Morgan McKinley London employment monitor April 07

Highlights

ï Gap between supply and demand in the City jobs market continues with:

- 56% of financial services institutions stating that it is more difficult or significantly more difficult to find good candidates than a year ago

- This is despite an increase of 32% in the number of individuals looking for a new role in March 07 compared to the same month in 06

- On average, new job numbers have continued to outstrip supply throughout 06 and Q1 07. March 07 figures show a 37% increase on March 06 levels

- Plus, 58% of City employers believe hiring levels will continue to rise over the rest of the year, whilst 36% predict there will be the same high levels of activity which occurred in 06

ï In this skills short market:

- Salaries are expected to increase by 6 ñ 10% over the year according to 69% of employers

- This is against a backdrop of average salary rises of 10 - 15% for key roles in 06 across sectors including banking, finance and accountancy, operations, risk, credit and compliance

- However, these salary rises are much more moderate compared to the heady increases of 30% and upwards that occurred between 2003 and 2005

ï Now the main focus is on providing visible career progression for potential and current employees as 63% of financial services workers stated they were satisfied with their current salary and that the career opportunities on offer were the number one reason as to why they would look for a new job or stay within their current organisation over the next 12 months. Remuneration was the second priority listed.

These findings are part of the research carried out by Morgan McKinley for its Annual Salary Survey and monthly London Employment Monitor, both released today. Opinions of 25 major financial services employers in the City of London were collated alongside the views of 235 financial services professionals.

Salaries show modest increases

With skills shortages still a recurring theme in the financial services employment market in London, total compensation packages are predicted to continue to rise throughout the remainder of 2007. A survey carried out by Morgan McKinley of high volume City employers found that 69% expected basic salaries to increase by an average of 6 ñ 10% over the next 12 months. This is against a backdrop of rises of between 10 ñ 15% in 2006, according to Morgan McKinleyís Annual Salary Survey published today. Whilst these are still significant rises, they are much more muted compared to the rises which occurred between 2003 and 2005.

Robert Thesiger, COO Europe of Morgan McKinleyís parent company, Imprint Plc comments;

ìIn a skills short financial services market, salaries for strong performers have inevitably risen over the last year. However, the step change in basic salaries that occurred in the City between 2003 - 2005 has not been repeated again this year. Banks have taken a more considered approach and are less willing to break with structured salary bandings unless for exceptionally high performers.î

Financial services workers focus on career progression

Financial services employers have moved their attention away from purely focusing on monetary reward to attract and retain staff in 2006 as employee pay satisfaction levels have risen and individuals cite career progression as the key motivator for changing roles. According to research for Morgan McKinleyís Annual Salary Survey, 63% of employees stated they were satisfied with their current basic salary and the most quoted reason for individuals wanting to change jobs or stay with their current employer was down to the career progression opportunities on offer.

Robert Thesiger, COO Europe of Morgan McKinleyís parent company, Imprint Plc comments;

ìIt is worth bearing in mind that financial services employeesí satisfaction with compensation levels is against a backdrop of high rises in pay over the last three years topped off by the largest bonus round the City has seen for some time in 2006/2007. Given the ongoing buoyancy of the financial services market and the plethora of job opportunities available, it is no surprise that individuals are now focusing on making the most of the candidate tight market to progress up the career ladder. City employers and employees both acknowledge that remuneration remains important but it is not necessarily the deciding factor in whether individuals accept a new role or employers secure the talent they need.î

Current market conditions

London continues to strengthen its position as the leading global financial services centre with further job growth in March 2007, registering an increase of 37% on March 2006 levels. In addition, 58% of high volume financial services employers stated that they expected hiring levels to continue to rise over the rest of the year and 36% predicted the City would experience the same high levels of hiring activity that occurred in 2006.

Robert Thesiger, COO Europe of Morgan McKinleyís parent company, Imprint Plc comments;

ìAside from a couple of well publicised proposals for consolidation within the City, the overarching mood is one of continued confidence in the jobs market with the majority of banks believing hiring levels will continue to rise during 2007. The most pressing issue still remains, how best to bridge the gap between demand and supply.î