EXECUTIVE pay in financial services is barely creeping up this year and will come in well below inflation, according to new forecasts from Mercer.
Average salaries will rise by just 2.2 per cent, they survey indicates, well down on the 2.9 per cent rise last year and firmly below consumer price inflation – currently running at 2.7 per cent and expected to rise to above three per cent.
Public pressure and new regulations have combined with weak market conditions to weigh down on pay, and the squeeze is not likely to lift any time soon.
Those factors mean pay is rising more quickly in risk management and legal services, with an average of 2.5 per cent anticipated.
But at the top of firms and in banks the squeeze is tougher, with 49 per cent of CEOs and 38 per cent of their immediate juniors in banks expecting pay freezes, says Mercer.
“Financial services organisations continue to face economic and regulatory uncertainty,” said Mercer’s Vicki Elliott.
“Regulators are watching their compensation policies and decisions with great interest.”
The study comes after high profile bankers including RBS’ Stephen Hester and Barclays’ Antony Jenkins waived their bonuses for fear of attracting public anger.
And European politicians are expected to cap bankers’ bonuses at the same level as their salaries, formalising EU disapproval of high bonuses.
Meanwhile, new figures from Income Data Services (IDS) show average salaries across the economy up 2.5 per cent on the year to the last three months – the fastest rise in pay since summer 2012, but still below consumer price inflation.