Could the sun be setting once and for all on bankers' bonuses? Financial services employer JPMorgan Chase has announced that it will cut bonuses (external website) paid to some 12,000 bankers across its global workforce, FT.com reports. It will instead boost basic salaries for these workers. It is believed that the resulting redistribution of funds will leave the group's wage bill unchanged, and that affected workers will still earn the same amount as before.
It appears that JPMorgan Chase's action is motivated by the ongoing controversy around banking bonuses. Bonuses are regarded by many as a central cause of the credit crunch. Yet some commentators argue that the recent return of colossal banking bonuses could be a sign that economic recovery is just around the corner.
Earlier this year, IRS research found that bonuses remain commonplace in the wider economy, and are highly valued by employers as well as by employees. Three-quarters (74.5%) of employers surveyed said that bonus/incentive schemes are effective in meeting their stated objectives.
Whether other banks, and indeed employers in the wider economy, choose to follow the lead of JPMorgan Chase remains to be seen.
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