Regular wages rising quickly to offset big bonus cuts at city banks
City workers are still earning bumper pay packets as rising regular wages offset falling bonuses, new research has revealed.
Bonus payouts in the City for the 2010/11 financial year fell by 8% to £6.7bn, down from £7.3bn in the previous fiscal year, the Centre for Economics and Business Research (Cebr) said.
But Cebr estimates average regular pay for City workers in the first quarter of 2011 was 7% higher than a year ago and much higher than growth of just over 2% for the UK as a whole.
Scott Corfe, Cebr economist and co-author of the research, said: "Our research shows falling bonus payments this year are being offset by rising regular pay packets. City workers are not earning less, their earnings are merely becoming less bonus-driven as basic pay continues to grow much faster than other parts of the economy."
Cebr warned excessive regulation on bank pay and heavy-handedness with taxation would drive financial services away from London. But it said the Government recognises this and is likely to constrain the extent of legislation aimed at curbing City excess.
Cebr chief executive Douglas McWilliams said: "There is a risk excessive micro-management and regulation of pay could accelerate the shift in financial services from the west to the east. Our research shows excessive remuneration and profit is much better addressed through increasing competition rather than regulation."
The Government-appointed Independent Commission on Banking will publish its final report in September. In an interim report this month it called for retail business to be ring-fenced from "casino" banking to protect savers and borrowers from any future crisis.