January jobs figures came in much stronger than expected. Available jobs grew by 115% month-on-month to 9,180, however on a year-on-year basis, this was virtually flat with a very small decrease of 1%. Job seekers were particularly active in January, showing an increase of 138% month-on-month to 16,924, this was an increase of 67% year-on-year .
“In complete contrast to the financial markets, January was a very strong month for jobs,” says Hakan Enver, Operations Director, Morgan McKinley Financial Services. “Hiring activity fell off a cliff in December, and similar to last years month on month trend (where it showed a 100% increase), the bounce back was expected. However, the strength of this increase, considering the current sentiment, does come as somewhat of a surprise.”
“The last quarter of 2015 had been weak, with volatile markets and reported redundancies causing a flat demand in hiring. “Many employers put the brakes on in the latter part of 2015, choosing to wait until the new year before kicking off the process once again. With this raised demand for talent, so we’re now seeing increased pressure for employers to speed up the sign-off process,” says Enver.
“As with the financial markets, it’s also been a volatile few months in the jobs market,” says Enver. “January’s numbers showed that businesses are continuing to pay for talent and that professionals are on the move.”
Volatility is all around us
One theme took control of the financial news cycle in January: the historically bad start to the financial markets. Driven by oversupply of oil and concerns over a global slowdown the markets dipped in January amid strong volatility, with China even entering bear territory. In the UK alone, £113 billion was wiped off the FTSE in just ten days making it the worst ever start to the new year for the index.
In positive news, the market could get some much needed support from a long list of planned mergers and acquisition activity. Last year, according to Ernst & Young, there was a record $516 billion of deals done in London, up 90% from the previous year. The drop in equity prices and in the sterling against other major currencies, could be a further supporting factor in bringing more deals to the UK.
Financial services going strong
Lost amongst the news about market turmoil, were news which indicate that the UK economy continues to do well. Figures published in January by the ONS showed that unemployment in the fourth quarter of 2015 reached its lowest level in a decade at 5.1%. Pay, excluding bonuses, was up 1.9% coming in just ahead of analyst’s expectations. The employment figures are supported by the views of UK business bosses, who are keen to hire new staff in 2016 as the economy continues to grow. Financial services firms, the most active on the hiring front, are faced with challenges in finding the right talent. This is good news for job seekers, as vacancies in financial services are up 16% on the year, and over 60% of executives expect to hire more staff in 2016.
Further proof of the health of the financial services industry was found in a study conducted by the CBI and PwC, which reported stronger than expected growth in the financial services sector in the fourth quarter of 2015, with 45% of businesses reporting an increase in business versus 22% reporting a loss. Looking towards the first quarter of 2016, 30% of businesses expected volumes to grow.
It wasn’t all plain sailing for the sector though as Barclays reported they would cut over 1,000 jobs within investment banking. The cuts were bigger than many expected and could be seen as a sign of things to come as the new CEO Jes Staley attempts to cut down on costs.
The overall positive employment data is supported by reports in increases in salaries for the financial services sector. When it comes to advertised pay for example, the Association of Professional Staffing Companies found an increase of 11% for consultant roles and 10% for banking jobs, well above the 1.9% in pay growth mentioned above.
Despite the growth in salaries for financial sector workers, it isn’t doing much to alleviate the costs of living in London as increasingly more younger bankers are finding it hard to pay the capital’s expensive rents. Despite salaries being approximately 30% more than the national average, they are not able to keep pace with the rise in rental costs. According to government data, rent in the capital is up to three times higher than that in the Northeast for example. Enver says,
“Combine this with graduates entering the City, heavily in debt from tuition fees unable to have been funded through university by their parents. Already carrying such a huge debt burden, they will also face the prospect of having to pay large rents to live in London. It cannot be easy for the Gen Y’s.”
Bankers’ bonuses remains an issue of interest. In the aftermath of 2008, new regulation came into effect placing strict rules on banker bonuses, including “clawbacks” a way of making recipients pay back bonuses if those bonuses were found later to have been paid as a result of wrongdoing. Some bankers have been getting round these rules by changing employers before their employers have been able to enforce the clawback rules. Now, according to Andrew Bailey, the Bank of England’s chief enforcer, new rules will be brought into place to close this “loophole” and allow regulators and employers to recover paid bonuses if it is found that an employer has obtained those bonuses by misconduct.
Average salary change – Are you being under paid?
The first quarter sees the start of the annual appraisals process in many organisations and employees will find out about bonuses and have the opportunity to discuss and in some instances, renegotiate their salaries. Enver says,
“January has been a great month for job seekers. We’ve actually seen double digit growth in salaries for those we’ve successfully found a new opportunity for. In January, the average salary change for someone moving to another organisation was +18%. Clearly, professionals with the right skillset are able to demand a premium. If organisations are not forthcoming with salary negotiations to those that can clearly demonstrate their value to a firm, they will be better off elsewhere.”
Emolument Data – Median Salaries and Bonuses for Risk Management Professionals, January ‘16
Alice Leguay, co-founder and COO of Emolument.com commented:
“With steeply increasing demand by banks for Risk professionals since the financial crisis in 2008, the gap between what was traditionally viewed as a middle office function and front office pay has narrowed with base salaries only about 30% lower than M&A bankers. However, the huge gap in pay between Risk – a cost centre – and M&A and other front office departments is at bonus level, which can still range from 3-5 times those of Risk staff.”