Bonuses paid to financial services employees dropped by almost 10 per cent in the year to March 2015, official data suggests.
Figures published by the Office for National Statistics show the total value of bonuses paid out increased by 2.7 per cent to £42.4bn. This is just 0.1 per cent lower than the record level in the financial year ending 2008, the ONS says.
Of this, some £13.6bn was paid in the finance and insurance industry, down 9.6 per cent year-on-year.
Payments across the rest of the economy rose 9.7 per cent to £28.8bn – the highest figure since the statistics authority began measuring the payments in 2001.
Across the economy, the average bonus per employee in the year to March 2015 was around £1,500.
Institute of Directors chief economist James Sproule says: “In the financial and insurance industries, the fact that bonuses now make up a significantly smaller chunk of take-home pay suggests steps have been taken since the financial crisis to rein in excess.
“Under pressure from politicians, the public and regulators, banks now realise that the culture of unjustifiably high cash bonuses as a reward for short-term performance is over. This system warped decision making, encouraged dangerously short-term thinking and, in the case of the Libor and Forex-rigging scandals, rewarded criminal behaviour.
“Nevertheless, we must caution against moving too far in the opposite direction. While bonuses in the finance sector have fallen by around 10 per cent, wages are growing at one of the fastest rates of any industry. This could mean firms are just shifting pay towards base salaries, rather than making sure bonuses reward employees who have delivered value for the company and hit stretching and long-term performance targets.”