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'Ridiculous' pay gap between City workers and rest of country
Last updated at 23:37pm on 26.10.06
City workers got record pay rises of up to 21 per cent last year
The "ridiculous" expanding pay gap between City workers and the rest of the country was laid bare today, official figures revealed.
City workers got record pay rises of up to 21 per cent last year, while the rest of the country got next to nothing.
The startling figures are a reminder of the dramatic divide between the City of London and the rest of the country's 29 million workers.
The 'average' salary for a man in the City who works full-time is now more than £100,000, fuelled by the latest inflation-busting pay rise.
It is the first time that their huge pay packages, published yesterday by the Office for National Statistics, have broken through the six-figure barrier.
It comes as City high-fliers scooped a bonus bonanza of a record-breaking £10 billion in the first few months of this year.
Details of the pay bonanza comes after a Government minister launched a blistering attack on City bonuses at the Labour party conference.
Harriet Harman said they were "excessive and ridiculous", and said the increasing gap between rich and poor creates "a sick society."
She said: "I do take the view that we are in the Labour Party because we don't like to see some people struggling while others are hugely rich."
While workers in the City of London enjoyed the big rise, everybody else in the private sector got just 4.5 per cent.
Many got even less, a cruel blow at a time when household costs such as heating bills and council tax are rising rapidly.
Experts warned yesterday that the City's culture of excessive pay is fuelling a potential crisis as the best graduates are lured into the Square Mile.
High-flying graduates with top science and engineering degrees are deserting traditional careers - which are perhaps more crucial to society - for the record rewards of the City.
Professor Alan Smithers, director of the University of Buckingham's Centre for Education and Employment Research, said it is a growing problem.
The huge salaries and bonuses, which can resemble international telephone numbers for the real winners, are "a distortion."
He said: "It is certainly very difficult to recruit graduates from physics, chemistry and engineering.
"This is because they have numerical skills which are attractive to the City. And the graduates are attracted to the high salaries.
"If you handle money as your job, it seems to produce disproportionate rewards. The enormous salaries are a distortion."
The only "saving grace", he said, is that many become disillusioned, bored or burned out, and abandon the City after a few years.
There are 134,000 men working full-time in the City and their average salary, including bonus, is £104,622, according to the ONS's Annual Survey of Hours and Earnings, published yesterday.
This translates into take-home pay of more than £5,500 every month after paying tax and National Insurance.
Outside the lucrative Square Mile, a typical man working full-time gets an average salary of £31,441.
Douglas McWilliams, chief executive of the think-tank Centre for Economics and Business Research, said their huge pay is not a surprise.
He said: "I'm tempted to say: 'If you think they are paid too much then go and work there.'"
Brendan Barber, general secretary of the Trades Union Congress, said: "A minority of City high-fliers are enjoying an astronomical increase in pay while other people, including support workers in the capital, struggle with meagre increases below the average.
"Hard work should be rewarded and, if a company is doing well, all the staff should benefit, not just a few at the top."
In a cruel twist, the figures shine a light on the growing number of people who are not even paid the national minimum wage, currently £5.35 for people over 22.
There are 336,000 workers paid below the minimum wage, and the majority are women in poorly paid jobs.
The ONS figures show that women in the City are also among the biggest losers with an average salary of £51,008, a payrise of just two per cent.
This is generous compared to the rest of the country, but is more than half the size of their male colleagues' pay packages.
The huge handouts in the City are "recycled" back into everything from exclusive restaurants, top wine sellers, upmarket holidays and fancy cars.
Restauranteurs speak of bankers "easily" spending £4,000 on a lunch, including buying several bottles of the most expensive wine on the list. More than anything, it fuels the capital's booming property market as City workers use their six-figure salaries to buy the best houses in London.
It is their spending power that has helped the average asking price to reach £1 million for the first time in the exclusive borough of Kensington and Chelsea.
Some of the biggest winners are at Goldman Sachs, the American investment bank which is nicknamed 'Golden Sacks' for its rich rewards paid to staff.
This week, 115 top executives hit the jackpot after being made partners in the firm, which is the equivalent of winning the lottery every year. By change, the figures are revealed in the week that the City celebrates the 20th anniversary of 'Big Bang.'
The decision to deregulate the Stock Exchange catapulted London to become the world's financial capital that it is today.
The ONS survey, which excludes self-employed people, is based on the earnings of 171,000 people and relates to pay for the period including 26 April.
Reader views (13)
Here's a sample of the latest views published. You can click view all to read all views that readers have sent in.
Despite the enormous pay packets, it's really hard to recruit people who want to work in the City. Most people don't want to commute into central London and work 60 hours a week, they'd rather have a life. That's why City firms have to pay so much.
- Andrew, UK
People in the City work incredibly hard, often 12 hour plus days and also have the stress to peform upsetting sleep patterns and social life. Salaries are adjusted to take affect of these disabilitating aspects.
- Jonathan, London
I find it a bit rich that Harriet Harmen on a ministerial salary of over £100,000, plus golden pension, expenses in excess of £100,000, driver etc. should pass comment on pay gaps.
- Simon H, London
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