New survey reveals employment outlook for Financial Services sector

 Recruitment expected in 2009 - but so too are headcount cuts

After a turbulent year, 22% of financial services firms in Scotland say they still intend to increase headcount in 2009 by up to 10%.

85 respondents in Scotland's financial services sector contributed to research during November & December 2008, designed to gauge perceptions amongst some of the most influential employers in the sector.  Whilst the majority of firms (48%) described their company's level of business confidence for 2009 as 'optimistic' or 'very optimistic', 19% expressed a pessimistic outlook. There's also been a spike in the number of firms expressing neutral feelings for business prospects in 2009 - from 21% in 2008 to 33% this year.  Fund management respondents were most likely to feel optimistic for the year ahead, with life and pensions organisation most pessimistic.

22% of firms expect to increase their permanent employee numbers in 2009 compared with last year's figure of 55%, however both results are considerably lower than the 82% predicting recruitment back in 2006.

The annual study, which has run since the Millennium, was conducted by Joslin Rowe Scotland, the financial services recruitment specialist and supported by Scottish Enterprise.

The main findings of the Joslin Rowe Review are:

• 82% of organisations believe being based in Scotland is best for their business - especially at the moment
• The median rise in staff numbers is expected to be 5-10% more in 2009
• Nearly one in five (19%) are recruiting for a greater volume of strategic roles than in previous years
• 25% of the respondents experienced difficulties in recruiting staff. Recruitment consultants were seen as the most successful method of recruitment
• However, reflecting market conditions, a third of organisations expect to make cuts of up to 5%.
• Investment operations firms emerged as most likely to see a drop in headcount
• London has witnessed a 65% decrease in job volumes, Scotland has fared much better with a 55% drop. Offers of employment  in the London market dropped 65%, compared to Scotland's 45% decrease*
• The average salary rise in Scotland's financial services industry is  forecast to be 3-5% in 2009 - but only just. A number of firms indicated nominal increases of just 1-2% this year or no pay rises at all
• Directors' bonuses have dropped by 10 percentage points to 10-20% this year, whilst managers' bonuses have also plummeted to 5-10% (from last year's levels of up to 20%)
• Managers' salaries have also decreased by £10,000 to £40-£49,000

Margaret Dyer, Director, Joslin Rowe Scotland believes: " For the first time in years there are many more applicants than jobs, yet this year's survey says that a quarter of companies are still finding it difficult to recruit staff. This points to one of the biggest problems Scotland's employers face at the moment. There's actually a huge amount of job seeker caution and a feeling of 'better the devil you know' so some of the very best niche talent, you'd normally expect to move around in the marketplace, is staying put. As these passive job seekers increase, sourcing very specific skills and abilities is becoming a real issue for firms in Scotland. It's a vicious circle. Job seekers think there are no jobs, so don't take a look at the market, in turn firms who are recruiting for niche skills can't recruit, and business aren't as equipped as they should be to combat the current economic crisis."

Paul Lewis, managing director industries, policy & research, Scottish Enterprise says: "Scotland's financial services sector will clearly face some challenging and uncertain times over the coming year as a result of the continuing effects of the global credit crunch.  However, sub-sectors other than banking account for almost half of all employment within financial services, and there remains some opportunities in some of these areas such as asset-servicing and fund management, which it is important we capitalise on.

"Overall, the attributes which helped build Scotland's strong-heritage in the financial services sector, such as a well developed business infrastructure, competitive cost-base and of course excellent people skills, are still in place. They will give us a strong platform from which to ensure the sector is in the best position possible for when the economy does pick up again."