Base pay for City staff up 12% despite Eurozone crisis

Average base pay in the City has jumped 12% to £83,000 in the last year (to September 30 2011),* according to Astbury Marsden, a leading financial services recruitment firm.

Base pay for Managing Directors saw the biggest jump, up 21% year-on-year to £237,000.

Mark Cameron, Chief Operating Officer at Astbury Marsden, comments: “A lot of the pay rises that fed this big increase to average City base pay were awarded in the first half of the year when the confidence amongst the banks was high.”

“Pay rises in the last six months were far rarer and now City employees are expecting the impact of the Eurozone crisis to produce very weak bonuses.”

Mark Cameron explains that senior staff tend to see the biggest increases in total remuneration rises when the market is active.

Says Mark Cameron: “Standard practice in the banking sector when you are trying to recruit senior executives had been to buy out their current bonus and offer them a guaranteed bonus.  As the banks can no longer offer those kinds of packages because of changes to the FSA’s Remuneration Code, they are forced to attract talent by offering high base salaries.”

“The consequence of the regulatory move against City bonuses has been that banks have been left with higher fixed salary costs at a time when banking revenues have slumped.  With less flexibility to pare back bonuses, we are instead seeing aggressive redundancy programmes from the banks as a way of reducing costs in response to falling income.”

Biggest pay increases for staff who switched employer or were promoted

Astbury Marsden points out that the biggest average pay increases were for City workers who changed jobs (up 19%) or were promoted (up 15%).  Staff who stayed with their existing employer and were not promoted saw pay increase by 8%.

Says Mark Cameron: “City staff who are very proactive in managing their career by winning promotions or switching employers will almost always see the biggest pay rises.”

City staff moving to niche players for better job security

Astbury Marsden says that uncertainty at some of the global banks and concerns about the likely impact of new regulatory rules has led many City workers to move to niche banks and hedge funds, where they think job security will be better.

Mark Cameron comments: “We’re seeing a lot of City staff looking to move from universal banks to niche employers that are more focused on their specialism.  Their concern is that their entire team might be for the chop as banks are forced to de-risk and streamline, particularly with the use of capital under the microscope because of new capital ratio requirements. ”

“Hedge funds and smaller banks are seen by City staff as more nimble and committed to a certain specialism, which makes them as close to a ‘safe haven’ as City workers can get.”

Pay awards expected to beat inflation next year

Mark Cameron points out that City workers continue to be optimistic about their pay next year, predicting base pay to increase by 8% on average.

He adds: “City workers say that they expect inflation-beating pay rises next year but they are not expecting their pay to increase as rapidly as it has this year.”

* Research conducted among 1,380 City professionals, from Analyst level to Managing Director.