Employment derivatives: Difference between revisions
Amwelladmin (talk | contribs) (Created page with "{{a|myth|{{image|Ironmountain1|jpg|}}}}{{d|employment derivatives||n|}} A financial asset class developed in the early part of this millennium by derivatives pioneer and potboiler {{author|Hunter Barkley}}. They would be like interest rate swaps. A bunch of large employers would submit, daily, how much they would be prepared to pay to hire established categories of worker, to derive some kind of London Inter-Employer Bid-Offer Rate (can we call this LIEBOR?). Then the B...") |
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{{a|myth|{{image|Ironmountain1|jpg|}}}}{{d|employment derivatives||n|}} | {{a|myth|{{image|Ironmountain1|jpg|}}}}{{d|employment derivatives|/ɪmˈplɔɪmənt dɪˈrɪvətɪvz/|n|}} | ||
A financial asset class developed in the early part of this millennium by derivatives pioneer and potboiler {{author|Hunter Barkley}}. | A financial asset class developed in the early part of this millennium by derivatives pioneer and potboiler {{author|Hunter Barkley}}. | ||
When midway through his customary annual rant about the meagreness of his pay packet, it occurred to Barkley — an amateur [[fi-fi]] novelist and financial services naturalist — that the variable cost of employment was a material, and largely unhedged, contingency in modern finance. Not just for plodding low-level drudges for himself — Barkey considered himself permanently short a very ugly option — but for the banks themselves. | |||
A good-sized investment bank, he reasoned, would have an annual ''variance'' in employee compensation, without accounting for any ''changes'' in employment, exceeding $2bn.<ref>The maths was like so: assume 40,000 people at an average total compensation of about $300,000, with a ratio of discretionary to fixed of between 20% and 50%</ref> | |||
They would be like [[interest rate swap|interest rate swaps]]. A bunch of large employers would submit, daily, how much they would be prepared to pay to hire established categories of worker, to derive some kind of London Inter-Employer Bid-Offer Rate (can we call this LIEBOR?). Then the British Human Capital Managers Association would compile and publish a list of rates. Employer could swap out their fixed costs for a floating rate, thereby hedging employment costs. Employees could do the same, hedging against their intrinsic loyalty discount, and restricting employee moves to genuine changes in role, or idiosyncratic hatred of boss, rather than just the need to rebenchmark periodically. | |||
Revision as of 14:42, 11 April 2024
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employment derivatives
/ɪmˈplɔɪmənt dɪˈrɪvətɪvz/ (n.)
A financial asset class developed in the early part of this millennium by derivatives pioneer and potboiler Hunter Barkley.
When midway through his customary annual rant about the meagreness of his pay packet, it occurred to Barkley — an amateur fi-fi novelist and financial services naturalist — that the variable cost of employment was a material, and largely unhedged, contingency in modern finance. Not just for plodding low-level drudges for himself — Barkey considered himself permanently short a very ugly option — but for the banks themselves.
A good-sized investment bank, he reasoned, would have an annual variance in employee compensation, without accounting for any changes in employment, exceeding $2bn.[1]
They would be like interest rate swaps. A bunch of large employers would submit, daily, how much they would be prepared to pay to hire established categories of worker, to derive some kind of London Inter-Employer Bid-Offer Rate (can we call this LIEBOR?). Then the British Human Capital Managers Association would compile and publish a list of rates. Employer could swap out their fixed costs for a floating rate, thereby hedging employment costs. Employees could do the same, hedging against their intrinsic loyalty discount, and restricting employee moves to genuine changes in role, or idiosyncratic hatred of boss, rather than just the need to rebenchmark periodically.
- ↑ The maths was like so: assume 40,000 people at an average total compensation of about $300,000, with a ratio of discretionary to fixed of between 20% and 50%