Fears of a mass exodus from London’s financial district seem to have been somewhat misplaced as data suggests employment remains strong in the Square Mile.
Research from recruitment consultancy Morgan McKinley noted that people seeking roles in the City’s financial services firms hit a five-year high in 2022.
Job vacancies in London’s financial district across financial businesses for 2022 were also at their strongest level since 2019.
There was a 36% increase in job seekers in 2022 from 2021, and a 16% increase in jobs available as applicants continued to outpace vacancies.
The buoyant jobs market data, however, seems to go against the tune sung by some of the big banks.
A dearth of new stock market floatations and dealings has played a part in many global banks culling their staff.
Last year, there were only 45 initial public offerings, a 62% decline from the record year of 2021, according to IPO EYE, a market tracker produced by Ernst & Young.
Goldman Sachs (NYSE:GS) and Deutsche Bank are among some of the international powerhouses with offices in the heart of London’s financial district to have chop back payroll in the wake of weak equity markets.
Goldman said earlier this year it would be cutting 3,200 jobs globally, around 6.5% of its workforce.
When the bank delivered the news of who would be getting the chop, mainly junior members of staff, many were said to have left the £1bn Shoe Lane office, just off London's Fleet Street, in tears.
So, if big banks are scaling back the number of their employees, why do the figures suggest there is a jobs boom?
London’s Square Mile
Well, it is first important to establish what is meant by ‘The City’ or ‘The Square Mile.’
Geographically speaking, The City refers to the 1.12 square miles that encompass The City of London.
It is home to a permanent 8,000 residents and sees 513,000 daily commuters and 10mln annual visitors pass through its borders which stretch from Temple in the west to Aldgate in the east, and from the bank of the Thames in the south to Spitalfields Market in the north.
Financial services aren’t just the banks
To the average person, you mention the Square Mile or the City, or Canary Wharf for that matter (further east a hub for finance) and they instantly assume you are talking about the big banks.
In some ways, that assumption isn't misplaced.
Banks, according to data from the City of London, are the largest employer in the area, accounting for 64,000 employees, over a tenth of the total 587,000 people who work in the City.
However, banks fall under a broader financial services umbrella when data like employment figures are recorded.
Also falling under the scope of financial services, among others, are fund managers, insurance providers, and accountancy firms, which employ 29,000, 21,000 and 20,000 people in the City respectively.
These areas, unlike the banks, are showing growth in employment numbers, according to their respective trade associations.
Broadly speaking, these sub-sectors are not as heavily impacted by a weak investment market in the same way that the banks are, with employment remaining strong even against the general doom and gloom in the economy.
That may explain the disparity in Morgan McKinley’s data which highlighted that financial service sector roles were increasing, and the banks scaling back on their staff.
“It comes as little surprise that economic optimism and business confidence has fallen, however, the number of jobs in financial services in London throughout 2022 continued to rise post-Covid, reaching 2019 levels of hiring,” said Hakan Enver, managing director of Morgan McKinley.
Not just financial services
Financial services aside, London’s Square Mile is home to several other industries.
The legal sector is the second largest employer behind the banks, with law firms contributing to some of the 59,000 people to the local workforce.
Employment in the legal space has remained strong despite the challenging political and economic headwinds in the broader market, according to Colin Passmore, chair of the City of London Law Society.
“The business of law in the City of London continues to be one of the UK's success stories,” said Passmore.
“This is evidenced by its vast direct and indirect contribution to the UK economy, a contribution which continues to grow, alongside sustained levels of entry to the profession.”
Fintech firms were some of the biggest hirers last year, with Radius Payment Solutions taking the crown, according to a report by the Evening Standard.
Payroll solutions firm Sage and online bank Revolut also took on hundreds of more staff last year, a sign of the growing significance of financial technology services.
Aside from that, the City is also home to a plethora of management consultancies, tech firms, media organisations and IT support companies, just to name a few.
While big banks play a significant role in the heart of the Square Mile, their health isn’t always an accurate depiction of the health of the City.
Many firms are hardly touched by the state of equity markets which is currently weighing heavily on the banks.
While fears of a further culling from the big banks persist, the other employers in the area will have a lot to say about the strength of London’s Square Mile.