In cash terms, bonuses in the 2014-15 financial year were just 0.1% below their record level reached in 2007-08, according to this year’s annual report on bonuses from the Office for National Statistics. However, in the finance and insurance industry they remain well down on their pre-downturn levels, while those in the rest of the economy are considerably higher than they were back then.
Total bonus payments in 2014-15 were £42.4 billion – an increase of 2.7% on the previous year. Of the total, £13.6 billion was paid in the finance and insurance industry, down 9.6% on the year, and £28.8 billion in the rest of the economy, which was up 9.7%. This left payments in finance and insurance over £5 billion below their 2007-08 peak of £18.7 billion, but those in the rest of the economy about £5 billion ahead of the pre-downturn peak of £23.8 billion.
Looked at as a proportion of total pay, bonuses in finance and insurance have dropped considerably since the onset of the downturn. For this sector, the proportion of total pay coming from bonuses peaked in 2006-07 at 34%, and has been much lower for most of the subsequent period – with a new fall to just 20% in 2014-15. This reverses the situation in the first half of the last decade, when bonuses were growing fast as a share of total pay in finance and insurance, from 19% in 2002-03 to their 2006-07 peak. By contrast, bonuses have consistently made up around 4% of pay in the rest of the economy.
The industry with the biggest increase in bonuses in 2014-15 was professional, scientific and technical services – up £0.9 billion on the previous year – followed by information and communication, with an increase of £0.5 billion. The largest fall, of £1.5 billion, was in finance and insurance, but this may be partly because this industry is more prone than others to concentrate their payments into a December-March ‘bonus season’ and in 2013 a number of bonus payments were deferred from March into April. Thus the 2013-14 figure in this sector might have been atypically high, with some employees receiving payments both in April 2013 and March 2014, twice within the same reporting period.