Marching off to a different tune

The credit crunch has hit the financial services hard but agencies report that the economic downturn is throwing up opportunities for recruiters both within the sector and the wider job market.<

The credit crunch has hit the financial services hard but agencies report that the economic downturn is throwing up opportunities for recruiters both within the sector and the wider job market.

The multi-billion pound writedowns endured by many major financial institutions have resulted in the culling of thousands of staff and freezes on hiring since the credit crunch started to bite last summer. Since then, the number of permanent roles offered in the City has fallen by 32.5% year-on-year, according to financial recruiter Joslin Rowe. And the number of temporary positions has fallen even more sharply, down 35.5% compared to June 2007.

Torsten Muth, managing director of personalised career service Experteer UK, says that this is resulting in a massive over supply of labour in certain financial sub-sectors.

"We are seeing more candidates on our website from the financial services sector but from January to May this year, the number of finance jobs being advertised on Experteer.co.uk actually decreased by over 20%," he says.

The lack of job creation is already hitting many recruitment agencies' fee income. Michael Page reported last month that profits from its finance and accounting divisions, which make up 16% of total group profits, were down 8% year-on-year in the second quarter and 5% over the first half of the year.

However, a number of specialist recruiters have actually benefited from the credit crunch. Specialist compliance recruitment agency TCC Recruit says it "has never been busier" since the current banking crisis began.

Tracy Harvey-Bussell, a partner at the firm, told Recruiter that following the near-collapse of Northern Rock, financial services companies have been placing a much greater emphasis on ensuring that they have a strong grip on their operational risks.

"Since the credit crunch started, we have never been busier and the volume of business that we are getting is enormous," she says. "We put it down to a feeling at board level that companies want to ensure that their compliance procedures are gold-plated.

"The fact that the Financial Services Authority said that it was moving away from fining firms to much more aggressively targeting individuals has been another driver, along with the move to principles-based regulation and the implementation of MiFID [Markets in Financial Instruments Directive]."

Harvey-Bussell says that there is also a distinct skill shortage in what is a specialist field and this is helping to fuel the buoyancy of the compliance job market.

Indeed, Joslin Rowe says salaries for new roles within financial institutions have actually returned to pre-credit crunch levels. This reflects the increased emphasis on retaining and attracting high quality staff with any redundancies made being seen as firms 'trimming away the fat'. New salaries in accountancy and finance have risen 9.9% from £52,105 to £56,821 over the past 12 months. And salaries offered to those moving jobs within banking operations are up 5%, and investment management up 5.9%, all comfortably beating inflation.

Tara Ricks, a director at Joslin Rowe, says: "The increased salaries reflect the quality of people left in banks. The job cuts we have seen have been highly targeted. The mix is changing. Once the wheat has been sorted from the chaff, average salaries go up accordingly."

The lure of these high salaries, at a time when the cost of living is rising and house prices are falling, has understandably tempted many City workers who were taking a career break, for whatever reason, to return to employment where possible.

This has particularly been the case among female workers who were taking time out after giving birth. This has had the unexpected effect of driving up demand for nannies to care for their young children.

West Sussex-based specialist nanny and childcare recruitment agency Harmony at Home says it has seen a 30-40% increase in demand since the credit crunch gathered momentum last summer.

Alan Nolan, a director at KPMG, says that this should not really be a surprise as wealthier professionals, many of whom have large mortgages, are also feeling the pinch.

"The growth in demand for nannies is obviously being fuelled by highly paid professionals returning to work earlier as they need that second income," he says.

With nannies typically costing around £30,000 a year, clearly this option is only economic for very high earners.

So, what about those workers who have been made redundant and have struggled to find new jobs in the City?

Many recruiters point to an increase in the number of individuals looking overseas for opportunities in countries whose economies are holding up better in the current downturn.

Muth says: "Another noticeable trend is the increase in the number of people looking for finance jobs abroad. In the past 12 months, we have seen a huge talent migration of UK executives working within the financial services sector. People are particularly interested in jobs in places such as Switzerland, as better job stability and standard of living have become higher priorities."

Nolan adds that this trend has also been prevalent among foreign workers in the UK, many of whom have the additional incentive of repatriating to avoid the government's planned new tax regime for non-domiciliaries.

"We are certainly seeing individuals working in the UK considering returning home because of both the proposed tax regime and the stronger economic growth in some of their home countries," he says.

Other workers that have been unable to secure new roles within the industry have left the financial services sector altogether.

Mortgage brokers have been among the hardest hit. After several years of boom times in the residential property market, the number of mortgage brokers had swollen to 35,000 in 2007.

Yet pickings have been leaner this year due to the credit crunch reducing the availability of mortgages, house prices falling and the lack of affordability for first-time buyers.

The Association of Mortgage Intermediaries estimates that around 3,500, or 10%, have now left the industry.

Bob Adams, a former principal of Adams Newman Independent Mortgage Advisers, recently shut up shop after eight years as a broker.

He says he has since taken a job as a business development manager for an insurance company, but adds that many others have not been able to find work within the industry.

"I was squeezed out of the market," Adams says. "I was fortunate enough to find employment within the industry but many brokers are having to retrain and find different work."

The problem has been compounded for mortgage brokers because the CeMap qualification that they are required to hold to be able to give advice can be seen as not particularly intellectually rigorous.

Harvey-Bussell says she has received a large number of applications from former mortgage professionals looking to move into compliance but is unable to put many forward for roles as they are unable to compete with individuals with law degrees, for example.

Simon Benstead, a partner at financial recruitment specialist James Associates, says that there is little reliable information about what trades those brokers unable to find work within the industry are switching to, but there is plenty of anecdotal evidence that suggests that more traditional trades are expanding at a time when financial jobs are reducing.

For example, Building Trade Skills Centres says demand for its plumbing course has soared by 30% in the last two months alone.

BTSC managing director Allen Jackson says that the firm, which has two training centres, is now receiving 1,000 enquires a week from would-be applicants.

"There is a perception that regardless of how bad the economy is we will always need plumbers in a way which we perhaps do not for other professions. The reality is that pipes and taps will all eventually leak," he says.

"It seems that people are now seeing storm clouds gathering on the horizon, and are opting in greater and greater numbers to look for a traditional trade to help protect them."

The view that traditional trades are less susceptible to the economic slowdown is borne out by figures from City & Guilds, which show that a staggering 82% of plumbers are financially better off now than a year ago.

Some of the former City high-flyers who have left the industry have more options open to them due to their higher past earnings.

Nolan says many ex-traders, for example, have been using their last bonus to set up new ventures.

"I have heard of a number of ex-City guys who are considering or are actually undertaking work in relation to property development using their project management skills," he says. "Many are using their bonuses to buy and do up City properties, where values have not been falling."

For those lower down the food chain, this is obviously not an option but with few prepared to call the bottom of the market yet, it seems that more financial services staff will be forced to look at alternative sectors.



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