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MORGAN McKINLEY LONDON EMPLOYMENT MONITOR December 10

MORGAN McKINLEY LONDON EMPLOYMENT MONITOR December 10

Monitoring the pulse of the City jobs market
2011 will see competition in financial services jobs market as hiring expected to rise

Hiring Market Survey Highlights

Morgan McKinleys 2011 Hiring Market Survey of 200 managers across the financial services sector in London found:

Over half (58%) expect hiring levels in H1 11 to rise compared to H2 10

One third of managers (34%) expect their organisations to focus on replacement hiring while another third (36%) anticipate equal focus on new headcount and replacement hiring

Comparing permanent and temporary recruitment expectations, 54% of managers anticipate a rise in permanent hiring in H1 11 compared to 29% of managers planning to hire temporary staff

Competitors poaching employees is the main personnel challenge for over a third of managers 37% compared to 12 months ago which saw remuneration as the most significant challenge

Fewer managers find it more difficult than a year ago to find the right staff 37% compared to 52% a year ago

Employment Monitor Highlights

December 10 saw a 48% monthly decrease in the number of new vacancies on the London financial services jobs market, although the volume of jobs once again registered an uplift (8%) on the same month of the previous year

The number of professionals entering the City jobs market in December 10 fell by 33% compared to November 10, but rose 43% on December 09

The average salary for those securing roles in December 10 rose by 6% month-on-month

Financial services hiring anticipated to rise in H1 2011

Morgan McKinley conducted a Hiring Market Survey of 200 HR and line managers across the financial services sector in London in December 10. The results indicate a renewed appetite for hiring in the City in the first half of 2011 with 58% expecting recruitment to increase and only 12% expecting it to fall. In addition, a third (34%) believe that there will be a greater focus on replacement hiring while 16% believe it will be new headcount and a another third (36%) expect an equal split. When asked about the need for permanent and temporary staff, 54% anticipated an increase in hiring for permanent roles, while less than a third (29%) anticipated hires for temporary positions.

Compared to Morgan McKinleys H1 10 Survey responses, fewer managers now believe that it has become more difficult to find candidates with the right skills and experience with 37% finding this an issue, compared to 52% of managers surveyed in December 09. However, managers are more concerned about the poaching of employees by competitors than in the previous survey. Poaching of staff was cited as the main personnel challenge for over a third (37%), while 12 months ago remuneration was viewed as the most pressing concern by 61% of managers.

Andrew Evans, Managing Director, Morgan McKinley Financial Services commented:
The results of our 2011 Hiring Market Survey show just how far the financial services jobs market has come over the past 12 months in terms of employer confidence, appetite to hire and in shaping the recruitment activity of financial institutions in the coming months. Last year we were just seeing the beginning of a period of recovery, now with that behind us, its clear that organisations are committed to continuing to hire with 85% expecting recruitment to rise (58%) or stay the same (27%) in the next six months compared to H2 2010 levels.

The greater focus on permanent hiring is a positive indicator at this early point in the year, although the fact that 34% expect replacement hiring to be the main driver for recruitment compared to 16% stating it will be new job creation, is a reminder that growth in hiring activity is still much less consistent than it was pre-downturn.

Managers concerns over competitors poaching their staff supports anecdotal evidence that there are pockets of the market such as risk, compliance, finance, asset management and more recently HR where talent at certain levels is in strong demand and financial institutions in some cases are offering very competitive packages to secure the best professionals.

December 10 sees suppressed recruitment activity
The London Employment Monitor registered a 48% monthly decline in financial services job opportunities new to the market, falling from 4,725 in November 10 to 2,457 reflecting the same decrease as November 09 to December 09. Although a sizeable decline, the volume of job opportunities continued to show a rise compared to the corresponding month of the previous year, with an 8% increase from 2,268 in December 09 to December 10.

The number of new professionals entering the City jobs market also dropped month-on-month in December 10 by 33% from 9,390 to 6,270, while still remaining at a higher level than the 4,390 registered in December 09 an increase of 43%.

Despite the decrease in hiring activity throughout the month, the average basic pay for professionals securing new jobs was 6% higher than salaries for those placed in new roles in November 10, rising from 54,154 to 57,254.

Andrew Evans continued:
The month of December is traditionally a slow period in the recruitment cycle due to Christmas and New Year. The process of placing individuals in new roles tends to take longer as jobs may not be released and final hiring decisions are often left until the New Year. This was compounded by particularly bad weather, causing additional disruption to normal business activity so its really no surprise to see that hiring activity slowed significantly. Equally, professionals are likely to sit tight at this time of year, awaiting bonus payments before making a decision to enter the jobs market.

It has been encouraging and a positive indicator for further market growth that job availability in 2010 rose each month on the corresponding month in 2009. All signs point to a similar pattern of hiring activity in 2011. Looking back at the first half of 2010, there was a real surge in hiring in Q1 and into Q2 as institutions reviewed hiring freezes and cutbacks of 2009 relative to plans for the year ahead. The rate of hiring inevitably tailed off in Q3 and Q4 but remained stable. September/October 10 saw a note of caution sounded across the market, after several months of political uncertainty and ongoing Euro zone and sovereign debt issues. Following this, hiring settled down with improved confidence and new hiring budgets pointing to a continuation of steady market recovery in the year ahead.

Salary levels remained stable in 2010 and our survey shows increased concerns over competition for candidates against a backdrop of an increased appetite to hire. Although we are not anticipating the same strong ramp up in hiring that we saw in Q1 2010, these signs coupled with anecdotal evidence suggest that the financial services jobs market in 2011 will see a similar overall level of hiring activity to the past year.

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