This week we’ve seen two major banks announce their results, and their response to recent pressure to limit their bonuses has been all-too predictable. Firstly HSBC – following on from recent EU legislation limiting bankers’ bonuses to an amount no greater than their basic salary – have now announced they will be paying their top staff an additional ‘fixed pay allowance’, in order to circumvent the rule. So this year Chief Exec Stuart Gulliver will be giving himself an extra £1.7m on top of his £1.2m salary, to make up for any cuts to his bonus (this allowance will not be performance related), while a further 1,000 top employees will be given similar payouts. This follows on from last year’s figures which show that top employees at the bank were paid on average £900,000 each per year, with Mr Gulliver himself receiving a total package of £8.03m.*
And now taxpayer-owned Royal Bank of Scotland, despite astronomical losses last year of £8.2bn, has announced it will nonetheless still be paying out £576m in bonuses to its top staff. This despite requests from many senior government figures to show restraint.
In both the above cases the banks justified their action with the argument that in a market economy they have to pay ‘market rates’ in order to get the best people. Never mind that ‘market rates’ don’t seem to apply to the rest of the workforce who are still being asked to undergo Austerity, and no care at all for the 13 million people in this country living in poverty, half a million of whom were forced to visit foodbanks last year. Any economic system which can create such vast inequalities between rich and poor is a broken system, which any decent person would try to change, not justify or defend.
For more on how our free-market system inevitably leads to constantly increasing executive pay, and an ever-widening gulf between rich and poor, click here.