Sizeable payouts in the finance and manufacturing sectors during February and March 2011 have helped to maintain payments during the 2011 bonus season at a similar level to that recorded in 2010, when the Office for National Statistics (ONS) estimated the total amount paid out to be somewhere in the region of £22 billion.
Bonuses are traditionally paid in a period from December to March and are tracked in the Average Weekly Earnings (AWE) series produced by the ONS. Although some figures may yet be subject to revision, early indications are that bonuses in 2011 have been at a similarly high level to those paid in 2010.
In particular the 'financial and insurance activities' subsector paid bonuses averaging over £900 a week to employees in March 2011, although payouts in construction and retail have fallen year-on-year.
It appears that the overall size of bonus payouts was similar to the previous year, perhaps with a slight shift in the date of some payments to January. Payments are significantly higher than in the recession-hit bonus season of 2009, but have still not quite reached the levels seen before the crash.
The highest bonuses paid across the economy are in the finance and business services sector (containing 20% of the workforce), where a small proportion of staff receive very large bonuses and have a disproportionate impact on the picture for bonuses across the whole economy. Within the finance and business services sector, the ONS breaks figures down further, showing that the most significant group in terms of bonus size is the 'financial and insurance activities' subsector.
This employee group comprises just 4.2% of the UK workforce, but the average bonus for the sector was £901 a week in February and £760 a week in March 2011, comparable to the corresponding figures of £975 and £714 in 2010.
The graph below shows how variable bonus pay in the financial and insurance activities subsector grew rapidly in the years leading up to the crash, before dropping back in 2009.
The past two years have shown a bounce-back to higher bonus payments, although without quite reaching the peaks seen just before the recession. Strong regular pay growth at around 5% and above over the past year may also suggest that earnings growth in the subsector has transferred from bonuses to regular pay.
March is the main month for bonuses in most other sectors, with significant levels of payments. In construction, which covers 5% of the workforce, bonuses were £44 a week on average in March 2011, compared to £67 a week in March 2010. In manufacturing, by contrast, bonuses averaged £80 a week in March 2011, identical to payout levels in March 2010.
In the large, low-paying sector comprising wholesaling, retail, hotels and restaurants, bonuses were also paid at lower levels in 2011 than in 2010. The average payout in March was £40 a week, compared to £52 a week in 2010. Bonuses in this sector are typically small, but regular pay is also low and has shown little movement in recent years, so the March bonus payments are important. Since 23% of the workforce is employed in the sector, lower bonus payments also have an overall downward impact on the whole economy average.
