Finance Job increases are expected

On February 4, 2015, in The Economy, by Lyndon-Farnham

By Geoff Cook – The JEP Thursday 29 January front page carries the headline, “Finance job losses are expected”, based on the latest Business Tendency Survey results, and the paper goes on to suggest that the survey contradicts comments regarding employment prospects made at the Jersey Finance annual review on the 28 January.

It could be argued that the headline is accurate, and I would agree there will be some job losses in the finance industry in 2015 – there are every year. They will mostly be in banking as I confirmed at our annual review, but what the article failed to convey in its headline is that new jobs will be also created in banking as well as in other sectors.

While there has been a slight fall since the previous Business Tendency Survey, the picture remains positive with 98% of respondents being either more than or equally as optimistic as they were three months previously.

Equally, the Survey suggests that 36% of finance firms actually anticipate increased long-term employment in 2015 whilst 21% anticipate no change during 2015 – meaning the majority of firms don’t think there will be declines in employment at all. In fact, more than half of companies in the legal and accountancy sectors, according to the Survey, anticipate increased employment in 2015.

Our members, meanwhile, tell us that they are very busy on funds related activity, they are experiencing good flows on private wealth structuring and there is a stable outlook for capital markets. The global banking sector is still experiencing some downside as it emerges from the financial crisis and of course the island will not be immune to the transition taking place at an international level.

However, given the continued external uncertainties, such as the UK general election, deflation in the Eurozone and oil price volatility, it is reassuring that indicators such as business activity, employment and profitability, all remain favourable.

Our own surveys of member firms indicate net employment (the difference between job losses and gains) will be positive over the next three to five years with potential for a further net 1,000 jobs, the vast majority of which will be filled by local people.

Of course we could be blown off course; external event shocks, geo political risk, economic stability, commodity prices are all ever present factors that we need to scan and monitor. However, an incomplete assessment of statistics can paint an unnecessarily gloomy picture, undermining people’s confidence in the process. This has the potential to create uncertainty leading to deferred investment decisions and spending, which in turn will lead to job losses. We need to take care that in failing to present the full picture we don’t talk ourselves into a self fulfilling downward spiral.

All industries constantly transform, with jobs either no longer needed, outsourced or automated, but at the same time new jobs are being created in growth sectors as firms innovate and evolve their offering.

The global economy is predicted to increase at a rate of around 3.4% according to the January 2015 forecasts from the IMF World Economic Outlook report. Should this growth materialise as the IMF predicts, Jersey’s finance industry is well placed to participate in the employment recovery that will follow.