Recruitment Still Strong despite Brexit…

Despite the uncertainty around Brexit, companies are still recruiting. It’s very much a candidates market at the moment and demand for workers is driving a sharp increase in starting salaries. It’s been getting harder and harder for firms to find good staff and with UK immigration policy likely to tighten, this trend isn’t going to get any easier.

Concerns about a no deal Brexit are putting a handbrake on the supply of candidates as the value of job security and stability shoot up people’s personal agendas. However, candidates who are prepared to take a chance and job hop can often bag a pay rise as a result.

Slower rise in staff appointments

Permanent placements increased at softer rates in November. Though strong, the upturn in permanent staff appointments was the second-weakest since October 2017.

Vacancy growth edges down to 25-month low

Though elevated by historical standards, the overall rate of vacancy growth edged down to the least marked for just over two years in November. This was driven by a slightly softer increase in permanent job openings…

Candidate availability continues to tighten…

The overall availability of staff continued to decline sharply in November. This was despite the rate of reduction easing to the weakest since March, helped by softer falls in the supply of both permanent and temporary candidates.

…leading to further upward pressure on pay

Tight labour market conditions and greater competition for workers led to further marked rises in pay for both permanent and temporary staff. Notably, temporary wages increased at the quickest rate since July 2007. Permanent starting salaries meanwhile rose at one of the sharpest rates seen in the past three-and-a-half years.

Permanent placement growth edges down to four-month low

November survey data signaled a twenty-eighth successive monthly increase in the number of people placed into permanent job roles. The pace of expansion remained sharp, despite softening to the second-weakest since October 2017 (after July 2018). Growth was generally linked by respondents to robust demand for staff. However, there were also reports that uncertainty linked to Brexit and candidate shortages had limited the overall upturn in placements.

Steep increases in permanent staff appointments were seen across three of the four monitored English regions, as the North of England registered only a modest rate of expansion.

 

 

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Inflation Remains at a Record High Amid Candidate Shortages

Key Points from the February Survey:

  • Softer rise in permanent placements
  • High levels of candidate shortages amid high starting salaries
  • Softer rise in staff vacancies

Softer rise in permanent placements…

The number of people placed in permanent jobs increased in February although at a slower rate than January’s recent high. The continued increase has  been attributed to a strong demand for staff and a greater willingness among candidates to take up new roles

Decreased demand for staff…

The demand for staff for permanent positions has risen at its slowest pace in fourteen months.

Availability of staff…

The availability of staff for permanent roles continued to decline in February.

Pay Pressure…

Salaries for permanent starters have increased further in February and the rate of inflation remains at a record high. The higher salaries have been attributed to higher candidate and skill shortages amid rising vacancies.

 

 

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Market update: Salary inflation hits 31 month record!

Key Points

  • Strong rise in recruitment
  • Starting salary inflation hits 31-month record alongside lack of candidate availability;
  • Growth of demand for candidates declines slightly but still remains high.

Sharp Increase in Permanent Placements

Permanent placements have continued to rise each month for the past year-and-a-half. This growth has been linked to a greater demand for staff, although some panellists suggest that improved decision-making has also been a factor.

Increase in vacancies:

Overall demand has continued to rise in January.

Availability of Permanent Staff:

The number of available permanent candidates has continued to deteriorate in 2018. Key permanent staff skills reported in short supply includes paraplanners.

Higher Starting Salary Inflation:

Starting salaries for successful permanent candidates has increased at the fastest pace for over two-and-a-half years.

UK Unemployment Rate in Context:

The UK employment rate is at a four-decade low of 4.3% which is below the EU jobless rate of 7.3%. The jobless rates are higher in Austria (5.4%) and the Netherlands (4.4%), but lower in the US (4.1%), Germany (3.6%) and Japan (2.7%) in comparison to the UK.

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Permanent placements rise to greatest extent since August

Key Points from the November Survey:

  • Permanent placements rise at a quicker pace;
  • Availability of candidates continues to decline sharply;
  • High demand for staff leads to further increases in pay;
  • The unemployment rate remains low.

Staff Appointments Rise Further…

The growth in permanent placements has reached a three-month high across the UK. The rise has been attributed to an increased demand for staff and company expansion plans.

The number of permanent placements in the South, conversely, is increasing at a slower rate.

Vacancies…

Staff vacancies have continued to rise sharply. The rate of growth since October, however, has slackened slightly.

Across all sectors, the number of permanent staff vacancies has increased. In descending order, the sectors with the greatest number are:

  • Accounting/Finance;
  • IT and Computing;
  • Engineering;
  • Executive/Professional.

Staff Availability…

Across the UK the availability of candidates to fill permanent roles has continued to decline. The South has recorded the steepest decline in permanent labour supply. The key permanents staff skills reported to be in short supply include:

  • Accounting/Finance:
    • Audit, Estimators, Insurance, Paraplanners, Payroll.
  • Blue Collar:
    • HGV and LGV Drivers, Production and Distribution.
  • Construction:
    • Construction, conveyancing, Quantity Surveyors.
  • Engineering:
    • Aerospace, Engineers, Technicians.

Pay Pressures…

The average starting salaries for permanents jobs has continued to increase, resulting in a growth which has lasted for just over five-and-a-half years. The increase is salary has been attributed to low candidate availability combined with a strong demand for staff. The quickest rate of inflation has been recorded in the North.

Unemployment…

The unemployment rate and claimant count for the UK remains historically low.

The unemployment rate stands at the lowest level it has been since 1975. It is virtually identical for both men and women.

In October, approximately 806,000 people claimed out-of-work benefits. Although a rise by around 24,000 people compared to last year, the claimant count has remained close to its lowest level recorded in the early 1970s.

 

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Concern about Compliance with MiFID II

Concern that over one third of financial services are unsure if they are MiFID II compliant

What is MiFID II?

MiFID II is an EU Directive which comes into force January 3rd 2018. Its purpose is to offer greater protection for investors and create greater transparency in all asset classes: from equities to fixed income, exchange traded funds and foreign exchange.

How will it affect investment decisions?

The legislation will change how Asset Managers pay for the research they use to make investment decisions. Prior to the Directive, Asset Managers received research for free, although the cost of this service was paid into trading fees. This is generally is paid by Fund Managers’ clients. In a process called unbundling, under MiFID II Fund Managers will have to budget separately for research and trading costs.

Concern over compliance with the Directive

A recent survey, conducted by managed cloud service provider Timico, found 39% of UK financial firms are not sure whether their organisation is compliant with the new regulations, while just 8% of companies said their employees were fully aware of MiFID II’s legal implications and had received relevant training.

MiFID II also places strict controls on all communications; regulated firms will be obliged to document all communications that are intended to result in a transaction.

However, Timico found 42% of respondents said their firms do not currently have a mobile compliant platform in place to record calls, 25% said they are not yet compliant with recording requirements and 29% are still going through the compliance process.

Penalty for failing to adhere to MiFID II

Companies can be fined up to 5m Euros, or 10% of annual turnover, for non-compliance.

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Brexit: A Ticking Time-Bomb for London’s Financial Industry?

Brexit: A Ticking Time-Bomb for London’s Financial Industry?

Fears are escalating as there are concerns that Britain’s vote to leave the EU in 2019 will harm one of its most successful industries…

The Impact of Brexit on the Financial Sector

The industry is crucial to Britain’s economy, accounting for 12% of Britain’s economic output and paying more tax than any other industry. Roughly one-third of the transactions within this sector involve clients in the EU.

There is a division among the population as to the impact Brexit will have on the industry. Politicians and economists warn that London may lose its renowned position as a financial centre. Conversely, those who voted leave support their decision, arguing that Britain will benefit through becoming more self-sufficient.

Indicators

The exact impact of Brexit cannot be predicted. However, below are some indicators to show that leaving the EU will encourage a slowdown in the economy but no drastic decline.

  1. Commercial Property

Highly-respected estate agents record that commercial property prices in London have dropped more since the Brexit vote than during the global financial crisis of 2009.

In terms of figures, the price renting of real estate has dropped by about 5% since last year. However, leasing activity in this area was 17% higher than the long term average in the first three-quarters of 2017.

  1. The Tube

Apart from a few exceptions, in general fewer people are using the tubes. The number of people using Bank and Monument stations is facing its first fall since 2009. A spokesman for Transport for London denies that the closure of some escalators at Bank station in response to the expansion was a significant cause of this change.

In terms of figures, the number of people using the above station declined by 2.7% from 2016-2017.

Although the number of people who using Canary Wharf station has continued to rise, the pace has slackened.

  1. Bars and Restaurants

Currently there appears to be no impact from Brexit of premises applying or renewing their licences to sell alcohol. In fact, the first eight months of 2017 showed these figures to be at a record high.

However, London’s night life no longer focuses on finance workers but attracts a diverse array of individuals. These findings may not be entirely pertinent for this study.

  1. London City Airport

This airport is selected especially by executives for flights to European cities and beyond. Statistics suggest that the number of such people using this airport faces its slowest increase in five years.

In terms of figures, the increase in passengers in the first six months of 2017 was only 0.9% compared to the average annual increase of 10% in the previous four years.

  1. Job Availability

The number of available jobs in London’s Financial Services has fallen the most in the five years.

A survey concluded that 51,922 new financial jobs were created in the first seven months of 2017. This is a 10% decrease in comparison to 2016.

It is estimated that around 10,000 finance jobs will be transferred out of Britain and placed overseas in the near future if Britain is denied access to Europe’s single market. The first type of jobs to be transferred may be at the lower end of firms, meaning that in the short term London may still cling onto its status as a financial centre.

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IFAs remain resilient despite rise in robo-advice

Despite the rise in the use of robots as employees in the workplace, IFAs remain adamant that such technology will not replace their human face-to-face investment advice.

Although robots and automation are increasingly infiltrating the financial services industry, experts argue that there are certain matters which robot advice cannot be used for; robo-advice generally focuses on investments which relate more to saving money rather than providing advice. For the sale of financial final products, clients require face-to-face advice…

Additionally, robo-advisers lack the learning and experience which is picked up on the job while working in the marketplace. Robo-advisers also lack the ability to adapt to a client’s response and body-language during meetings…

However, there remains the argument that robo-advisers will save people money and may be appropriate for the absolute bare basic investor. The robo-advisers have proved that they are able to look at volatility in the market and allocate accordingly…

The conclusion appears to be that if people want to pay a low price they’ll choose the robots. Conversely, those wanting  a more detailed report will be willing to pay for a higher price and choose face-to-face advisers…

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Robo-advisors are changing wealth management

Robo-advisors are changing wealth management

It’s here. The rise of the machine. Or perhaps a more appropriate phase would be the tsunami of robots, as technology sweeps across industries, disrupting the norm and throwing civilians jobs into question. First it was the industrial industry, now the tidal wave has reached the financial industry – with wealth management at the forefront of FinTech investment.

robo-advisors are changing wealth management

Automated financial advisors, also known as robo-advisors, are changing the landscape of wealth management. Platforms like Hedgeable and Wealthfront in the US and Nutmeg in the UK are providing personalised portfolios for their customers, using increasingly more sophisticated algorithms and drawing from ever larger data sets. The CEO of robo-advisor Hedgeable has predicted that, in the coming years, old fund managers will become misinformed due to their lack of efficiency. Already, “digital” wealth management assets’, including those at traditional firms, has reached an estimated $55-60 billion.

Robo-advisors have reduced costs by reducing one of the major costs to the financial sector – salaries. With low barriers to entry, the number of successful start-ups in this sector is high. This in turn increases competition, further driving down the cost of digital wealth management services. Robo-advisors have also made investing more accessible for novice investors and the mass affluent, a market segment that has previously been underserved. Financial advice can now be provided conveniently by a computer screen, something that was thought to appeal to the younger generation and their technology-based way of life.

However, a recent report conducted by Salesforce suggests this is not the case. The majority of people are still interested in face-to-face interactions with an advisor. There remains a clear desire to have a personable advisor, someone to ask questions, express financial concerns and trust their assets with.

A half-human, half-tech advisor is needed. Some robo-advisor platforms are now including options to interact with a human, and marketing themselves as having the best of both worlds – savvy technology, and a friendly human advisor. After all, a human advisor can do something a robot has not yet learnt how to do – they can provide emotional support and behavioural coaching. With this combination, automated financial services have the ability to positive affect the mass affluent sector.

But for High Net Worth (HNW), Ultra High Earners and Institutional Investors, robo-advisors are unlikely to change much. These individuals are willing and able to pay the higher fees for traditional wealth management, offering them complex, tailored advice that current robo-advisors are not capable of. In a recent FinTech survey by the CFA Institute, 80% of respondents (who are CFA charter holders) thought that robo-advisors would have either no or a negative effect on Ultra High Earners, with 60% thinking the same for HNW investors.

Overall, robo-advice has expanded the customer base for financial advice. Reduced costs and improved market access has increased competition between companies, providing more choice for customers and enabling them to select the best deal. With demand still remaining for human advisors, full-service advisors are using robo-advice to help serve smaller accounts and increase advisor productivity. For now, it seems, robots and humans can work together peacefully. The next threat will come from emotionally-enabled AI.

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Financial services rules broaden approach to whistleblowing

Whistleblowing

The new rules on encouraging staff to ‘blow the whistle’ in financial services firms are a significant development for whistleblowing in general. Firms must promote whistleblowing internally, and nominate a ‘whistleblowing champion’ by 7 March 2016 who will oversee the implementation of whistleblowing policies and procedures which must be in place by 7 September 2016.

The changes stem from proposals last October by the Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA). These bodies want to ensure firms formalise their arrangements for people who want to voice concerns about wrongdoing. Organisations affected by the new rules include banks, building societies and credit unions, PRA-designated investment firms, insurance and reinsurance firms.

The companies will have to inform UK-based staff about the new arrangements and their legal rights as a whistleblower. The whistleblowing policies will have to cover all types of disclosure, rather than limit these to the current categories covered under the Employment Rights Act 1996 (these are criminal offences, breach of legal obligations, miscarriages of justice, health and safety issues, damage to the environment and the deliberate concealing of any of these).

The changes will affect the drafting of employment contracts and settlement agreements. HR managers preparing these documents must ensure they do not include wording that discourages whistleblowing. Many workers are unaware that under current whistleblowing law they cannot sign away their legal right to report wrongdoing or that agreements that try to prevent them from doing this will be invalid. The legislation has not stopped some confidentiality clauses in employment contracts and settlement agreements seeking to deter workers from reporting concerns. Under the new rules these agreements will have to include a clear statement that the individual is not prevented from reporting wrongdoing under whistleblowing law, including to the FCA or the PRA.

To prepare for the new regime, financial services’ firms must appoint a senior manager, who is a non-executive directive, to have overall responsibility for the organisation’s whistleblowing policies and procedures and the protection of those using them. They will need to review existing policies and update them to ensure compliance.

Training may also be required as the range of concerns that will be reportable is much broader than under current whistleblowing law. Managers are likely to require specific training to recognise whistleblowing and protect whistleblowers. A firm’s fitness and propriety will certainly be called into question by the FCA where there is evidence of retaliation against a whistleblower.

With thanks to the CIPD for the information contained in this blog

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February Report on Jobs: South (excluding London)

Key points from January survey:

  • Weaker rise in permanent staff placements than 2015 trend
  • Second-slowest increase in temp billings in current 33-month upturn
  • Labour supply in South continues to drop sharply

Staff Appointment:  Growth of permanent placements moderates in January

Recruitment agencies in the South of England reported a slower rise in full-time appointments at the start of 2016. The rate of growth remained strong overall, but was weaker than the trend pace over the current sequence of expansion which began in August 2012. The South registered a broadly similar increase in permanent placements as the UK as a whole in January.

Staff Availability:  Supply of permanent candidates continues to decline sharply

The availability of labour for permanent roles in the South fell for the thirty-first consecutive month in January. The rate of contraction eased to a three-month low, but remained faster than the trend pace seen over the current sequence of decline, and the UK average.

Pay Pressures:  Permanent salaries

Recruitment agencies in the South reported a further marked rise in salaries awarded to new permanent staff in January. The rate of inflation eased for the second month running, but remained stronger than the long-run survey average and faster than the trend shown across the UK as a whole.

Regional Comparisons:

Staff appointments

Permanent staff appointments in the UK rose for the fortieth successive month in January, and at a faster pace. Regional data highlighted stronger increases in London and the North, while moderations were recorded in the South and the Midlands. Nonetheless, the latter saw the sharpest growth rate.

Candidate availability

Permanent candidate availability in the UK worsened further in January, with declines seen in all four tracked English regions. The quickest drop was recorded in the North and the slowest, although still sharp, in London.

Pay Pressures

Skill shortages continued to place upward pressures on permanent pay across the UK. January saw the thirty-second broad-based monthly rise in salaries, with the Midlands overtaking the South with regards to the strongest rate of salary inflation.

 

This blog has been written with thanks to The Report on Jobs, a monthly publication produced by Markit and sponsored by the Recruitment and Employment Confederation.

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