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Saturday 22nd December 2012 | 00:01
IPPR press release
People working in finance earn substantially more, on average, than identical workers with the same levels of education, experience and other characteristics in other sectors, according to new statistical analysis from the think tank IPPR.
The analysis, to be published in IPPR’s report on the ‘financialisation’ of the UK economy early in the New Year, shows there has been a persistent wage premium in finance for the last quarter of a century.
Over the last 25 years the ‘excess wage’ of a finance worker has fluctuated between 12 and 29 per cent. Since the financial crisis began in 2007, the ‘wage premium’ of finance workers has been around 20 per cent.
The analysis shows that the most senior staff are the ones who have benefited the most.
Kayte Lawton, Senior Research Fellow at IPPR, said:
“We’ve analysed individual earnings of people working in finance and compared them to people with the same education and experience in other sectors. We’ve found that over the past two and a half decades, there has been a clear wage premium for workers in the finance sector.
“But figures for average earnings hide as much as they reveal because there is such a wide range of incomes within the finance sector. Average earnings data for the finance and insurance industry encompass everyone from the highest earning hedge fund managers and bank chief executives to staff in local bank branches and operatives in call centres. Pay for those in the upper echelons of the City is extraordinarily high and it is this that boosts the average wage.
“This wage premium for City workers is a major source of pay inequality in the UK.”