According to figures from the Office for National Statistics over 42bn was paid out in bonuses in the last financial year ? up 2.7 per cent on the previous 12 months. Thats just 0.1 per cent below the record level reached at the dawn of the financial crisis in 2007/08.
Bonuses paid out to bankers and others working in the financial industry came to “only” 13.6bn ? down 9.6 per cent on the year as bosses were constrained by regulations put in place as a result of the sectors pivotal part in the economic downturn seven years ago.
The bonuses accounted for about a fifth of total pay in the sector the lowest share since 2003.
James Sproule, chief economist at the Institute of Directors said: 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.
Bonuses in other parts of the economy rose to 28.8bn or 4.5 per cent of total pay ? the highest share since records began in 2000. However the average bonus per UK employee remained at around 1,500.
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The professional, scientific and technical services industry saw the biggest jump in bonuses in 2014, with average payouts rising to 2,500 pounds from 2,100. Real estate saw an increase to 4,400, construction went up 300 to 3,200, construction went up 200 to 1,200, while administration landed at 900.
The average for the private sector was unchanged at 1,800, with the average for the public sector down 200 at 100.
Sproule added: Bonuses are a fundamental feature of a flexible labour market and make up a key component of the remuneration mix. They allow businesses to reward staff for their achievements over a set period of time and are often directly linked to an individuals or the companys performance.
“This means when times are good, companies can share profits with staff without increasing their labour costs to an unsustainable level. Todays figures, which show both bonuses and base salaries continue to rise, are good news and another sign of improved corporate performance and strong business confidence.