LONDON, ENGLAND - Sizeable increases to wages for workers in London's key financial district, the City, have helped to offset cuts to their controversial bonuses, an independent study showed on Tuesday.
"Despite falling bonus payments, City workers continue to earn bumper pay packets bolstered by rising regular pay," the Centre for Economics and Business Research said in a report.
"Cebr estimate that average regular pay for City workers in the first quarter of 2011 is some 7 per cent higher than a year ago and much higher than growth of just over 2 per cent for the UK as a whole - lower bonuses have not put an end to the culture of high remuneration in the City," it added.
The Cebr added that bonus payouts in the City for 2010/11 fell by 8 per cent to £6.7 billion (S$13.63 billion), down from £7.3 billion in the previous fiscal year.
"Our research shows that falling bonus payments this year are being offset by rising regular pay packets," said Scott Corfe, Cebr economist and co-author of the research.
"City workers are not earning less - their earnings are merely becoming less bonus-driven as basic pay continues to grow much faster than other parts of the economy."
Britain's coalition government has imposed a small tax on bankers' bonuses and urged the financial industry to show restraint when rewarding staff amid deep cuts to state spending.
Cebr added in its report that the City risked harming its competitive edge by slashing bankers' pay.
"The increasingly globalised nature of the financial services industry means that London cannot afford to be complacent about its position as a world-leading financial centre.
"The ascent of Eastern financial centres such as Shanghai and Singapore in global competitiveness measures only goes to illustrate this."
It also noted that "excessive regulation on bank pay, and heavy-handedness with taxation would only accelerate this shift of financial services to the East - something that the government recognises and is likely to constrain the extent of legislation aimed at curbing excess in the City."