance and risk specialists being highly sought after.”