MORGAN MCKINLEY LONDON EMPLOYMENT MONITOR
London Employment Monitor November 2017 highlights:
- 5% increase in jobs available, month-on-month
- 3% decrease in jobs available, year-on-year
- 8% decrease in professionals seeking jobs, month-on-month
- 37% decrease in professionals seeking jobs, year-on-year
- 16% average salary change month-on-month (Average of £8,017)
City defies economic odds
Despite the Office for National Statistics (ONS) reporting the first across-the-board drop in employment since the Brexit referendum, the City’s tenacity was on full display in November. Jobs available were up 5% in November, a continuation of the post-April flatline, and reaching the rates as seen in November 2015. The year-on-year decrease of 3% was moderate given the extreme uncertainty of the business climate. “The City is on the receiving end of a lot of punches these days, but it keeps getting back up to fight another day,” said Hakan Enver, Operations Director, Morgan McKinley Financial Services.
The number of professionals seeking new opportunities has been inching up since April, with November seeing a slight decrease. The 8% month-on-month fall shows an ongoing uncertainty around the Brexit fallout as job seekers choose to stay put in their current roles. The 37% year-on-year decrease in professional job seekers is consistent with the post-Brexit hemorrhaging of EU nationals. “In Brexit adjusted terms, the job seeker figures are a net positive for the financial services sector,” said Enver.
Banks pass stress test with flying colours
The Bank of England announced in late November that the nation’s top lenders all passed a recent round of rigorous stress tests. It is the first time in a decade – and since the 2007 crash – that stress tests produced such stellar results. “The stress tests confirm that the City is resilient and they offer hope for its ability to weather the Brexit storms ahead,” said Enver.
Indeed one of the stress tests conducted measured resilience under a “disorderly Brexit,” a scenario that still cannot be ruled out as EU divorce terms remain largely unknown. “The tests give businesses the opportunity to prepare for a future they know may be around the corner,” said Enver. “All signs indicate that the damage of a ‘disorderly Brexit’ can be offset with a robust trade deal.”
Brexit threatens to take bite out of budget
A recent study by researchers from the Centre for Economic Policy Research found that Brexit has already cost the UK economy nearly £20 billion. In its latest budget, unveiled in November, the government has set aside an additional £30 billion for the remainder of the exit process. “That’s a hefty price-tag for a parcel we haven’t seen the contents of,” said Enver. Alarmingly, the EU itself puts the final bill at up to two or three times that of the combined spent and projected amounts.
An additional red flag for the financial services sector in the government’s newly released budget was its reduced GDP growth targets. “The government is either playing the expectations game, hoping for a positive news story this time next year, or we’ve got trouble ahead,” said Enver. The Organisation for Economic Co-operation and Development economic forecast showed even less growth optimism than the government’s, with a growth rate as low as 1.1% in 2019 – a full half percent lower than the Bank of England estimate.
Fintech disrupts financial services workforce
A new Deloitte survey of business executives found that over half anticipate investing at least £10 million a year in digital technologies by 2020. The investments will be both a boon for talent, as well as a challenge for those struggling to adapt to the rapid changes in technology and business models that this tech-forward approach heralds. “The fintech disruption isn’t in the future, it’s in the here and now,” said Enver.
As businesses are scrambling to adapt to the rapidly evolving fintech space, their dependence on consultants instead of salaried staff is skyrocketing. While sectors across the board saw a spike in consultant utilisation, nearly a third of growth was in financial services. “It’s high risk, high reward out there in the wilds of fintech, and niche tech skills are in high demand,” said Enver. Data scientists are among the most hotly recruited fintech talent, as organisations large and small increase their dependence on data driven analysis and business planning.
Consultants are also proving themselves essential in an industry that is struggling to provide a new generation of professionals the type of work culture and hours they are looking for from a job. “Millennials work every bit as hard as their predecessors, they just don’t do it in the same way,” said Enver. Consulting work offers the opportunity for high intensity and high earning periods of work bookended by time away from the day-to-day grind, a schedule that has proven especially appealing to millennials.
Average Salary change
The average salary change for those moving jobs to another in November held steady at 16% – the equivalent of £8,017 on average in monetary terms. “Despite the ongoing questions raised around the future of the City, organisations are still going out of their way to make sure that they are offering high premiums and a competitive salary to attract talented individuals” said Enver.
Though less steep, the road to recovery remains long
Despite the relatively upbeat November, the City is far from out of the woods: the ONS further reported that EU migration to the UK was down 43% in the year since Brexit; the threat of a “no deal” Brexit is sending chills down business sector spines; office development, a key indicator of business growth, was down 9%; and financial institutions remain poised to pull the trigger on Plan B,launching a possible exodus that puts at risk the £72.1bn in tax revenue generated by the City, if the government does not provide a Brexit roadmap by the New Year. “The tea leaves are impossible to read, but there are potential fights on many fronts left to be fought,” concluded Enver.