But 1 per cent increase suggests ‘economy on the mend’
ONS figures have revealed that bonus payments increased across the UK in 2012/13, suggesting that the economy “may be on the mend”.
Official figures revealed that £36.9 billion was paid out in bonuses in 2012/13, up 1 per cent on the previous year.
Average bonus payouts per UK employee were £1,400, but, perhaps unsurprisingly, the highest average bonus amounts were found in the finance and insurance industry where employees received £11,900 – nearly twice the next highest payout of £6,700 in the mining and quarrying industry.
Meanwhile workers in the education, health and social work collected the smallest bonuses averaging less than £100 per employee.
Analysing the figures by sector showed that the average private sector worker received £1,700 in bonuses, which is more than five times that of the average public sector worker bonus of £300. However, if financial services – which include the temporarily nationalised banks – are removed from the public sector, the average public sector worker’s bonus falls to £100.
“The positive news is that bonus payments across the whole economy are up by 1 per cent, another indicator that the UK economy may be on the mend,” commented Charles Cotton, CIPD reward adviser. “The less positive story is that despite the increases in bonuses and basic pay over this period, this will not have been enough to make up for the decline in employee living standards caused by inflation.
“As a consequence of a squeeze on living standards in the workforce, HR professionals should brace themselves for difficult conversations in the workplace as some employees look to maintain their real earnings through: a pay rise; a promotion; a move to a higher paid job; requests to work more hours; requests to take on a part-time job; or a move to another employer.”
Earlier this week, EU plans to cap the high bonus levels seen in the UK’s financial services prompted concerns it would drive a talent exodus.
A survey of UK financial services executives by recruitment firm Robert Half found that almost one in four respondents were “very concerned” that the introduction of the cap would make jobs outside Europe more tempting.
From January 2014 bonuses will be capped at 100 per cent of fixed salary, or 200 per cent with shareholder approval. The survey found that to counter the impact of the cap, nearly two-thirds of employers have increased salaries – by an average of 20 per cent – and six in 10 have increased benefits to staff.
But the findings also revealed that more than half (52 per cent) of financial services executives are “very concerned” that the bonus cap and resulting rise in base pay will create an unstable cost structure for the organisation.