City workers pocketed an average 13 per cent pay increase when switching jobs over the last quarter, a rise that is above the national average, new research out today shows.
Salary increases handed down to new starters at the Square Mile’s banks, brokers and insurers have ebbed over the last year as activity in the financial services sector has slowed.
According to research by recruiter Morgan McKinley, the average new starter trousered a peak wage increase of 25 per cent in the second quarter of last year.
Although a sharp reduction annually, starting pay in the financial services industry in the latest quarter has outstripped the average pay rise across the private sector of 7.7 per cent. Official figures do not isolate salary changes for new starters.
A shortage of skilled workers that can perform high value functions has incentivised finance firms to ramp up pay settlements to outbid rival companies.
Hiring picked up sharply in the first three months of this year “primarily driven by a very strong 2022 for financial services, but also thanks to sufficient gains by the FTSE 100,” Hakan Enver, managing director at Morgan McKinley UK, said.
However, fears of a global economic slump have hobbled financial services activity and partially reversed the FTSE 100’s strong start to 2023. It is now up around two per cent.
Deal making has fallen off a cliff amid higher interest rates and inflation, reducing the need for City firms to take on more staff.
Vacancies in the Square Mile in the second quarter of this year tumbled to 6,105, down from 7,497 in the previous quarter and 47 per cent down from the 11,415 in the same period last year.
Enver said redundancies are on the up and the candidate pool is swelling, keeping a lid on starting pay growth.
“It’s clear to see businesses are factoring in market conditions as they look to reduce overall costs and therefore, be more frugal in their spending,” he said.
Morgan McKinley started tracking recruitment and pay trends in the UK financial services sector just after the 2016 Brexit vote.
In the first quarter 2017, 24,105 jobs were available in the Square Mile, a 75 per cent contraction when compared with latest numbers.
The world’s top financial institutions have been swinging the axe over the last year as economic conditions have deteriorated.
Wall Street titan Goldman Sachs trimmed its headcount by about 3,200 in the first quarter, the largest round of layoffs since the 2008 financial crisis. It also sacked around 500 staff last year.
FTSE 100-listed Asia focused lender Standard Chartered, Barclays, US bank Morgan Stanley among others have all announced plans to scale back their workforce or made staff redundant already this year.