REGULATION of bonuses contributed to a 12 per cent hike in City workers’ base pay during the year to September, a survey reveals this morning.
Standard pay at the top spiked even more sharply with managing directors earning 21 per cent more than a year earlier, as firms looked to attract the top managers with higher basic remuneration.
“Standard practice in the banking sector when you are trying to recruit senior executives had been to buy out their current bonus and offer them a guaranteed bonus,” explained Mark Cameron of Astbury Marsden, which conducted the research.
“As the banks can no longer offer those kinds of packages because of changes to the FSA’s Remuneration Code, they are forced to attract talent by offering high base salaries.”
Economic optimism earlier in the year also contributed to higher salaries, the report says. Yet bad economic news in the recent months have dampened expectations over City pay.
“Pay rises in the last six months were far rarer and now City employees are expecting the impact of the Eurozone crisis to produce very weak bonuses,” Cameron added.
The average level of base pay in the City came in at £83,000 in the 12 months to the end of September, the report said, while the average for managing directors reached £237,000 per annum.
The sharpest pay hikes came when workers were promoted or moved to a new employer, the survey revealed, resulting in average wage increases of 15 per cent and 20 per cent respectively.
People who stayed in their current jobs enjoyed wage rises of only eight per cent, however.
The threat of redundancy has prompted City workers to begin staking out new job opportunities, separate surveys revealed earlier in the month.
Morgan McKinley reported a nine per cent rise in the number of people seeking new employment opportunities in financial services, in October.