Over a fifth of financial services firms have warned that the ongoing staff shortage is limiting investment in the sector, according to a new report by the Confederation of British Industry (CBI) and PwC.
“In such a competitive market, ensuring the UK’s process for attracting global talent is quick, efficient and workable is key – especially where there are domestic skills shortages,” said Emma Reynolds, managing director of industry body for the UK financial services sector, TheCityUK.
The report follows news that UK vacancies between July and September reached their highest three-month total on record, hitting 1.1m, according to the ONS which published the data yesterday.
But many businesses across sectors, including the financial services, have reported difficulties filling roles in the existing labour market.
The headcount across the financial services sector did not change since the last quarter though it is expected to grow in the next quarter, according to the new report.
The crisis prompted the Mayor of London, Sadiq Khan, to call on the government last month to introduce a ‘Covid Recovery Visa’ to address the issue.
The skilled labour shortage has hit London businesses particularly hard, with 22 per cent of London business leaders attributing the issue as the biggest hurdle facing their company over the next five years, according to data shared exclusively with City A.M. last week.
“Firms are seeing a tightening in the labour market and therefore are very focused on the need to secure, retrain, and retain existing talent,” Reynolds added.
Almost three quarters of financial services companies are actively recruiting new staff to tackle the skills shortage gap the new CBI report, published today, confirmed.
Upskilling existing staff was also flagged as a high priority for the sector, with 78 per cent already engaged in developing or retraining their employees.
“As the adoption of technology and automation accelerates, firms will have to continue to grow and adapt the skills of their workforce to meet changing needs,” agreed Claire Tunley, chief executive at the Financial Services Skills Commission.
Tunley pointed to the need for the sector to prioritise skills in cyber security, machine learning and AI. Financial services companies plan to invest more in cyber security over the next year than they did in the last, the CBI report confirmed.
While the latest CBI report showed that optimism in the sector had improved in the last quarter, it was to a lesser degree at 35 per cent compared to the previous quarter at 41 per cent.
Business volumes also grew for a consecutive quarter, though the pace of growth was slightly slower at 33 per cent than in June when it was recorded at 40 per cent.
Notably building societies were the only exception to this trend, as the sector saw a decline in business volumes, attributed partly to the end of the stamp duty holiday, with a further decline expected over the next quarter too.
Meanwhile profitability improved over the last two quarters – both business volume and profitability are expected to continue to rise over the next three months to December.
“It’s great to see that the recovery in the financial services sector has firmly taken root,” said CBI principal economist Ben Jones.
“The concern now,” he warned though, “is whether the pace of economic recovery in the UK can be sustained in the months ahead as energy costs spiral and labour shortages and supply chain constraints bite.”
“It is imperative that government and business work together to address short-term challenges, unleash investment and set a sustainable course for the economy,” Jones added.