15% increase in professionals seeking jobs YoY, reveals Morgan McKinley London
Morgan McKinley has released its September 2016 London Employment Monitor.
At 8,400 new jobs available on the market, September saw the third highest rate of jobs released in 2016. The 1% month-on-month uptick was modest, but suggests a stabilisation of the jobs market.
Hakan Enver, operations director at Morgan McKinley Financial Services, said, “Clearly there’s an ongoing appetite to recruit.
“Given the volatility that we have been facing, two months of positive growth is welcome news.”
After the aggressive downturn in jobs available in the second half (H2) of 2015, September’s 5% year-on-year decrease is moderate in comparison, indicating further stability. Enver commented, “We’re beginning to see a flattening out of jobs being released.”
With a 9% month-on-month increase in job seekers, it’s clear the summer holidays are over. There has also been a 15% increase in professionals seeking jobs year-on-year. Enver stated, “This time last year we had a 12% drop in job seekers due to the unusually slow start after the summer lull. What we’re seeing this year is standard operating procedure.”
With redundancies by European banks making headlines, however, it’s unclear if the post-summer spike is being influenced by market confidence or, alternatively, fears of layoffs. Enver acknowledged, “Whilst the banking industry has been under scrutiny, it can make candidate decisions to commit to organisations harder.”
Since Prime Minister Theresa May’s announcement that Britain would trigger Article 50 by the end of March, the government has made increasingly worrying statements about passporting which has a huge impact on the financial industry. Triggering Article 50 kicks off a two year negotiating period, for which the City had hoped the government would seek an interim agreement to preserve passporting rights. Sources inside May’s government, however, suggest that no such attempts to maintain financial services’ access to the single market are on the PM’s agenda.
According to a recent Moody’s report, it is unlikely that all passporting privileges will be lost, even in the event of a hard Brexit. Simon Ainsworth, senior vice president at Moody’s, commented, “[We] consider that the third country equivalence provisions contained within the incoming MIFID 2 EU directive may provide firms with an alternative means of accessing the single market.”
The MiFID 2 EU regulation comes into force in 2018. It stipulates that the UK must adopt an EU equivalent regulatory regime, leaving the door open for an alternative method of accessing the single market. Nevertheless, Ainsworth acknowledged that passporting uncertainty alone could cause some banks to move UK based activities abroad before the completion of withdrawal negotiations.
Others are not as optimistic about the outlook of passporting. Anthony Browne, chief executive of the British Bankers' Association has cautioned against putting too much faith in equivalence as a sufficient alternative. He said, "They are not available for many banking or other basic financial services, provide much more limited rights at greater cost, are uncertain, and can be withdrawn at short notice.”
Goldman Sachs said it was waiting to see just how hard a Brexit was ahead before determining whether or not to move 2,000 jobs from the City. Similarly, Lloyd’s anticipates needing to move parts of its business operations from the City in the case of a hard Brexit. Both cited passporting as the deciding factor.
Some 5,500 UK-based firms rely on passporting rights to do business. An additional 8,000 firms elsewhere in Europe use passporting to conduct business in Britain. Enver commented, “Given the number of businesses affected in Britain and across the EU, and the massive contributions made by City workers to the British economy, it’s frankly shocking to see the government take such a dismissive attitude towards passporting.
“Stability is the foundation of business growth, so hopefully the government will right this course. If we are not careful, London will have a massive talent drain to countries such as France, Germany, USA, Japan and Ireland who have already turned on a charm offensive to woo our professional workforce".
Speaking at the Conservative party conference last week, International Trade Secretary, Liam Fox, called EU nationals one of the government's ‘main cards’ in EU negotiations. Additionally, Home Secretary, Amber Rudd, announced that companies would have to publish data on the number of foreign workers they employ. The backlash to Rudd’s controversial remarks was so swift and sudden, that the government has now taken the plan off the table.
Freedom of movement is a prerequisite of passporting rights. Without it, access to the single market is further threatened. Also, the politicisation of foreign workers has broader employment implications for the financial sector. Enver stated, “Many of the technical skills needed to work in niche areas of the financial sector cannot be taught in universities.
“Recruiters look at a professional’s on-the-job experience to help place them in the right jobs”.
Access to a highly qualified workforce with diversified skills enables British businesses to compete and thrive in the global economy. Limiting the candidate pool would have the opposite effect, limiting job growth and shrinking tax revenue. Enver added, “Currently London is the hub of the financial world, but if we limit who can work in the City based on their nationality, top talent will begin to look elsewhere.”
September 2016 saw a modest increase in average salary change compared to the previous three months. Professionals moving from one organisation to another were able to secure on average an 18% increase in base pay. Much of this increase was driven by accounting and finance executives across both the banking and investment management sectors.