If you work in an investment bank, you might think you have it worse than your pre-crisis predecessors. People like Kerim Derhalli, the former global head of equities trading at Deutsche Bank, would certainly say so. In an article earlier this year, Derhalli said the investment banking industry went through an extraordinary bubble between 2002 and 2008 and that all who worked in it then were very lucky indeed.
The mantra goes that all who’ve worked in the industry since are far less fortunate: revenues are stagnating and banks are facing a wave of technological change. Not for nothing did UBS CEO Andrea Orcel tell Bloomberg yesterday that he wants budget for, “technology or for hiring more people” [our emphasis]. Not for nothing is Goldman Sachs strategizing to achieve the same revenues in 2020 as it had before the crisis hit in 2006.
Nonetheless, it’s possible to argue that staff in investment banks haven’t done that badly since it all went wrong. Five months ago, The City UK declared that there were 78,000 more people working in accounting, law, consulting and finance jobs in London than there in 2008. Six months ago, the Wall Street Comptroller’s office said finance employment was at its highest level since the crisis – even though it was still 6% below the peak and pay per head was 22% below 2007. Banking jobs have certainly disappeared – the UK Office of National Statistics says the banking sector employs 119,000 fewer people today than before the crisis struck, but it’s not necessarily the staff employed by investment banks who’ve suffered.
In a newly published book, Gregor Gall, a left wing academic and writer who’s professor of industrial relations at the UK’s University of Bradford, argues that the real ‘bankers’ who’ve suffered in the wake of the crisis are the employees of retail banks who’ve had their pay cut, their hours extended and their promotional prospects dimmed by the meltdown of 2008.
Gall conducted a big study of British high street banks and unearthed all this and more.
“Since the crisis, the high street banks have made increasing use of targets to measure performance,” Gall says. “Increased regulation means it’s a much more performance-driven culture and that people are having to work long hours just to try reaching these targets, which are often unattainable anyway.” How long is long? Gall says you won’t find many people in retail banking working the 12 hour days of investment banks, but that where employees used to work seven or eight hours, they’re now working eight to ten. “People are coming in early and staying later to try reaching the targets. There’s been an extension of the working day.”
At the same time, Gall says opportunities for advancement in high street banks have all but evaporated. “There’s been so much downsizing that it’s much harder to get promoted. Moreover, most people can’t achieve the targets required for promotion. The internal labour market has become much tighter.” At the same time, nefarious high street banks have begun plotting employee performance on bell curves and doing away with poor performers. The result is that while retail banks used to be conduits for social advancement, allowing people to join as tellers and progress to head office, Gall says they’ve instead become highways to nowhere. The only area which has undergone any growth is – surprise – compliance and regulation.
If you work for an investment bank, none of this is likely to come as a particular shock – or will probably elicit much sympathy. If you’re working 80 hour weeks and are subject to continuous assessment which sees the lowest 5% of performers let go while as many jobs as possible are being shifted to cheap locations elsewhere, 50 hour weeks and bell curves are par for the course.
However, Gall stresses that retail bank staff make a lot less money for their pains (hourly pay for a Citi teller in NYC is $14; the annual salary for a Lloyds cashier in the UK is around £17k) than investment bank staff. He also argues that retail bank employees didn’t do much to elicit their current tribulations: “You see banks cutting costs in retail divisions in response to problems in the investment banking arms. If you choose to work in investment banking and to be money rich and time poor and insecure in your job, that’s up to you, but these people were never planning to work until 40 and retire on their savings and their futures have been spoiled too.”
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