Summary of the editorial from IDS Pay Report 978, June 2007

Highest ever bonus season in finance boosts earnings growth

This spring brought the highest volume of bonus earnings ever recorded in finance, with the February 2007 Average Earnings Index for the sector reaching the dizzy heights of 243.1, starting from a base of 100 in 2000. The figures, from the Office for National Statistics (ONS), show the extent to which non-pensionable and variable bonus payments have become a major form of remuneration for many thousands of higher-paid employees in financial services.

The Average Earnings Index (AEI) measures monthly changes in gross earnings per employee, based on a sample of around 8,500 companies. Each organisation in the survey provides details of the total paybill and the number of staff covered. The index therefore measures changes in total earnings, including basic pay, overtime, shift premiums and bonuses.

This last element is important, since now that the financial year has turned, we’ve reached the end of the bonus season in the finance sector and elsewhere. With the release of the AEI figures for the year to March, we can see that the total amount paid out in bonuses was much greater than last year. We’ll have to wait until the release of the April figures to make an exact comparison with 2006, when the total paid out in bonuses was some £19 billion. However it is already clear that the total this year will be significantly higher.

... the full editorial can be read in IDS Pay Report 978