If you get a job in the banking sector these days, chances are that your new base salary will be about the same as your old one. While widespread wage deflation is still uncommon, the glory days of massive pay increments are officially over.

Most banks aren’t pushing down salaries too much because this strategy might not work in the long term, says Michael Notley, a senior consultant at SMF Recruitment. If the market warms up in a year, those who think their salaries are too low will be the first to leave.

“Although banks are closely monitoring their employment costs, they are mindful of the broader implications of creating a two-tier salary structure, both in regards to staff retention and reputation,” adds Notley.

Jon Michel, director of Jon Michel Executive Search, says most candidates already in jobs can still command similar salaries if they move. “I had one client who went from an investment bank to a boutique and his base was maintained. They didn’t want to demoralise him.”

Your ability to negotiate an increase largely depends on the job function. Banks are still willing to pay a premium in risk and compliance roles because there is a shortage of high calibre people.

In front-office corporate finance and M&A roles, recent redundancies mean there are more candidates than jobs. “At the tier 1 banks, these candidates can only expect to move on the same salary, or perhaps an inflation-adjusted one,” says Notley.

Demand is waning in operations, with salaries flat to 10% down, he adds. “For example, a role in settlements, corporate actions or custody which paid $60k last year, might now pay $55k.”

Most candidates are becoming more flexible about the role, location and package, adds Michel. “If you’re out of work, the opportunity costs of turning down a job is not your former salary, it’s zero salary.”

There remains little variation in junior to mid-level salary rates between the top-10 banks in Australia. Notley comments: “It’s only the bonuses that can vary a lot. Base pay at each level, from analyst to senior associate, is likely to be within $5k to $10k across the market.”

Salaries are stuck in the doldrums largely because of a glut of job-seekers entering the market over the last four months from the likes of ANZ, Macquarie, UBS and Citigroup. The danger is that further shocks to the financial system later this year might mean wages for new recruits will tumble rather than tread water.

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