A wintry mix of Christmas attrition and Brexit blues make for record low job numbers
A lacklustre year for City jobs and job-seekers closed with a 52% decrease in jobs available, month-on-month, and a 39% decrease year-on-year. “In 2018 we saw job numbers fall off a cliff”, said Hakan Enver, Managing Director, Morgan McKinley UK. It is common for December to see significant reductions in the wake of a shorter trading month and Christmas holidays, but not since December 2011 has the year closed with so few jobs available, making Christmas but one culprit for the disappointing downtrend.
The outlook for job-seekers was only mildly less grim, with those seeking new opportunities down by 40% month-on-month and by 29% year-on-year. “We haven’t seen this few applicants to market in December since 2012”, said Enver, who attributes the reduction to the Christmas holidays and the ongoing political uncertainty surrounding Brexit. “We’ve seen January get off to a sluggish start on this front, also. After over two years of navigating the impossible task of preparing for an unknown Brexit scenario, people are fatigued”, said Enver.
Average Salary Change
The average salary change for those moving from one organisation to another fell to its second lowest level in 2018, at 15%. “Whilst you could argue, a 15% increase in moving organisations is a modest increase, it is still short of the heights of the 27% we saw back in May of the same year. I suspect this will increase as we press ahead into 2019. With Brexit on the horizon, and candidates less eager to jump ship, fixed pay may creep back up in order for companies to attract and commit talented individuals into their businesses”.
A year that never quite took off sets stage for recession anxiety
December closes a 2018 plagued by a timid hiring environment in the Square Mile. A surprise summer surge of candidates briefly raised hopes of a turnaround that never materialized. “There was a sense over the summer that the tables might be turning, as candidates demonstrated increased confidence in the jobs market”, said Enver. “But the weight of Brexit proved too much to just shake off, given its immense implications for individual livelihoods and business viability”.
Despite the relatively quiet jobs market, investors continued to pour money into the City, with over 600 City firms raising £37 billion in 2018. “London is still the main place in Europe to transact”, said Enver. “But March of 2019 will define our economy for the next two generations, and there isn’t a person alive who can tell us what that’s going to look like”, said Enver.
Though few expect investments to dry up, investors are being cornered into a bearish stance by the ongoing lack of regulatory clarity. The London Chamber of Commerce and Industry (LCCI) polled 500 companies and found that confidence in the capital’s economy reached a record low in the final few months of 2018. “We’d see even more investment in London if investors weren't being forced to follow a broken politics process, blow by blow, for two years and counting”, said Enver.
The ever present fear of a disorderly Brexit has many worried that 2019 will be the tipping point for the economy. The Bank of England’s forecast for a worst case scenario Brexit is an 8% economic slump. “For two years everyone’s been screaming from the rooftops that we need clarity about the terms of Brexit in order to succeed economically, to no avail. So now it’s time to assume the brace position and hope we survive the impact of what’s coming”, said Enver.
London Employment Monitor to switch from monthly to quarterly
Morgan McKinley’s London Employment Monitor will switch to a quarterly model in 2019. The next edition will be available in early April of 2019, after the momentous March 2019 Brexit-deal deadline has passed. “Quarterly reporting will allow us to provide the same level of tracking of City employment over time, and to better identify topline trends”, said Enver.
Given the historic year that lies ahead, any dramatic increase in jobs in Q1 of 2019 would be a surprise. “It will be interesting to see, but the earliest we can expect any non-seasonal uptick will be Q3”, said Enver. “But if the world doesn’t end on March 29th 2019, then maybe we’ll finally be out of the woods and can get to worrying about something other than Brexit”, concluded Enver.
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