Salary hikes unlikely, as fintechs respond to Andrew Bailey's wage comments
Fintech bosses have reacted to comments by Andrew Bailey relating to wage rises as well as the impact the 0.25 per cent hike in interest rates will have on their businesses—saying it's not for him to determine an individual's wages and that few fintechs can afford big wage increases.
Fintechs can’t afford “inflation busting” salary hikes but the Bank of England governor should not decide whether workers ask for wage rises, fintech leaders say.
Fintech bosses have reacted to comments by Andrew Bailey relating to wage rises as well as the impact the 0.25 per cent hike in interest rates will have on their businesses. Bailey's comments have been blasted by unions.
On the day that interest rates were upped by 0.25 per cent to 0.5 per cent, Bailey, who was paid £575,538 including pension, in the year from 1 March 2020, gave various interviews.
In an interview with the BBC, he was questioned whether he was asking workers not to demand big pay risers, he said: "Broadly, yes - in the sense of saying: we do need to see a moderation of wage rises. That's painful - I don't want to in any sense sugar that message, it is painful."
Wage increases would pose the risk that employers would pass on higher wage costs to consumers by rising prices, creating further inflation.
Sharon Miles, chief operating officer, Chip, said an individual’s salary should be not be decided by Bailey.
"I think it is down to individuals and companies to decide the appropriate wage changes at any time," she said.
“Companies should be evaluating wages based on the typical criteria of experience, demand, market benchmarking and individual performance, if individuals feel they deserve more then of course they have the right to ask and companies should welcome an open environment to allow this to happen.
“It does not mean, however, that individuals who feel they deserve more money should automatically get it - companies would go bankrupt very quickly if that was the case."
Josh Levy, Ultimate Finance CEO, said that “few companies will be able to afford inflation busting salary increases”, pointing to other cost pressure they faced.
He said: "The governor of the Bank of England has felt the need to give a hard message but businesses are equally facing cost increases through their supply chains and increased employment taxes, amongst other factors.
“SMEs are still trying to manage the financial impact of the pandemic and few companies will be able to afford inflation-busting salary increases.
On the impact of the rate increase on Ultimate Finance, Levy said: “Some of the products that we offer are base-rate linked and so this week’s increase will be passed through to clients where appropriate.
“But many of our products, such as Asset Finance and Bridging Finance, are not directly linked and whilst our own funding costs are increasing slightly, we are not passing this through in the form of a higher cost of funding to clients but will keep a watching brief on pricing movements in the markets we operate in."
On the impact on Chip, Miles added: “Ultimately this increase will lead to further increases in interest rates across cash deposit products, which we very much welcome as we are always aiming to offer our customers the best rates we can via banking partnerships.”