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The number of new City job vacancies has dropped by -18% over the last month, according to Astbury Marsden, the financial services recruitment firm.
Approximately 3,160 City jobs were created in October 2011, down from 3,840 in September 2011.
Mark Cameron, Chief Operating Officer at Astbury Marsden, commented "with the end of the Eurozone crisis being postponed employers seem to be ending 2011 still in cost-cutting mode."
Approximately 14,390 City workers were looking for a new job in October 2011, a +48% jump on the 9,750 who were looking in the same time last year. That figure excludes the impact of MF Global.
This surge in the number of employees looking for new roles is partly caused by recent redundancies and partly by an increase in bankers with jobs doing contingency planning.
Cameron said "a lot of bankers and fund managers are concerned over what their future prospects are and whether there is a commitment by their employer to the area of the bank they work in. These people are now beginning to window shop."
"Normally bankers want to change jobs because they want to progress their career or increase their income. At the moment we are seeing a lot of approaches from bankers who just want to maintain their incomes."
"During periods when the bigger banks are cutting jobs most employees sit tight and wait for the storm to pass but an increasing number of bankers are wondering whether it is worth the risk of jumping ship. They will be conscious of the fact that there aren't a huge number of jobs for them to switch into."
"Employers try to deal with these morale issues by paying their staff a lot more attention and promising to take care of them but those line managers also want to avoid overpromising."
One area where cost-cutting can be more closely linked to a recent increase in candidate numbers is amongst IT contractors at investment banks.
Downward pressure on contract rates at some investment banks has led to a +30% increase in IT contractors looking for jobs in the last month.
Cameron said "we were surprised to see such a big jump in IT registrations and many of those that have approached us are contractors who have some way to run on their current contract."
Base pay for City staff up +12% despite Eurozone crisis
Separate research by Astbury Marsden reveals that average base pay in the City has jumped by +12% to 83,000 Pounds in the last year (to 30 September 2011).
Base pay for Managing Directors saw the biggest jump, up +21% year-on-year to 237,000 Pounds.
Cameron commented "a lot of the pay rises that fed this big increase to average City base pay were awarded in the first half of the year when the confidence amongst the banks was high."
"Pay rises in the last six months were far rarer and now City employees are expecting the impact of the Eurozone crisis to produce very weak bonuses."
Cameron explains that senior staff tend to see the biggest increases in total remuneration rises when the market is active. He said "standard practice in the banking sector when you are trying to recruit senior executives had been to buy out their current bonus and offer them a guaranteed bonus. As the banks can no longer offer those kinds of packages because of changes to the FSA's Remuneration Code, they are forced to attract talent by offering high base salaries."
"The consequence of the regulatory move against City bonuses has been that banks have been left with higher fixed salary costs at a time when banking revenues have slumped. With less flexibility to pare back bonuses, we are instead seeing aggressive redundancy programmes from the banks as a way of reducing costs in response to falling income."
The biggest average pay increases were for City workers who changed jobs (up +19%) or were promoted (up +15%). Staff who stayed with their existing employer and were not promoted saw pay increase by +8%.
Cameron said "City staff who are very proactive in managing their career by winning promotions or switching employers will almost always see the biggest pay rises."
Uncertainty at some of the global banks and concerns about the likely impact of new regulatory rules has led many City workers to move to niche banks and hedge funds, where they think job security will be better.
Cameron said "we're seeing a lot of City staff looking to move from universal banks to niche employers that are more focused on their specialism. Their concern is that their entire team might be for the chop as banks are forced to de-risk and streamline, particularly with the use of capital under the microscope because of new capital ratio requirements."
"Hedge funds and smaller banks are seen as more nimble and committed to a certain specialism, which makes them as close to a 'safe haven' as City workers can get. City workers say that they expect inflation-beating pay rises next year but they are not expecting their pay to increase as rapidly as it has this year."