Recruitment firm Astbury Marsden says that 90% of senior City staff say they are keen to move overseas, a rise from the 77% recorded the previous year.
The main reason for this growth in numbers is apparently down to the European Union’s cap on bankers’ bonuses which restricts banks from paying more than a year’s salary to their employees as a bonus.
As result senior City workers can earn substantially more in other financial centres including Singapore and New York.London's attractiveness as a location for bankers
Indeed, the recruitment firm says that the bid to reduce bonuses along with increased regulatory powers has had a huge impact on London’s attractiveness as a location for bankers to work in.
Astbury Marsden however does point out that while many of the City’s top bankers will be unwilling to leave the capital because of its perception as a prestigious financial centre, the findings do highlight concerns over pay restrictions being imposed on banks by European regulators.
This factor, which may force experienced and talented London banking staff to move overseas, is proving to be a much bigger factor for the trend for senior City workers to move abroad than had been previously thought.
The firm’s associate director, Adam Jackson, said: “Policymakers need to take into account that highly skilled City workers are more internationally mobile than before.
“Competing financial centres such as Singapore, New York and Hong Kong have an advantage in attracting top talent as they are free from restrictions on bonuses.”
Motives for moving overseas for work
When questioned about their motives for moving overseas for work, 54% said it would be for career progression, 18% were expecting more exciting work and 16% said they wanted to enjoy lower taxes.
Researchers then asked them which of the world’s major financial centres they would consider moving to and 78% of City of London’s senior employees opted for New York, 55% said Singapore was attractive, Hong Kong was popular with 50% while 40% opted for Amsterdam and 42% wanted to move to Dubai.
Mr Jackson also warned of a growing complacency risk over the capital’s ability to retain and also attract the best talent in investment banking.
He said: “London has been traditionally the location with the biggest pull for the brightest and best in the sector but the sharp curbs on bonuses seem to be prompting more top-level City workers to consider moving to London’s main rivals.”
In addition, London’s City workers are also being influenced by the issue of taxation since the capital does well when compared with some of the world’s major financial centres.
Major City institutions offer significant relocation packages
Indeed, most major City institutions offer significant relocation packages to its most talented staff to attract them to working in London and the survey also reveals that more than half of City workers, 51% of those questioned, said that the new bonus deferral regime had not made an impact on London’s appeal as the base for a banking career.
However, it’s not all bad news for City of London employers since the recruitment firm’s research also indicates that the same willingness to move overseas for work is not reflected by junior City workers.
When questioned, just 64% of analysts said they were willing to move to a new overseas role and 54% of associate City workers expressed an interest.
Mr Jackson explained: “There will not be a shortage of young candidates who are keen to get on in London but retaining experienced staff who have a track record of success is more challenging.
“It’s also quite interesting that those keen to leave are the most experienced and qualified City staff.”
The opportunity to work from home
In a bid to address this rising discontent over bankers’ bonuses, growing numbers of employers in the City of London are increasingly offering staff the opportunity to work from home, with senior staff members being the primary beneficiaries.
The research reveals that 45% of City workers are now being given the opportunity for home working and when the data is analysed, Astbury Marsden says that 56% of staff in their 40s can regularly work from home while just 39% of staff who are aged in their 20s and 30s have the same opportunity.
Mr Jackson explained the discrepancy: “Working from home has become more common in recent years in the City though it’s usually on a limited basis. It’s the senior staff who are benefiting first which appears to be driven by them being trusted with handling the responsibility for that more than junior staff.”
One of the big issues facing City staff is that after the Brexit vote to leave the European Union many big employers in the financial services industry announced plans for moving jobs out of London.
Many City workers may be forced to move abroad
This will mean that many City workers may be forced to move abroad to pursue their career anyway.
However, the financial services industry is not unanimous about the impact of Brexit and while big employers such as JP Morgan are saying that around a quarter of its 16,000-strong UK workforce could move, private equity and hedge fund businesses say the vote to leave will boost the UK’s economy and there’s no reason for the banks to move to other cities.
Other banks looking to move jobs out of London include HSBC which announced in February that it would move around 1,000 jobs to its Paris operations, though it has since clarified this statement by saying it will wait until the UK’s Brexit decision comes into effect.
One national newspaper also reports that there is anecdotal evidence that growing numbers of financial firms are looking to move their businesses to Singapore or Hong Kong which offer bank-friendly jurisdictions and a low-cost environment for their operations.
If the big banks do decide to leave the City of London this would mean uprooting their senior executives and families and relocating them to the new financial hubs.
Negotiations to leave the European Union
London’s financial institutions will also be taking a keen interest in the negotiations to leave the European Union because much of the success for the industry in the UK is based on their ability to ‘passport’ their services within the EU.
According to the Financial Times, some banks have already begun putting plans in place to move operations from the UK and into fledgling financial hotspots such as Dublin and Paris.
Investment banks particularly have reacted the quickest and have, apparently, begun approaching financial regulators in a bid to secure licenses and are already lining up their senior executives to relocate to the new operations.
If the banks and financial institutions lose the right to a ‘financial passport’ for their services, it may mean that the City will become less attractive for these institutions as well as for international banks and this is the point where many employers may switch their operations to Dublin, Luxembourg, Frankfurt or Amsterdam. Paris may also see a boost in employment numbers.
Issue of where City of London workers may end up
This issue of where City of London workers may end up in the months and years to come has led to a report from accounting firm PwC stating that London is still the most attractive city to set up a financial services operation in Europe.
However, once the UK leaves the European Union, then Dublin could overtake London as the top location in Europe for financial services, the firm states. Dublin has now risen above Luxembourg, which was in second place last year in the rankings.
The PwC report looked at the ease of doing business as well as the number of highly educated workers, with London scoring best in five of the six indicators looked at.
Other cities that were highly rated were Amsterdam in sixth place, followed by Frankfurt, then Stockholm and Warsaw in ninth place.
The hub for Germany's financial services
Frankfurt is an interesting result since it’s the hub for Germany’s financial services and home to the European Central Bank. While it scored highly for its strength of legal rights and ease of doing business, it did poorly for its highly educated workers and offering credit to the private sector.
The report from PwC highlights that if the UK loses the right to ‘passporting’ after leaving the European Union it will lose its place as the EU’s strongest financial city.
However, the report also highlights that while Ireland will undoubtedly benefit from a windfall of financial service jobs there are doubts over how Dublin will cope with a huge influx of workers. The firm highlights that Ireland’s capital city may not have the infrastructure – such as housing and transport – to cope with the numbers that might move there.
It’s not just City workers that are increasingly looking to boost their career prospects overseas; another report points to doctors wanting to leave the NHS to work abroad.
The report has found that in the last five years there has been an increase of 20% in the number of doctors who are applying for a ‘certificate of good standing’ which enables them to register with overseas practices.
British doctors are heading for Australia
Specialist recruitment firms for medics say that British doctors are heading for Australia and New Zealand with Canada also proving popular – and they point out that a GP in Australia will not only earn more than they do in the UK but work fewer hours too.
Another report says it’s not just professional City workers and doctors that are looking to move overseas; a recent study from jobs website Indeed.com has revealed that one in 10 workers in the UK are looking for a job abroad.
The most popular destination for Brits who use the website is France, with jobs in accounting the most popular choice. The next most popular country for Brits looking for work opportunities is Italy, the US and then Canada.
The data from Indeed reveals that of all the job searches conducted in the UK, 9% are looking to move overseas for work. There’s a similar trend for US workers; 8% of them want to move abroad too. In Ireland, the number of rockets to one in three jobseekers heading overseas.
EU workers who are looking for jobs abroad
One interesting aspect to the Indeed survey is that of all EU workers who are looking for jobs abroad, 37% are looking for work in the UK, with 12% looking for jobs in France and 11% in Germany.
In addition, the UK is getting as many job hunters from India and the US as it does from all of the EU countries, which underpins its global appeal as a location for establishing a career. Many of those will be looking to the financial services industry in London for opportunities.
So, while many senior executives in the City are looking for a move overseas, Astbury Marsden’s Adam Jackson says that the impact of the Brexit has yet to be felt on London’s appeal to workers already employed there, and it is still a popular destination for expats from around the world in financial services.
He added: “The prospect of leaving the European Union is generating uncertainty but feelings on Brexit are mixed. Many are confident that the UK as a leading financial services centre is in a strong position for renegotiating successfully its relationship with the European Union.”