THERE are two very common misconceptions about the aftermath of the 2008 financial crisis. In our special feature on pages eight and nine, we demolish the first: that it is business as usual for banks. The second is that very few bankers lost their jobs as a result of the crisis.
Nothing could be further from the truth. So far this year, the top 50 banks have cut around 60,000 wholesale jobs.
Policymakers are to blame for many of the redundancies. In the past banks would have countered falling revenues by slashing bonuses, but that is no longer an option. Draconian bonus rules saw variable pay slashed and salaries hiked to compensate. Now jobs must go instead.
Banks are tight-lipped about which countries will bear the brunt of the axe, but Hays yesterday joined the long list of recruiters bemoaning the state of the City jobs market. It is safe to assume London is being hard hit.
As the number of City bankers falls, so too will the ancillary jobs that rely on them. Headhunters will have fewer people to recruit. IT technicians will have fewer computers to fix. The City – one of the country’s biggest sources of high-skilled jobs – will shrink.
When fixed-income revenues pick up again, it is far from certain that jobs will return to the City, rather than Asia or the US. So those who wanted their pound of banker flesh have got what they wanted: an economy with fewer wealth-creating jobs than before.