Flat outlook for salaries in financial services

Salaries for staff in London’s financial services sector are expected to remain flat, particularly among contract and temporary staff, according to the annual survey carried out by Morgan McKinley – but nearly a third of staff expect pay rises of 10%.

Overall, compensation is predicted to remain relatively flat with 57% of professionals in the permanent hiring market and 67% of the temporary/contractor market expecting remuneration to remain the same in 2013.

Even so, some 33% of permanent staff expect pay rises of up to 10%. Respondents in the contractor market again showed slightly less confidence with only 28% forecasting that rates might rise and again only up to 10%.  Despite this, there was confidence in the contractor market that pay rates will not decrease at all over the course of 2013.

Of those who expected compensation to increase this year, attracting and retaining the best talent in the market is predicted to be the key reason according to 48% of those in the permanent market and 33% of temporary/contracting professionals.  In addition, another 33% working across temporary/contracting recruitment cited skills shortages as a reason for pay rates rising.

“It’s interesting that this survey shows a high number of professionals anticipating that compensation in their organisations will at least remain flat this year or rise by 10%.  In contrast to this, the average salary change for new joiners over 2012 was 14%, therefore suggesting that talent attraction really was and continues to be a key focus for employers,” said Hakan Enver, operations director, Morgan McKinley Financial Services.

“Looking back to our 2012 London Financial Services Salary Survey, the responses are broadly comparable, suggesting that economic instability and performance challenges faced by many organisations in 2012 will see compensation remaining similarly restrained over the course of this year.”

In December, Morgan McKinley’s monthly London Employment Monitor registered a fall of 36% month-on-month, from 2,079 to 1,323. Compared to December 2011 this was a decrease of 24% from 1,733.

The number of active job seekers also fell in December 12 from 3,886 to 2,915, a decrease of 25% on November 2012 and 50% lower than the 5,802 job seekers in the market in December 2011.

“As usual at this time of year, seasonal factors have affected the hiring market, illustrated by the lack of both new jobs being released and the fall in professionals seeking new roles,” said Enver. “However, from speaking to those with hiring responsibility across the sector, there is expected to be a significant amount of recruitment activity likely to take place during January. This will not only consist of roles that have been open since the start of Q4 which still need to be filled, but also new jobs which will only be released once 2013 budgets are confirmed and resource requirements for the year have been reviewed. 

Enver added that there has been a noticeable trend due to hiring restrictions imposed by various banks.  “Some hiring was postponed at the end of 2012 so that headcount could fall into the new calendar year. Based on this, we also anticipate that job volumes will rise in January 13 and then level out over the remainder of Q1,” he said.