UK employers went on a bonus frenzy last year, as payments hit a record £44.3bn – finally beating the pre-recession record set in 2008. Naturally, the finance sector was the biggest contributor.
Bonus payments in the financial year ending 2016 were six per cent of total pay, the Office for National Statistics (ONS) said today – that's a little bit higher than last year, but well below 2008's figure of 7.1 per cent.
In the finance and insurance sectors, bonuses increased 2.2 per cent to £13.9bn.
That said, as a percentage of total pay in the sector, they dropped – from 23.1 per cent last year to 22.7 per cent this year. The figure is significantly down on its 2007 peak, when it hit 34.1 per cent of total pay.
During peak bonus season in March, though, bonuses made up 54.6 per cent of total pay in the sector. It might sound like a lot – but it's still 12.8 percentage points below the peak in February 2008, when bonuses made up 67.4 per cent of total pay.
By contrast, bonuses as a percentage to total pay in the rest of the economy have remained pretty stable – in the financial year to March, they made up 4.5 per cent of the total, compared with the average of four per cent. In the public sector, they made up just 0.3 per cent. Ouch.
What's interesting is that in the finance sector, bonus season has got later – whereas in the year ending 2014 it peaked in February; in 2015 and this year that peak came in March.
ONS statistician Nick Palmer pointed out that other sectors are catching on to the fact bonuses are good motivators.
“Although the finance and insurance industry retains the largest share of the total, other industries, particularly among professional and high-tech business services, have been the biggest drivers of growth since 2008.”
The bad news is that City workers have been warned to brace for big cuts to bonuses: in April no fewer than five bodies suggested slowdowns in the sector could lead to heft cuts to incentives.