Britain’s economic recovery has helped bonuses return to within a whisker of their pre-recession peak, according to official data.
The Office for National Statistics said that salary top-ups rose by 2.7% in 2014-15 to £42.4bn, despite less generous payouts in the City.
The total was 0.1% below the record reached in 2007-08, but the ONS said the figures did not account for rising inflation over the past seven years.
Its breakdown of the data showed that the boom years for the City have yet to return. Bonuses in the finance and insurance sector are running at less than 75% of their 2007-08 level after falling 10% last year.
Basic pay has tended to be less important for the City than the rest of the economy, but the ONS said bonuses as a percentage of salary peaked at 34% in 2006-07 and has since dropped to 20%.
In contrast, bonuses in the rest of the economy have held at 4% of basic salary. They rose by almost 10% in 2014-15, with the biggest increases seen in professional, scientific and technical services and information and communication.
The ONS said the fall in bonuses in the finance and insurance sector was probably exaggerated by the higher than normal payouts in 2013-14, when many City firms deferred their awards so staff could take advantage of the cut in the top rate of income tax from 50% to 45%.
The average payout per employee in the whole economy was £1,500, compared with £13,100 in the financial and insurance sector.
James Sproule, the Institute of Directors’ chief economist, said: “Today’s figures, which show both bonuses and base salaries continue to rise is good news, and another sign of improved corporate performance and strong business confidence.
“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.”
This article was written by Larry Elliott, for theguardian.com on Wednesday 26th August 2015 13.43 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010