How very amusing

Salaries for new recruits have been raised to around between £45,000 and £50,000 a year at the top investment banks – a 5pc rise from last year in reflection of the “reputational issues” around City firms.

The rise is on top of a big jump in starting salaries at the banks last year as the “social stigma” of working for a bank rises again.

Jon Terry, partner at PricewaterhouseCoopers who advises all the top banks on pay levels, said: “There is no doubt that \’banker bashing’ and the scandals at the banks are impacting graduate decisions about going into the City. The importance of reputation seems to have gone up tremendously. Investment banks are generally paying around 5pc more this year, even though investment banking graduates are paid far more than other graduates.”

The more the student unions spout off about how they hate banking the more the new recruits into banking get paid.

It\’s just as Adam Smith said, eh? When you add everything in together, the hours, the shittiness of the job, the reputation good or bad, then all jobs pay the same amount. Lower the reputation and the cash element goes up.

Not quite what the student Trots really wanted to happen but then unintended consequences and all that….

4 thoughts on “How very amusing”

  1. Not just Grads and not just reputation – we’re having to pay higher basic salaries across the board (in IT at any rate) because the expectation of a bonus has now disappeared.

    We also used to do well in my specialist area because investment banking knowledge was a nice to have rather than a pre-requisite, and we used to get a steady stream of bright young 2nd jobbers looking for a foot in the door – not so much demand for that now.

  2. Salaries in the City have gone up as bonuses have gone down, because bonuses are unpopular with the public. And I’m sceptical that banks are competing with employers in other sectors for bright young things with a bribable conscience. Rather, as ever, they’re competing with each other to get the best people.

    All jobs pay the same, taking all the conditions into consideration? Footballers are paid the same as rugby players? Bankers are paid the same as sewerage workers?

  3. PaulB: Smith’s description need a lot of caveats, or at least careful thinking. The most notable is that supply and demand still reign in the labour market, so that someone whose skills are more widely available will be paid less than someone with very specialised skills. So cleaners are paid not a lot in part because almost anyone could do it (if they had to).

    You’ve also got the point Tim occasionally makes about money being sticky, so where there’s a lot of it floating about, people tend to pick up high pay packets.

    There again, there may be a way to see those factors at work in the overall picture.

    But in any case, once we subsume all those caveats into the marvellous phrase ceteris paribus, we’re left with two otherwise identical firms, one has a rubbish reputation and the other a good: which one has to pay their employees more to work for them?

Leave a Reply

Your email address will not be published. Required fields are marked *