Goldman Sachs has become the last of the big investment banks to raise salaries for junior staff in response to complaints about burnout from new recruits caught in a dealmaking boom during the pandemic.

First-year analysts will now earn a base wage of $110,000, rising to $125,000 in their second year, according to people familiar with the decision. Those at the more senior associate rank will receive a boost to $150,000.

The increases mean that Goldman will have one of the most generous starting pay packages in the industry. The figures do not include annual bonuses, which can be multiples of salaries in buoyant years.

Goldman declined to comment.

There has been a fierce internal debate about pay at Goldman. Some top executives have argued that boosting junior salaries, which are fixed and cannot be easily reduced, could set a “dangerous precedent” and attract “mercenaries”, the Financial Times reported last month.

But the bank’s hand has been forced by its rivals as well as concerns that it could lose its most promising junior staff to private equity or tech firms, which offer comparable pay and often a better work-life balance.

Morgan Stanley informed its new analysts last week that they would earn $100,000 a year, with second-year analysts taking home $105,000 — up from $85,000 and $90,000 respectively.

This follows rises ranging from $15,000 to $25,000 a year at JPMorgan Chase, Barclays, Citigroup, Bank of America and others, which also now pay about $100,000 to new starters.

Credit Suisse and Jefferies have also offered younger staff perks such as a one-off “lifestyle” bonus and a free Peloton exercise bike.

The issue of burnout among younger employees became particularly sensitive at Goldman after a group of first-year staff spoke out about the effect of gruelling hours on their mental health.

In a widely shared presentation, they claimed to be working 95 hours a week with five hours of sleep a night starting at 3am. In response, the lender promised to hire more staff to spread the load and ensure junior employees had some of their weekends off, unless they were working on an active deal.

David Solomon, Goldman’s chief executive, has taken a hard line against flexible arrangements when offices reopen. He has called working from home “an aberration that we’re going to correct as soon as possible”.

James Gorman, chief executive of Morgan Stanley, has been equally stern, telling staff: “If you can go into a restaurant in New York City, you can come into the office.”

In contrast, other banks such as Citigroup and UBS have touted their adoption of hybrid practices as a recruiting advantage.

Pay rises across the industry come as investment banks benefit from advising on mergers and acquisitions during a pandemic-driven boom in deal activity.

The launch of more than 500 special purpose acquisition companies since the start of 2020, which raise cash on the stock market and later hunt for a company to take public, has led to a significant increase in working hours.

Investment banks have historically avoided significant inflation in fixed salaries, which are harder to reduce in quieter periods. Instead, they tend to reward staff with bonuses that can vary dramatically from year to year depending on the performance of individuals and banks overall.

Goldman’s first-year analysts and associates previously typically earned less than peers, according to Wall Street Oasis, a website that tracks pay.

First-year analysts at the bank on average have earned a salary of about $86,000 plus a $37,500 bonus, lagging behind the Wall Street average of $91,400 and $39,700 respectively.