CITY VACANCIES RISE BUT INTERVIEWS FALL AS SKILLS SHORTAGE BITES

CITY VACANCIES RISE BUT INTERVIEWS FALL AS SKILLS SHORTAGE BITES

- Number of banking and financial services vacancies grew 9% year-on-year in Q2 2011

- But, interview numbers fell as skills shortage leaves City fighting for candidates

- Increased demand for Change Management has helped boost job vacancies

The number of job vacancies in London's banking and financial services sector has risen 9% over the last year and 16% over the last quarter according to Ambition, the global recruitment group.

The growth has been driven largely by an increased demand from City institutions for change management specialists to drive change to systems and processes as a result of tougher regulatory frameworks as well as a need from many businesses for specialists to help cut overall operational costs as a result of the downturn.

However, Ambition's research shows that despite the year-on-year rise in vacancies the number of job interviews across the City over the same period has fallen. The number of interviews has fallen 7% annually as a lack of candidates with the right skills has made it difficult for businesses to recruit staff.

The reason for this shortage is two fold. First, there are fewer candidates on the market as a result of the shift towards higher base salaries in lieu of large bonuses and the need to retain important staff. This has reduced the churn of staff traditionally seen after bonus periods and has produced a shift away from candidates chasing bigger and bigger bonuses towards an environment where base salary and progression are deemed most important.  Second, many businesses and hiring managers are unaware of the drop in candidate supply over the past twelve months and are still trying to hire staff using the criteria from a market that was incredibly skills rich as an immediate result of the recession.

Simon Lynch, managing director of Ambition UK, said: "It's extremely encouraging for the overall economy to see jobs being created in the City but the skills shortage is preventing a surge in growth and activity. It's not entirely a product of economic circumstance though, some businesses are helping to create the perceived shortage by being too fastidious when it comes to candidate selection. Many are stuck in mindset of two years ago when the City was skills rich - this is not the case anymore and many businesses would find a lot more candidates available to them if they were prepared to invest time in refining a candidate's skill-set rather than searching for a perfect fit."

The shortage of skills in the City has meant that salaries are on the up.

Strong candidates interested in moving roles are being offered increases to their salaries by their current employers as a way of trying to retain staff. This means that any business serious about hiring has to be prepared to pay a premium on top of the candidate's current retention incentive. The average salary range for a permanent manager within banking in finance is currently A370,000 to A390,000. The premium a new employer would have to pay to lure them away can be as much as 10% on top of what a candidate is being paid to stay by their current employer.

Simon Lynch, continued: "Any business intent on hiring candidates that match all of their skills criteria must be prepared to put their hand deep in their pocket or expect a long wait. Those businesses who have had the most successful hiring programmes over the last six months are those that have been prepared to accept a few of the skills they need and invest the time to develop the ones that are missing. This process has saved time, money and heart-ache for many and is something many others could benefit from."

Time for Change

Over the past year the number of change management vacancies in the City has increased 71%. This growth has been driven by the need of many businesses to adhere to regulatory changes as well a need to cut costs.20 But the change arena is not immune from the City's skills shortage either, in a survey conducted by Ambition as part of a wider report on the change sector, 76% of hiring change managers confirmed that finding candidates with the right skills was their biggest challenge and hiring contractors was a key means of strengthening their teams particularly when teams need to be built in a short space of time.

However, this need for contract staff within the change space has led to a catch 22 situation for many. Contractors feel they are not offered the training and development needed to widen their skill-set and career opportunities and permanent staff feel their career opportunities are limited by contract staff incumbent in senior management positions.

The demand for change specialists and the need to have them in situ quickly has led to a strong rise in demand for contract staff and this has had an impact on salaries and daily rates. Permanent project managers have seen their annual salary remain steady over the last twelve months with the average manager currently earning around A385,000 per annum. But demand for contractors with the right skills has caused average contractor day rates climb between 10% and 20% over the last year with average rates now at £3650 - £3750 per day.

Kathryn Roberts, associate director and head of change management at Ambition UK, said:

"As regulatory deadlines loom and businesses focus more and more on cost cutting, the need for change management staff is greater than ever. However, the skills shortage affecting the City as a whole is very much present in the change space and this has led to change management becoming more focused on hitting milestones rather than the quality of the assets or benefits they are delivering. This is something that businesses need to address urgently in order to avoid having to invest more in the future to amend or completely overhaul work being done now. Loosening hiring criteria and investing in developing skills now will pay dividends in the long term."