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£36.9 Billion Paid Out In Bonuses

Financial London

Total bonus payments received across the whole economy during the financial year April 2012 to March 2013 were £36.9 billion, an increase of 1% compared with the same period in 2011/12. This equates to an average of around £1,400 per employee.

Of the £36.9 billion paid in bonuses in 2012/13, £13.3 billion was paid in the finance and insurance industry, virtually unchanged from the previous financial year. The increase in bonus payments for the whole economy was driven by the rest of the economy, which experienced a 1% increase in bonuses. Total bonus payments received in the rest of the economy in 2012/13 were £23.6 billion, almost as high as bonus payments in 2007/08, when bonus payments were at their peak.

However, a number of businesses responding to the Monthly Wages and Salaries Survey (MWSS) reported that they paid their bonuses in March last year but in April this year. Thus, it is useful to also examine bonus payments paid in the period May to April to present a complete picture of how bonus payments changed between 2011/12 and 2012/13.

Using this method, total bonus payments received across the whole economy during the period May 2012 to April 2013 was £38.6 billion; an increase of 4% compared with a year earlier. The average bonus per employee at whole economy level during this period was £1,500. Of the £38.6 billion, £14.0 billion was paid in the finance and insurance industry, also a 4% increase over the year.

Deferral of bonus payments contributes to weaker ‘bonus season’

Usually, the majority of large bonuses are generally paid in the period December to March each year, mainly, but not exclusively, in the finance and insurance industry. This period is sometimes referred to as “bonus season”. Seventy-two per-cent of total bonuses paid in the finance and insurance industry in 2012/13 were paid during this period.

Bonus payments paid in the rest of the economy between December 2012 and March 2013 represented 43% of total bonuses, with the majority of the bonuses paid in March. This means that the “bonus season” is less significant in the rest of the economy than in the finance and insurance industries.

The extent to which the usual definition of “bonus season” did not apply in 2012/13, with April 2013 seeing unusually high levels of bonus payments. Total bonus payments paid in the finance and insurance industry were £1.3 billion in April 2013 compared with £0.6 billion paid in April 2012. Similarly, total bonus payments paid in the rest of the economy were £2.9 billion in April 2013 compared with £1.9 billion paid in April 2012.

Thus, bonus payments paid in the whole economy were £1.7 billion higher in April 2013 compared with April 2012. The increase in bonus payments in April 2013 partly reflects the deferrals of bonus payments by some businesses which reported that they had chosen to pay the bonuses usually paid in March in April this year. This is also seen in reduction in bonus payments in March 2013 for the rest of the economy as bonus payments peaked at £4.2 billion in March 2013 compared with a peak of £4.9 billion in March 2012. However, the finance and insurance sector peaked at £3.7 billion in March 2013 compared with a peak of £3.5 billion in March 2012.

 

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