Goldman Sachs is not thought to be reducing its London salaries by very much at all
Good news for anyone who thought the salary reductions at Goldman Sachs were the vanguard for a wave of salary rebasing which would take base pay back to 2008 levels: salaries at the bank are rumoured to be falling by a mere 17%.
This may sound a lot, but it's not when you consider that salaries at Goldman and elsewhere have doubled - or more, over the past few years (for a list of salaries, bank by bank, click here).
Goldman declined to comment on the claim, first reported by us in July and reiterated recently by Financial News that it's invoking a clause in employee contracts allowing it to reduce salaries.
One headhunter suggested the reductions are merely to bring Goldman's London salaries in line with its salaries elsewhere in the world. "People who are on 300k might get their salaries cut to 250k. It's not a big fall," he alleges.
When salaries and bonuses and employer's national insurance are taken into consideration, employees at Goldman Sachs International, which is based in London, are paid more than twice as much as its employees worldwide.
Significantly, the alleged rebasing of London salaries to match Goldman's salaries worldwide will underscore how much pay in London is suffering as a result of the weak pound. Since September 2008, the pound has fallen by around 9% against the euro and the dollar and by 36% and 25% respectively against the Swiss Franc and Singaporean dollar. With salaries in London no longer higher to compensate for this, Goldman staff may be less keen on being located here.
Headhunters say there's little sign of other banks reducing salaries yet, but that many have made provision to do so in their employment contracts. "I've seen a lot of contracts specifying a base salary of 125k, accompanied by a 'side letter' saying that this will be supplemented by another 125k which is non-pensionable," says Jason Kennedy at search firm Kennedy Associates. "That extra 125k could easily be removed," he claims.
