Image: Fred Romero, Unsplash

Bank bonus season shows our inequality crisis continues

It may not feel like it for everyone – but this has been a very good year for some of the UK’s highest paid.

Over the last two weeks, UK banks have been annoucing their bonus packages for their highest-earning staff. And, despite the financial chaos this year wreaking havoc on mortgage payments, rents, loan costs, and much more, almost all of them will be paid even more than last year.

  • Over at Lloyds, their £446m bonus pot is the highest in four years (despite flat profits) with a £9.1m payout for their Chief Executive
  • NatWest‘s £367.5m pot is up £70m on last year, with their chief executive receiving £5.25m this year.
  • Standard Chartered‘s bonus pool is the largest since the 2008 crash, increasing 13% to £1.3bn. Their chief executive’s pay jumps 16% up to £4.6m for this year.
  • HSBC‘s bonus pool increased to £3.4bn, and increased their chief executive’s pay by 36%, up to £4.6m.
  • Barclays will give their highest paid a measley £1.2bn, down 3% after a 15% drop in profits.

This year’s bonus payouts are eye-watering sums of money, but the problem isn’t new.  Over the past 40 years, executive pay in the UK has far outstripped that of workers on average or low incomes.

In the FTSE-100, for example, the average CEO earned 11 times that of the median UK worker in 1980. By 2019, this ratio had risen to around 119 times the average worker, with the median FTSE-100 CEO being paid around £3.6m and the highest paid CEO taking home £58.73m, or 1,935 times the pay of the average UK worker. As a result, soaring executive pay has become a major driver of economic inequality in the UK.

Just last year, we commissioned polling on what the public thinks of this as part of our report ‘Unjust Rewards: Public opinion on CEO pay‘. Our polling found:

  • 73% of respondents agreed that “the gap in pay between average workers and the highest paid executives in the UK is too wide.”
  • 77% of respondents agree that “companies that benefited from public support through the COVID-19 pandemic (e.g. the government furlough scheme) should not be increasing the pay of their highest paid executives.”
  • 72% agreed that “government action and regulation is needed to ensure companies provide a more equitable distribution of pay between chief executives and average workers”, and 64% agreed that “the government should set a maximum salary for executives relative to workers.”

At the time, we called for restraint from the financial sector – plainly, that didn’t happen this year. But it’s very clear that the public does not support this excessive pocket-stuffing by the UK’s wealthiest, and government action is urgently required.

Read the full Unjust Reward: Public opinion on CEO pay report.