Rosa Nonell

The management of variable pay in European banking

Banking is a major employer in most large European countries, facing common pressures in terms of competition and technological change. Traditional pay systems have been revised in response to changing business objectives and new forms of work organisation. This paper examines variable pay schemes (VPS) in banking in four countries with very different institutional contexts: Austria, Norway, Spain, and the UK. It finds extensive use of VPS in each case and shared managerial objectives in terms of performance management and cost control. Forms of VPS vary, with Norwegian banks in particular favouring collective forms of bonus, but overall there is a common drive towards individual (merit) pay and multiple bonus arrangements providing increased scope for management discretion. In broad terms, what the case of pay-setting in banking suggests is a course of fading path dependency at national level.

Comparative Analysis of Institutional Incentives and Organisational Adjustment of Social Actors in Eight European Countries

This chapter compares the institutional differences between some European social actors and their implications in the policymaking process. We observe the difference between reinforcement of social pacts or reinforcement of social actors and their results in economic performance. We emphasize the pernicious effects of bargaining systems excessively based on institutional rewards and political rationales as opposed to centralized and coordinated bargaining system. If the roles of social actors in economic policymaking are restricted in exchange for monopoly of representation, that reduces the necessity to recruit new members and ensures access to public resources. In the case study between different countries firstly, we argue that social pacts are often short-sighted compromises with no compulsory clauses concerning policy outcomes. Secondly, we point out that political social pacts draw upon numerous trades off logics between the government and social actors. In this case, thirdly, such a scenario urges social actors to be focused primarily on institutional representation. However, they face serious constraints as far as most of the advisory forums and monitoring institutions remain outside the core of decision-making. The cases of Spain and Italy give the best examples to understand the incapacity to resolve political and economic problems with this instrument.