“The New Year is traditionally strong,” says Hakan Enver, Operations Director, Morgan McKinley Financial Services. “But we had predicted this year would be exceptional and this has been reflected in the figures.
“Demand for strong candidates, particularly in the regulatory space, continues to outstrip supply,” he says. “We believe the first quarter as a whole will show increasing levels of hiring activity with remuneration rising to attract scarce talent.”
It’s the economy, stupid
The London boom in hiring activity is underpinned by a slew of positive indicators in the UK economy at large. Whilst the City is an international financial centre and global positioning is key, it is also reflective of the country’s economic health.
The FTSE 100 climbed to a record high on 24 February, closing at 6949.63 points, boosted by continuing expectations of low US interest rates and renewed hopes that a solution to the Greek debt crisis was in sight. Since then rising UK gilt yields and poor performing property stocks have led a retreat. However, the underlying strength of the UK economy remains robust, as reflected in the strength of the pound, hitting a seven-year high against the euro this month.
The Confederation of British Industry (CBI) riding a wave of optimism, revised up its forecast of UK economic growth from 2.5% to 2.7% for 2015. According to a report by The Institute for Fiscal Studies (IFS) UK living standards will at last return to pre-recession levels in 2015 as low inflation and growth in the labour market filter through. Statistics from the ONS showed a 2.1 per cent rise in average weekly earnings in December 2014.
“Confidence remains at high levels,” says Enver, “and this is vital to sustain growth in hiring activity. While we are entering a period of uncertainty with the UK elections, spectre of a Grexit, EU referendum and continuing underwhelming growth in Europe, we nevertheless forecast a strong and growing first half of the year.”
What roles are most in demand?
Professional services firms, particularly accounting and management consultancy, helped numbers of City professionals beat all records.
The Association of Professional Staffing Companies (ASPCo) reported a 29% increase in permanent vacancies in 2014, with the demand for IT professionals (up 31%) leading the charge and financial services professionals in second place.
“Morgan McKinley follows a similar trend in that it is seeing reported increases in demand for IT professionals, on both a contract and permanent basis. New IT implementations and organisational change have been the main drivers of recruitment. There exists a talent shortage in some areas, with a surprising upsurge in demand for data-driven programme and project managers, particularly in financial services and consulting. IT security and compliance projects are also figuring high in current priorities.
It is a well-known fact that regulation is continuing to fuel demand in the financial services sector,” says Enver, “as on-shoring of previously off-shored roles is increasing appetite. More and more banks and financial institutions are repatriating critical middle / back-office and support roles into the City. Risk and Compliance functions also continue to climb the strategic agenda.”
Banks still struggling to shrug off old habits
The New Year brought little relief to banks still wrestling with legacy issues. The UK’s watchdog, the Financial Conduct Authority has been urged by MPs to review compensation paid to companies missold interest rate hedging products; the Bank of England promised to hold HSBC senior executives’ “feet to the fire” following tax evasion scandals at its Swiss private banking subsidiary; RBS revealed that 1,200 of its staff trousered over £250,000 while it reported its seventh consecutive annual loss, this time of £3.5 billion.
For all that, according to a survey undertaken by Ernst & Young earlier this month, 43% of UK’s biggest banks expect 2015 will see hiring increases.
Diversity fails to launch
Diversity, a long-established business imperative, continues to elude employers as government statistics reveal that more than one in four of the City’s top earners (over £100k pa) are men.
Despite the statistics above, many financial services institutions now have HR policies aimed at attracting and retaining female talent. The FTSE 100 board diversity drive, championed by Lord Davies, has seen a rise in board diversity among the UK’s largest companies, despite most of that increase is in non-executive rather than executive roles.
“We have long put shortlists balanced for gender at the heart of our recruitment practice,” says Enver. “However, diversity is now the Number One priority in hiring briefs across sectors, roles and levels of seniority. I see the hiring of female talent as the top theme in 2015. A number of clients have already highlighted this as a priority for their hiring agendas this year. ”
Clouds on 2015 horizon
“While 2015 has opened with a bang,” says Enver, “and we are, in general, confident that we will continue to see growth in both the numbers of roles and the remuneration offered to successful job seekers. However, we cannot ignore potential dangers.”
The new high of British support for EU membership as revealed in a YouGov poll, is “encouraging”, says Enver, “but it is very dependent on the current feel good factor continuing.”
In general, European economies are not yet out of the ‘financial crisis’ woods and reports that the European Central Bank was preparing contingency plans for a Grexit are unlikely to fuel confidence.
Uncertainty brought about by the UK’s May election, ongoing effects of the low oil price, the heightened geopolitical risks in the Middle East, Africa and Russia, the threat of a UK housing bubble and cyber threats are all reasons for caution.
Finally, whilst there has been a positive reaction to a number of recent changes at CEO level of certain banking organisations, there is no doubt that unless the investment banking units of many organisations are able to show positive growth in the coming months, there may be further strategic realignment to other business functions, namely asset and wealth management. Clearly this would impact the skill sets that are being recruited and as such, potentially shift the dynamic of talent shortages into new areas.
With regards to average salary changes shown so far in 2015, it is promising to see that those securing new opportunities are still able to demand strong salary increases. Despite a slight fall from January’s 21% to February’s 19%, it is still evident that organisations are prepared to offer uplifts for technical staff who can enhance and shape businesses in order to satisfy the requirements of the regulators.