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UK — Recession narrows North-South IT pay divide

13 April 2010

According to data provided exclusively to staffing agency ReThink Recruitment by E-Skills, the Sector Skills Council for Business and Information Technology, IT workers in the North now (2009) earn 69% of London salaries compared to 66% in 2008.

The average weekly pay for IT professionals in the North of England bucked the recession and actually increased by 6% in 2009. In 2008 the average weekly IT salary in the North was 590 Pounds, rising to 625 Pounds in 2009. In the North West specifically weekly IT pay jumped from 620 Pounds in 2008 to 640 Pounds in 2009.

Weekly IT salaries in London increased 2% between 2008 and 2009, from 890 Pounds to 910 Pounds.

According to ReThink Recruitment, the reliance of the IT sector in London on the financial services sector, combined with the rapid growth of the IT industry in the North, which tends to be dominated by software vendors and chip manufacturers, explains the narrowing North-South IT pay divide.

Debbie Davenport, Director at ReThink Recruitment, says "London's heavy reliance on the financial services sector, which is a major user of IT skills, has undoubtedly hit IT professionals in the capital hard during the recession and allowed IT salaries in many Northern cities to gain ground over the last year."

"We have seen a resurgence in demand for technology staff from the investment banking sector in London over the last two quarters, so it will be interesting to see whether IT pay in London pulls ahead of the North in 2010."

She adds "the North of England has been rapidly developing as a major IT hub over the last few years. It is now a serious challenger to traditional IT clusters such as the Thames Valley. High labour and property costs in the South East are pushing IT vendors to consider alternative locations, the North West chief among them."

According to figures by MIDAS, the Manchester development agency, Manchester now employs over 100,000 in the IT industry, with the North West employing the largest IT workforce outside the South East (10% of all UK IT workers).

Both Fujitsu and Siemens have their UK headquarters in the North, while companies such as IBM, Cisco and Oracle have major operations in Manchester.

Debbie Davenport continues "IT pay growth in the North has traditionally been slower than London and the South East, but what we are seeing now is a growing recognition among employers that if they want the best skills they have to offer competitive pay. The rapid growth of the IT sector around Manchester is now beginning to outstrip the region's production of skills, which is pushing up pay."

ReThink Recruitment predicts that as many organisations in both the public and private sector increasingly locate to cities such as Manchester, the pay divide between IT workers in the North and South will continue to narrow.

Debbie Davenport comments "whichever party comes to power this summer, it is widely acknowledged that public sector spending cuts will take place. The Government could generate substantial savings by relocating departments to lower cost centres in the North and this would have an immediate benefit to the IT industry outside London."

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