Apologies for yet another posting on bank bonuses, but has anyone looked at the deal between the Government and Royal Bank of Scotland, whereby the bank agreed to limit its bonus payouts for 2008? Rank-and-file employees of the bank would normally have expected bonuses averaging about 10% of base salary. In today's climate, of course, such largesse is unacceptable, so instead of bonuses all the employees will receive.....a 10% salary increase!
RBS says it is pleased that its unions have accepted the deal. I'll bet the unions and their members are pleased too. Who wouldn't accept a salary rise of X pounds, which presumably you'll continue to receive as long as you stay with the firm, in preference to a one-off bonus of X pounds? If things return to normal in a couple of years, you can start to demand a bonus again, but you'll still have the higher salary anyway. Banks have been trying to increase the variable component of pay for years, and here's RBS single-handedly reversing the trend. No doubt union organisers at the other big banks, including those who have not accepted any government money, will have taken note.
The deal allowed RBS (and the government) to brag that this year's bonus payouts will be less than 10% of last year's. Oh yeah? And how much has the bank's total wage bill gone down, or does that not matter?
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