City bonuses are rising six times faster than average wages as the UK grapples with the cost-of-living crisis, the Trades Union Congress (TUC) warned today.
As soaring inflation and energy costs burn a hole in most people's pockets, bonuses in the square mile are at a record high, according to its analysis of data from the Office of National Statistics.
The union body warned today's record-high bonuses exceed the bumper pay-outs from before the 2008 financial crash, a time when cheaply available debt and the re-packaging and selling of risky sub-prime loans created a bubble in the real estate market.
While average wages in the UK have grown by 4.2% in the past year, bonuses in the financial and insurance sector have shot up by about 27.9%.
As of March, City bonuses were worth approximately £5.9 billion. Average quarterly bonuses in the City rose from about £3,146 in the first quarter of 2021 to £4,021 in the first quarter of 2022, the union body said. The average monthly wage in the UK meanwhile rose from £2,315 to £2,413 in the same period, it said.
The Trades Union Congress has called for the UK government to introduce maximum pay thresholds so bonuses are capped at 10% of executive pay and to ensure bonuses are available to all staff.
It wants to see workers represented on pay committees and has called for an increase in the minimum wage to at least £10 per hour irrespective of age, together with pay rises for public sector workers.
Bonuses in the finance and insurance industries are 2.4 times higher than the average monthly salary, according to ONS figures. City bonuses were also higher than monthly basic earnings in every other sector of the economy except mining and quarrying.
Meanwhile, in real terms, wages across all sectors of the economy have dropped by about £68 per month compared to a year ago, as the continuing effect of the pandemic, inflationary pressure and uncertainty caused by Russia’s war on Ukraine have all put pressure on the economy.
Wages have been at a “standstill” for more than a decade, the Trades Union Congress said, leaving UK workers at “breaking point” and exposed to soaring bills.
With the energy price cap due to increase by more than £800, the trade body said there was “no justification” for “obscene” City bonuses.
"There is no justification for such obscene City bonuses at the best of times – let alone during a cost-of-living crisis. While City executives rake it in, millions are struggling to keep their heads above water," said the Trade Union Congress's general secretary Frances O’Grady. "Working people are at breaking point, having been left badly exposed to soaring bills after a decade of standstill wages and Universal Credit cuts.”
The union body warned that a “sticking plaster” approach would not fix underlying problems in the labour market, as it said bonuses in some sectors such as technical services, real estate, construction, wholesale trade and hospitality were being used as a sweetener to attract and retain staff rather than offering permanent wage rises.