Sunday 28 July 2013

Sunday, July 28, 2013 Posted by Jake 3 comments Labels: , , , , ,
Posted by Jake on Sunday, July 28, 2013 with 3 comments | Labels: , , , , ,

Excessive pay in the banking industry has long been justified by the need to 'stay competitive' in the global market. The UK has to pay bankers exorbitantly, we are told by UK bankers, because everybody else does. We can't stop until they do, the bankers tell us. To add insult to injury, banker pay provides cover for executives in other industries (energy; transport; MPs; etc.) to pump up their own salaries and perks. Which they pay for by keeping ordinary workers' salaries down, and pulling off more and more consumer rip-offs. New data on banker pay has exposed the whole "everybody else pays pots" as a fib.

Figures published by the European Banking Authority expose the lie. They reveal that the UK has more than three times the number of bankers paid more than 1 million Euros than the rest of Europe put together. 

"The EBA published today a report featuring data on the remuneration of EU bank staff who received one million Euro or more in total in 2010 and 2011. The report focuses on the gathering of numerical data and provides a first analysis of remuneration structures across the EU. "

Second in the list, after the UK's 2,436 bankers, is Germany with just 170: fourteen times fewer.

Bankers taking more than one million Euros in remuneration
There are always ways of spinning statistics if you choose your survey group craftily. UK bankers can bleat that the average remuneration of the 125 Spanish bankers is higher than the average pay of the 2,436 British bankers.

On this basis they can claim British bankers are only modestly ridiculously paid. Which is statistically true due to the rigged group being surveyed. (For example, if you took a survey of just two people, the Queen and Prince Charles, Prince Charles would be in the bottom 50% in terms of salary and so would have a 'below average' income for the group). 

A more relevant figure is to compare the highest paid 125 Spaniards with the highest paid 125 Brits. In this survey of 125 the Brits would be laughing all the way to the bank, with average remuneration ten times higher (see below). Same would apply if you compared the highest paid 2,436 from each country, because all the Brits would be paid more than a million but 2,311 of the Spaniards in that statistical sample would be paid less than a million.

This graph from a London School of Economics study on extreme pay shows that the top 5% of grotesquely paid bankers are paid much more than the rest of the grotesquely paid bankers:

  • The top 125 Spaniards makes up all, 100%, of Spanish bankers paid more than a million.
  • The top 125 Brits makes up 5% (125 out of 2,436) of British bankers paid more than a million.
We can use the LSE graph to estimate that the average remuneration of this group of 125 is ten times higher for Brits than Spaniards.

The British bankers may threaten they might get sucked out of Europe to the USA, Hong Kong, and Singapore. All we have to say to that is: please proceed to Heathrow Terminal 4. A report by the Independent Banking Commission stated that only 1% of tax revenue would be lost to the UK if the banks moved out. An amount that would be recouped by ejecting recklessly greedy bankers ripping off the rest of the UK economy with scams including Payment Protection Insurance and Interest Rate Swaps.

Excessive pay has been good for the excessively paid. Claims that they have pulled up all of us, or trickled down over all of us, are simply not true. The income of 90% of Britons has stagnated for decades.


  1. UK government likes to talk about controlling banker bonuses. But when the chips are down they do the opposite. The BBC reports that "The UK Treasury has launched a legal challenge against European Union (EU) plans to cap bankers' bonuses."

  2. Figures for 2012:
    "In 2012, the highest values were reported for

    the United Kingdom (2,714 high earners),
    Germany (212),
    France (177),
    Italy (109) and
    Spain (100).

    The figures include staff paid by institutions, including subsidiaries or branches of any EU-parent institution based in another Member State other than the one where the parent company is located, as well as staff in branches of third country institutions."

  3. Figures for 2013:
    EBA updates on remuneration practices and high earners data for 2013 across the EU


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