The latest employment figures from Morgan McKinley suggest that there are more workers in the City’s Financial Services sector available for work than has been seen since 2017.
According to the company’s recruitment monitor for Q4 2022, there was a slowdown in hiring across the quarter, with an 8% decrease in jobs available compared to the previous quarter due to the unsettled economic situation and holiday season.
Hakan Enver, Managing Director, Morgan McKinley UK said, “2022 was yet another eventful year with major economic events, high inflation rates and political change, with Rishi Sunak becoming our third prime minister of the year. It comes as little surprise that economic optimism and business confidence has fallen, however, the number of jobs in financial services in London throughout 2022 continued to rise post-Covid, reaching 2019 levels of hiring.”
“Financial services and banks have had a strong 2022 and continued to hire throughout the year. Jobs available in the City increased by 16% in 2022 compared to 2021 but is noticeably less than the peak year of 2016. The number of financial services jobs in London has been shrinking over recent years with a shift in jobs due to Brexit and onshoring of business to other British cities as well as further afield to mainland Europe.”
“The quarterly figures showed a drop in hiring in Q4 by 8% compared to Q3 due to economic and political uncertainty alongside the usual holiday season slowing down hiring. Despite this, jobs increased in November by 12%, buoyed by Britain’s economy growing 0.5% as activity bounced back from the impact of the Queen’s passing when businesses shut their doors for mourning.”
“2022 ended with high interest rates, decline in business confidence and reduced output, shocking the City, with hiring slowing as a result. Coming into 2023, we feel that the market will stabilise as businesses continue to struggle to find good staff. Unemployment is close to record lows of 3.7% and early retirement, alongside long-term sickness, has left the UK with a shrinking workforce since the pandemic.”
“We’ve seen a higher supply of candidates coming to market in 2022, with 36% looking for new roles in financial services compared to 2021. The higher cost of living and rise in inflation rates has caused many professionals to look for new jobs with higher salaries and better work-life balance.”
“However, as expected over the quarter, there has been a slowdown in those looking for work by 23%. Professionals have become more cautious and are waiting for bonuses before considering a move. That said, many big financial institutions and technology companies have announced job cuts which could mean a bigger pool of candidates to choose from.”
“The UK’s problem of low investment and productivity following the EU referendum six years ago, needs to be addressed. Although London firms could face a decline in investment over the coming months, the capital will come roaring back. London is a strong market with lots of innovative businesses looking for finance, and lots of people looking to finance them. Financial and related professional services contributed £261bn to UK gross value added (GVA) in 2021.”
Enver concluded: “Firms will need the right support and reassurance from the Government to provide confidence ahead of an uncertain year. The Government must take action to solidify the UK’s competitive advantage and inject investment into London by increasing trade deals, simplifying tax and investing in technology innovation. The jobs market will bounce back, particularly if we invest in the sector.”
Average salary change
Despite the overall number of candidates available during Q4 2022 falling by 8% compared to the previous quarter, the average salary change for an individual moving from one organisation to another held steady at 21%.
Hakan Enver, Managing Director, Morgan McKinley UK said, “Across the year, the average salary increase was 22% which is an uplift from 19%, the average seen across 2021.
“The competition for talent clearly remains and combined with higher costs of living, candidates continue to demand premiums for their commitment. Organisations are also becoming a little more desperate holding on to staff and understanding that the hiring of a replacement can be a more expensive option.
“The challenge is that by increasing the salary of an existing member of staff to compete with external offers, heightens the wage gap internally. In turn this creates challenges. The overall wage inflation is likely to continue into 2023, particularly if that glimmer of a quicker recovery continues. Businesses will be back on high alert scurrying to hire the best talent in the London market.”