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(no subject)
2012
unknownj
It would appear that Robert Peston doesn't think that any employee of any bank that received taxpayer assistance should receive any bonus.

The rationalisation for this?
If taxpayers hadn't rescued those banks then those employees wouldn't have jobs, let alone bonuses
Yes.. and? That's something of a non-sequitur, akin to telling a small child that they can't have sweets, because if Daddy hadn't gone to work today, Mummy wouldn't have been able to buy sweets in the first place. I don't really see how it follows. So I elected to read on, just in case he started making more sense.
So perhaps all bankers should simply count their blessings that they work for banks perceived to be so important to the prosperity of us all rather than for Woolworths - where there was no taxpayer bailout and 30,000 were made redundant.
I see. So what he's saying is, provided the final outcome for bank employees isn't unemployment, they should just be grateful. It could be worse.

So I guess I should receive a 10% pay cut, and just be happy that I've still got a job. I don't even care about my own bonus, until this story broke I hadn't even started thinking about it. Were I to lose it for the sake of keeping people happy, I wouldn't feel overly bad about that, though it would still be useful to have.

But the point is, I have yet to see a good justification for not paying any bonuses, at least none given by anybody who understands how a bonus is intended to work. Two members of staff might each receive £17,000 basic salary per year. One of those people has hit all their targets, the other has not, but has still performed adequately. The bonus allows the company to pay the better performing staff member £18,000 while the other gets only £17,000.

Now, this money not being a part of the basic salary means that next year, if the person who received a bonus doesn't meet their targets, the company has no obligation to match their previous salary. That makes good sense business-wise - the pay rate is conditional on performance rather than guaranteed as part of the employment contract. Next year, you can put that extra thousand pounds somewhere else instead if you want.

It also makes a lot of sense because it gives you a way to reward strong performance, without which it might be considerably harder to motivate staff to work well. If two people with different levels of work are paid the same because discretionary bonuses aren't available, then the person performing less well has no motivation to improve, and the person performing better is going to wonder what the point is, beyond customer satisfaction (which is nice, but doesn't pay the bills).

But finally, this idea that bankers ought to sit back and just be grateful that they still have jobs holds no more water than telling anybody within the UK economy that they should be grateful that they still have banks. The Tesco employee should be glad they don't work for Woolworths, right..? And they still have an economy that works, thanks to taxpayer funding - so why should they get a bonus?

Ultimately, the taxpayer did not fund banks for altruistic reasons. It wasn't some favour that the banks ought to repay by scrapping bonuses - it was an investment, with certain strings attached, and a promise from the government that it wouldn't lead to political interference in the day to day running of the banks. That's why an independent company was set up to hold the taxpayer's interest in the banks. The extent of what the government gets out of it are the favourable terms on which they bought into the industry,

On a personal note, I've spent about £750 on shares in the bank over the last few years. I've also been given (conditional) free shares by the bank, and that shareholding was worth (at its peak) £7,000. As a result of the financial crises, that's now worth £500 - the thousands of pounds worth of free shares haven't even kept my initial investment from shrinking. And there are people far worse off than me in that regard, who have lost tens of thousands.

At this point, a bonus might feel like the least the banks could do for their most loyal shareholders and stakeholders, to make up for the financial decisions that have massively harmed their (usually un-diverse) investments.

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Well, in spite of how strong my view might seem, I'm in two minds about it.. I can see the reasons for not paying bonuses, but the arguments currently being made seem to be tabloid-informed rubbish based on an aversion to the word "bonus" based on fat-cat connotations rather than anything that actually relates to the circumstances themselves.

And as far as the people whose worlds have fallen apart go, I would gladly relinquish any right to a bonus, and suggest that others should lose their bonuses too, if I thought that the money would be paid to the treasury and would then go towards helping people who are in need right now.

I mean, in effect that would be the equivalent to a lump sum of my salary going off as taxes, which I'm not opposed to in principle. But as is so often the case with taxation, it would be nice if it went somewhere appropriate - so that means funding the creation of new jobs, support for people who are having to claim job seeker's allowance, and more government bailouts of long-term-viable, short-term-insolvent businesses. I mean, take Woolworths for example - if one could have shown that Woolworths would be profitable again after the recession is over, then I would have no issues with my bonus being witheld, that money going to the treasury, and the treasury bailing them out.

But do I think the money would be put to that sort of use? Not really. I would like the sort of socialism in which the government would step in with its large reserves of money and bail out companies if they thought the company would be able to pay it back and survive long term. But what we've got is capitalism pretending to be socialism, in which bailouts are only given to those companies upon which the success of the whole economy depends. Banks, large manufacturers, they're given money for the good of the economy. I would happily give up my bonus if it meant companies could be given money for the good of the people. But that's not where my money would end up.

Still, I ought to feel happy that at least the taxman only takes my money up until ten past eleven on Tuesdays - logically, doesn't that make me more productive than you? ;o)

Hah! I guess so. You certainly enjoy a higher percentage of your effort than I do on an input/output basis.

Doesn't that make me more socialist than you? ;0)

The good news is the organisations who do provide transition support for their employee's pay for it. Its not cheap either.

At least they can put it in their CSR reports for some positive marketing.

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