The US investment banking giant Goldman Sachs has invoked a clause in its employment contracts so as to reduce the pay of hundreds of its London based bankers.
These pay cuts come on the back of an 18% fall in their Q2 revenue of $7.28 billion.
GS employs some 5,500 staff in the UK capital and increased the basic pay of its workers back in 2009 in order to avoid Labour’s bank bonus tax reports the Guardian.
The pay cuts, which are thought to apply to those at managing director or partner level, are due to come in ‘this summer’.
After the salary uplift two years ago basic pay increased by between 50% and 100% and last year GS paid its staff an average of Â£263,000 ($430,000).
The Guardian says that many banks are unhappy that a high basic salary makes it hard to get rid of lower performers as well as reducing the incentive for employees to get results. It quotes the chief executive of PHD Search and Selection, Chris Forbes, who said "High base salaries and low bonuses are not part of the traditional culture of the City and certainly reducing base salaries will lead the way to greater attrition of low performers."
And last week Barclays Capital chief executive Rich Ricci told the FT "These days, when a banker doesn't get a bonus, they no longer leave automatically. They've got their salaries to fall back on – and, really, there's nowhere else for them to go."
Well I’m sure some of us could show them the way to a suitable burger flipping job.
Maybe banks paying their workers in a way that disincentivises them from thinking up new ways to shuffle the same money about and taking as much of a wedge for their bank as possible in the process isn’t such a bad thing for the rest of us, so should be considered as a service to the public!