Mervyn King has weighed in on the bonus debate. The guvnor says big payouts have encouraged too many talented people to squander their lives in banking when they could have been doing something more constructive instead.
King made his comments to the Treasury Select Committee.
According to the Telegraph, King says young people look at City compensation packages and think they “dominate almost any other type of career … It’s not a very attractive situation that such a high proportion of our talented young people naturally look at the City and think it is the only place to work in. It shouldn’t be. It should be one of the places, but not the only one.”
Talented yoof confirm Merv’s fears. One Cambridge student confesses that he might think of doing a medical PhD or going into the voluntary sector were it not for the fact that he’s leaving university with a 15k overdraft and needs the cash.
“During my gap year I worked at Pizza Hut and earned 200 pounds a week. As a summer intern in an investment bank I’ll be earning 700 pounds a week. There’s no comparison,” he says.
“Put bluntly, yes, people do go into investment banking for the money,” confirms Gordon Chesterman, head of the Cambridge University Careers Service. “But we do work hard to promote a wide variety of other careers.”
Bonuses may not need to be reformed to put students off – mass redundancies should be a more effective deterrent.
However, they don’t seem to have had an impact yet. Martin Birchall, director of High Fliers Research, a company which monitors top students’ career aspirations, says a record number of students want to go into investment banking this year: “Despite all the problems in the City, it’s still as desirable as ever.”
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