London Employment Monitor: Average salary in London's Financial Services sector drops after bumper recruitment spree

Key stats from Morgan McKinley’s 2023 London Employment Monitor:

• 86% decrease in jobs available year-on-year (Q2 2023 vs Q2 2022)
• 23% decrease in jobs available quarter-on-quarter (Q2 2023 vs Q1 2023)
• 13% average salary change moving from one job to another in Q2 2023

The latest employment figures from Morgan McKinley suggest that the number of jobs and salary have been on the decline in the City’s Financial Services sector since Q1 2023. According to the company’s recruitment monitor for Q2 2023, there was a 86% decrease in jobs available compared to the previous quarter.

Hakan Enver, Managing Director, Morgan McKinley UK commented: “2023 kicked off with much optimism, primarily driven by a very strong 2022 for Financial Services, but also thanks to sufficient gains by the FTSE 100. Soon enough, this dynamic changed - a recent turn of bad news whittled away the FTSE’s 2023 run and despite continued buoyancy across the US markets, UK businesses took a far more cautious approach to hiring. This coincided with the collapse of two major EU financial institutions, continued high inflation, further rises to interest rates and a continued threat of recession.”

“Whilst it may seem a bit gloomy, the data simply suggests a realignment in hiring trends. Levels are returning to those seen prior to the COVID-19 pandemic in Q1 2020. Back then there was an initial decline in job roles, followed by a surge during the post-COVID recruitment spree. We’re seeing slower hiring processes and companies delaying hires to ensure they’re selecting the right candidate. London financial services companies are exercising caution and increasingly relying on temporary workers who offer flexibility and short term contracts.”

“The City’s offer to global investors continues to strengthen due to its unique combination of time zone, language, complex financial ecosystem and access to global talent. Whilst the M&A market is down almost 50% compared to 2021, and unlikely to get back to those levels for some time, there is hope that 2024 will deliver a more fruitful year, particularly if the UK government is able to control its finances. That said, 2024 also brings along an election which could also change the outlook.”

“The average salary change for a finance professional moving from one job to another dropped to 13% in Q2. We have not seen this low level of salary increase since Q2 2020, right at the start of COVID lockdowns. With companies making redundancies and still a greater proportion of jobseekers active compared to pre-COVID, prospective employers are able to offer more reasonable pay packages. This is a stark contrast to Q2 2022 when it peaked at 25%. With so much rhetoric around wage inflation, there does appear to be more control from corporates in not offering exaggerated financial packages to tempt people across.”

“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. The average salary change in the London market is dropping considerably and as such, let’s hope that with other economic drivers, the UK will soon start seeing inflation falling further.”

*Candidate data for Q2 was not available.