Wartime pay – permanent staff | RBS Remembers

RBS remembers 1914-1918


Wartime pay – permanent staff

Mr Worthington of Manchester & Liverpool District Banking Company's Manchester King Street Branch, c.1915 © RBS

 

The war brought enormous demand for workers. Employees suddenly had more choices about where and how they worked, and this gave them the power to ask for more money. At first, most put aside such demands in the interests of the war effort, but by 1915 it was evident that the cost of living was rising rapidly, and pre-war salaries were no longer enough to make ends meet.

Banks, like many employers, met the need for increased incomes not by raising basic salaries, but by granting bonuses. Each bank gave these payments a different name – war allowance, gratuity, grant-in-aid – but the essential principal was that they boosted workers’ incomes without committing banks to permanently maintaining or repeating them.

The details varied from bank to bank, but they had some features in common. Payments were usually targeted towards lower-paid staff, so a higher percentage was paid on the first £100 or £200 of salary, tapering off and stopping at higher levels. For the same reason, some banks also focussed on staff with dependants, giving more to married men and fathers. The banks were keen that payments should be seen as a temporary response to extraordinary circumstances, and warned staff to resist ‘the temptation to live always up to one’s income’.

Payments increased as the war went on. In 1915 and 1916 they were in the region of 10% for ordinary bank clerks, but in 1917 and 1918 this rose to 15% or 20%, and was supplemented in some cases by additional payments for men with families. London County Westminster & Parr’s Bank paid £10 per child, in addition to 15% grant-in-aid, in 1918.

The banks’ tradition of paying their employees’ income tax also became increasingly significant. The basic rate of income tax doubled during the war, and the threshold was lowered. Combined with increased salaries and bonuses, this made many more people eligible: 3 million people in Britain paid income tax in 1920, compared to 1.15 million in 1913. Among them were many middle-ranking bank workers. If they worked for banks such as London County & Westminster, which continued to pay staff income tax despite the increases, the payments represented an important extra benefit. 

Other banks – particularly in Scotland – did not follow the same policy. As early as autumn 1914, Commercial Bank of Scotland announced that it would continue to pay employees’ income tax at the current rate, but if it increased, employees would have to pay the difference themselves. National Bank of Scotland followed suit in 1915, and The Royal Bank of Scotland in 1917. 

 


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