Now that there’s going to be a UK general election in six weeks’ time, the UK’s parliamentary parties are laying out their wares. At this stage, the principal policy of the British Labour party seems to be a promise to tax “the rich.” Who’s that? According to Labour shadow chancellor John McDonnell, it’s anyone earning more than £70k ($90k).
On this basis, most people in front office banking jobs would be paying higher taxes under a Labour government. As the chart below, based on figures from recruitment firm Dartmouth Partners reflects, you can expect to earn £72k as an ‘analyst one’ in your first year out of university if you join a big bank’s M&A or capital markets team. You will be “rich” from day one.
Naturally, not everyone who works in a bank is a “banker.” Support staff typically outnumber ‘front office’ revenue-generating staff by a the ratio of 2:1 and are becoming more populous every year. The latest Robert Walters salary survey suggests it’s four years before you get a £70k salary in a compliance role and seven years before you earn that amount in “market risk reporting.” Even so, Robert Walters confirms that there are a lot of infrastructure jobs that pay more than £70k in the City – and this is just the salaries.
The chances of Britain waking up to a Labour government on June 9 are unusually small, but McDonnell has cleverly shone a light on what constitutes “rich”. While a 29 year-old earning £75k in a risk role might not feel well off compared to his counterpart in a trading job, plenty of people would argue he’s doing fine – as evinced by the representative Tweet below. The usual response from people in finance is that they earn twice as much as people in other industries because they work twice as hard. If a Labour government is (ever) elected in the UK, however, this may not hold much water.
People saying £70K a year is not rich really need to look outside their own bubble. That level of ignorance really angers me.
— Ed Martin (@EdMartinjourno) April 19, 2017