Poll shows City optimistic on pay

AN ONLINE poll in the City shows surprisingly optimistic expectations for this year's bonuses, despite warnings that many investment bank staff may get little this time with only the elite rewarded.

The survey by recruiters Morgan McKinley found 34% anticipate a rise of more than 65% in their payment.

On average, across all sectors of the City, staff are looking forward to a 25% increase in year-end bonuses, to 35% of salary.

Morgan McKinley said the optimism appeared based on stronger financial markets especially, earlier this year, and particularly in fixed-income and derivatives.

'Bonus expectations in the City are running high this Christmas and, while top performers will always be rewarded, the majority of those expecting big increases are likely to be disappointed,' said Morgan McKinley chairman Ken Brotherston.

'Business conditions are more muted than they were earlier this year and, while the City is in good shape and bonuses will be healthy, 2004 is not going to be the bumper year some are hoping for.'

This latest survey reflects the gap between expectation and probable reality revealed in a poll earlier this month by headhunters Armstrong International, which said big bonuses would only go to high-fliers. Its annual survey found that, while most workers were expecting flat, lump-sum payments, star performers and hot product areas - such as leveraged finance - were anticipating a 30% bonus. 'Expectations are ahead of the actual numbers in many of the product areas,' said Armstrong partner Aidan Kennedy.

But top performers were likely to be rewarded, he added.

'Management are committed to rewarding outperformers at the expense of trying to keep everybody happy.î

City banks went on a hiring spree early this year, hoping for a recovery in fees from an upswing in mergers and acquisitions, but those deals have failed to live up to earlier promise.

Costs are rising, but revenues have not come through as expected. 'The banks got ahead of themselves,' Kennedy said.

But, while City salaries maybe lagging in the short term, the Morgan McKinley poll sees a longterm upwards trend.

Salary offerings have fallen by an average of 7.6% to £43,872, from September's, £47,483, with the biggest reductions in the lower and middle sectors of the City jobs market.

The trend reflects a tail-off in recruitment since end-September.

Pay for senior professionals and directors has remained relatively stable as expectations of higher bonuses have enabled employers to fill new vacancies without necessarily raising base salaries.