City bonuses are at a record high and rising six times faster than wages, according to analysis of official data by the TUC.
The study of figures from the Office for National Statistics (ONS) by the union found that bonuses in the financial and insurance sector grew by 27.9 per cent over the last year, compared with 4.2 per cent for wages.
It also found that the average bonus in the finance and insurance sector rose from £3,146 in the first quarter of 2021 to £4,021 in the first quarter of 2022.
In the same period, average monthly regular pay in the UK rose from £2,315 to £2,413.
The TUC estimated City bonuses in March 2022 were worth nearly £6bn, which it said suggested executives bonuses were back to the levels seen before the 2008 financial crash.
Frances O’Grady, the general secretary of TUC, said there was no justification for such “obscene” bonuses at the best of times, let alone during a cost-of-living crisis. “Working people are at breaking point having been left badly exposed to soaring bills after a decade of standstill wages and Universal Credit cuts,” she said.
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“Ministers have no hesitation in calling for public sector pay restraints but turn a blind eye to shocking City excess. It’s time to hold down bonuses at the top, not wages for everyone else,” said O’Grady.
Charles Cotton, senior reward and performance adviser at the CIPD, added that the success of a firm relied on the efforts of all of its staff, not just those at the top. “As such we would encourage companies to spread bonuses more widely with the rest of their employees rather than concentrating it on just a few,” he said.
As the cost of living continues to rise, the TUC also raised concerns that sectors outside of finance were turning to one-off payments to address skills shortages, with many employers in sectors including accommodation and food, entertainment, construction and arts offering starting bonuses instead of increasing pay.
The union said this could potentially hamper a more sustained increase in pay, calling it a “sticking plaster approach” that would not solve longer-term skills shortages.
The union suggested a series of measures to clamp down City bonuses and push up wages, including increasing the minimum wage; putting workers on company pay boards; and introducing maximum pay ratios.