| City bonuses exceed expectations |
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| Thursday, 14 February 2008 | |
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The credit crunch does not appear to have affected bonus payouts by London’s financial services institutions as strongly as predicted.
Research by Morgan McKinley shows 80 per cent of London’s financial services professionals received a similar (43 per cent) or higher (37 per cent) bonus than last year. Seventy-one per cent of financial services organisations surveyed stated their companies’ bonus pots were similar or larger than 2007 and 80 per cent of financial services employees in the middle and back office stated that they received a similar or higher bonus to last year. Twenty per cent received a lower amount. Impact of the credit crunch London’s financial institutions look to have managed bonus expectations well with 70 per cent of employees claiming their bonus this year either matched or exceeded their expectations and the majority were satisfied with the payout they received (67 per cent). Robert Thesiger, CEO of Morgan McKinley’s parent company Imprint Plc, said that speculation surrounding this year’s bonuses was enormous following on from a record bonus round in 2006/07, particularly given the significant volumes of write downs by banks in the last quarter of the year. Putting the impact of the credit crunch aside, 2007 was still a strong year for financial services and for the majority, bonus payouts in middle and back office functions appear to reflect this. Sixty-seven per cent stated they were satisfied with their payout and 70 per cent said their bonus either matched or exceeded their expectations. This is against a backdrop of 71 per cent of financial services employers stating their companies’ bonus pots were similar or larger than 2007. Change jobs New job vacancies fell 20 per cent in January 2008 compared to January 2007 as market uncertainty led to a slower start to hiring for the year. Job numbers still showed substantial growth on December 2007 figures, however, up 57 per cent. Typical of post-bonus season and consistent with the previous two years, the number of individuals wishing to change jobs rose in January 2008, up 11 per cent on January 2007 and 87 per cent on December 2007. Thesiger added that the findings showed that most employees received a similar or higher bonus payout than last year. “While there are always some exceptions, there does not seem to be large scale discontent amongst financial services professionals. Investment banks have managed expectations well,” he said. Skills shortage continues into 2008 Banks have taken a more cautious approach to hiring at the start of the year as new job vacancy figures highlight, due to uncertainty caused by the credit crunch and the volatility of world markets in the last quarter of 2007 and into 2008. New job numbers were down 20 per cent in January 2008 compared to the same period 12 months ago, although month-on-month job growth continued, up 57 per cent on December 2007 levels. On the flip side, seasonal fluidity within the candidate market has begun earlier than usual this year as recent market uncertainty has prompted individuals to test the temperature of the job market pre-bonus payouts. Wait and see Consistent with the previous two years, the number of new candidates increased by 87 per cent in January 2008 compared with December 2007 and up 11 per cent on January the previous year. This led to new candidate numbers overtaking new job numbers last month. These rises are not at the levels recorded over the same period last year (December 2006 - January 2007), however, which saw individuals looking for a new role increase by a staggering 128 per cent. Thesiger said that the ‘wait and see’ approach currently adopted by many banks had translated into a slower start to hiring this year. He added that there would not be a clear view on how the 2008 financial services hiring market was going to shape up until the end of March, post-bonus season and once the ‘credit crunch’ had worked its way fully through the system. “Only then will organisations feel more confident forecasting growth plans for 2008 and beyond,” Thesiger concluded. Salary increases indicate a skills short market Whilst the flow of individuals looking for new career opportunities may have increased substantially in January 2008, wage inflation suggests that it is still a skills short market with the availability of those individuals with the right skill sets remaining tight. Basic salaries increased across all levels with the average salary rising 5 per cent on January 2007 to £53,246. Related articles
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