Top bosses in the City are pocketing bumper payouts not seen for a decade, reveals analysis published today by a leading economic think tank.
Growth in average pay packets in the Square Mile has far outstripped the rest of the economy since just before the onset of the Covid-19 crisis, according to the Institute for Fiscal Studies (IFS).
Accelerating earnings at City firms has been driven by the sector’s top brass receiving pay bumps much larger than their workforce.
Mean pay for bankers, insurers and money managers has swelled 31 per cent between December 2019 and this February, compared to just 14 per cent across all sectors, the IFS calculated.
However, median pay in the City climbed 19 per cent over the same period, “implying that high-earners in the industry experienced faster pay growth than lower- and middle-earners,” Xiaowei Xu, senior research economist at the IFS, said.
Last week, NatWest chief Alison Rose pocketed an over £5m remuneration package despite tough opposition from shareholders over the size of settlement.
Strong pay growth may also be caused by City workers banking bonuses, which are typically paid out in January and February.
A surge in deal making, listing and trading activity ignited by firms and investors capitalising on choppy market conditions during the pandemic boosted City firms’ revenues, which may have lifted workers’ pay.
The IFS’s analysis indicates London remains an attractive place for the world’s top finance talent to carve out a well-rewarded career despite gloomy Brexit forecasts.
However, it also illustrates already sharp disparities in the UK’s income distribution are set to intensify.
Across the workforce, monthly pay jumped as much as 12 per cent, while those in the top one per cent of the income distribution – of which around 40 per cent work in financial services – notched a 14 per cent pay rise.
“This is in stark contrast to the trend in the years leading up to the pandemic, when low earners saw bigger increases in pay than middle-and high-earners,” the IFS said.