The Great Resignation Could Soon Be The Great Sacking

the Great Sacking. We've been hearing earnings from the banks, some reporting lower profits than they have done for many years, Golden Sacks saying that they were going to slow their hiring spree. They're also reintroducing their annual performance reviews where they culled the under performers, and that got us thinking, I mean, are the employees about to actually lose their vantage.

I'm David Merritt in the London studio and this is in the City Bloomberg's podcast, connecting you to the stories at the heart of the City of London, and so to give a broader sense of the jobs market across the UK, I spoke to James Read, the CEO and chairman of Red UK that's Britain's largest jobs recruitment company. First, I'm joined here by Bloomberg's Tom Metcalf, who heads up all of our City of London coverage, to zoom into what's happening on the ground with the jobs market in

the City of London. Tom, thank you so much for talking to in the city. We're exploring what the health is of the job market in the City of London. You track finance in the UK capital. How's it looking. Well, it's been interesting because since the pandemic, you know, things are going gangbash, so there's more and more jobs are available. We're getting figures from various people. That's the best time

ever you could possibly choose to move. What's particularly interesting for me right now is just sort of the situation is starting to maybe muddy slightly. You've got some areas which still seem to be doing very well and others which are starting to struggle. And I think that's what's going to be really telling over the coming months, you know, as the economic outlook starts to clarify a bit, I think we might have a bit less of a positive

sense from the job market. So which are those areas which are starting to look shaky, where people starting to worry for their job security. Yeah. For me, that the big one is investment banking, So that is the sort of part of the city that might be advising on you know, I p O s on M and A. So the traditional kind of suited bankers, you know, going out glad handing clients and that at least in terms when we see listings that is way down. The deals are dried up, right, So these guys are sitting on

their hands over the summer. Well yeah, basically, and obviously you've had a big sort of horror in boost previously. It was a very busy year last year, and now they're suddenly finding hey, maybe we have too many people.

So what we're hearing from people in the space is certainly there's very few jobs out there going forward, and when people do leave, perhaps they're not looking to sort of actively replace them, just because if you're if you're at least and banker in London, there's there's very little to be done right now, and the pipeline for the I p. A market's not looking great either as it for I mean, there's the arm deal which is obviously in doubt whether or not that our count to London.

I know there's lots of lobbying on that and that would be a mega, a blockbuster deal, but there's not much else. Is there anything else coming? And no, nothing, nothing significant, So you know, big change from last year. And that's the thing. It's a very sort of what you kill type industry, right and if if the deals aren't coming, then there's as you say, banker is probably sitting on their hands or lots of pitching. But right now, and this is true of a lot of listening markets,

there's just just not much activity. And what about M and A Similarly, I think that's a bit more sort of defensive in that you know that will continue to sustain itself no matter you know what the economic outlook is. And some some people say, hey, look in tough times, it's a great time to do M and A, But again in terms of those big standout deals, is very few right now, and that's just so much uncertainty right there's a lot of wait and see in that markets

are not as drastic as the listings. But again I wouldn't say the sort of job market in M and A banking is sort of going to be flying in the next few months. Okay, so you don't want to be in e CM, you don't want to be in M and A. What are the areas which are still doing well, what people are still getting these pay rises to switch firms, and where the job market really looks booming still well? I think trading doing very well. It's

kind of feeding off that market volatility. And you know, the interesting about trading is whether it's quite or busy, you kind of need the same number of people. So if someone does leave a position, they tend to get replaced fairly fairly quickly, so that's a positive place. And then of course stuff like compliance and of course we've been hearing from CEO is a lot about this. Anyone

with sort of tech capabilities. So if you know, you know your finance, but you're also able to code, those jobs are still like gold dust and and that's a fantastic place to be as a employee. We're seeing people in those parts of the industry switch roles for big pay rises and people's salaries getting bit up. There's been headlines around some of the big bonuses that are coming or the big total conversation packages people are getting in the city is that is that still happening over the summer,

certainly in the right areas. And I mean I'm looking at a stat here from Morgan Kenley, a recruiter, and they're saying, like the average salary change in the second quarter was basically so that's kind of spread across not just the super hot areas as well. It gives you a sense of if you're really sought after, how how well you can do at this point. So you know, there are some eye popping things, and when people move, you know, we hear tales of sort of guaranteed conversation

and stuff like that. But again, it's in those certain areas, and I think the broader picture is a much more sort of mixed one. And you know, I would say, also the heat is done, come out of the market a bit. What about the economic headwinds that we're facing you mentioned them about earlier. A lot of uncertainty as we head into the end of the year all around the world. Obviously, fears of recession in many markets, including here.

We know all about the high inflation problem that needs to happen, and we don't know what sort of government we're going to have here after September the five with the new Prime Minister is announced. What impact does that have on the ability for city firms to hire to plan for the rest of the year. Yeah, it's it was interesting mentioned house was was this month and basically we're here in you know, the government forward yet another plan about how it's going to take advantage of this

Brexit dividend. You know. Again, it's sort of well, that's the thing. It's all very rhetorical at the moment, right, and I think when you talk to people in the city, they have sort of effectively given up on any kind of obvious reward from that, and they're just sort of planning on kind of being stuck in this sort of limbo really in terms of you know, we're not in the EU, but we're not massively pivoting away from pre

existing regulation or anything like that. And you know, I think that's sort of the challenges as that lack of clarity means, you know, these really big decisions are probably just being kicked down the path a bit um and instead you sort of you know, manage watched in front of you. Yeah, because who's going to be the chancellor, who's going to be the Chief Secretary to the Treasury. Who's going to be in charge of the city regulation. What does that regulation of premier even look like. No

one knows today at this point. No, And and that's going to be very interesting thing about September. So the current Chancellor sort of push this decision on something called cooling power down the road, but it became very clear that whoever does take over the Conservative leadership and the Prime ministership, then they'll have to make that cool in terms of do we start to see more government intervention

in regulatory matters. Thank you, Tom metcalf as always. So now let zoom out and look at the picture across the whole of Britain. And I'm joined in the studio by James Reid. He's the chief executive officer and chairman of Read UK and they are the largest jobs recruitment company in Britain. James, thank you so much for joining us on in the city. I just wanted to start with this question about where we are at now at

this moment in time. Back in the spring, the story was that the job market was red hot here in the City of London. We were writing that city firms are desperate to hire this really tight job market it feels that something has changed. We had common Sacks coming out just recently saying they're going to slow hiring. Now, is that what you're seeing? Well, we're still seeing very large numbers of vacancies, but I'd say the race at which those vacancies have been increasing has really slowed down.

So a year ago a job's boom began in Britain and particularly in the city, the level of demand is still very high and there are fewer people available to do these jobs than there are vacancies, so it's a very tight labor market. I would say it hasn't hasn't overheated completely, which was looking perilously possible earlier in the year, so it has has cooled a bit, but it's still

very tight. So does that mean we're still seeing cases of these inflated salaries people are having to bid up the amount of money to poach people from different firms. Is it? Is it still that hot? Well? The data that was published from the o NS is very interesting because it showed that pay was not keeping pace with inflation. So overall pay in the private sector was up about seven p and inflation is obviously now about nine and rising,

so inflation is galloping ahead of pay. But interestingly, in finance and insurance roles pay the media increase in pay was reported as above ten percent, so those areas are doing well, especially when you compare them with say arts and entertainment, where the medium increase was one point four percent. So there are still there's still a lot of movement

on pay, particularly where skills are in tight demand. And in the past, you know on read dot co dot UK, when we saw companies advertising for roles, they were typically advertise a premium of say ten percent above the market rate to get people to move. Now we're seeing above the market rate to get people to move if those people have particular skills, and that's particular finance out in front.

Do you think they're increases because there's such a shortage still for for finances, Well, yeah, for for particular skills, that's exactly what's happening, and we're seeing it in a number of sectors, but finance and technology in particular, and you know, skills like digital marketing in such demand. You know, we're seeing up to increases for people moving. But that's what's interesting about this market because the cost of living is going up on a daily basis now and and

it's accelerating. More people are looking around thinking well where can I go to earn more money? And so we're going to see a lot of people on the move I think later this year. But in those top end jobs, you know, the cost of living, as we all know, impacts people at the lower end of the placecout doesn't it much more, you know, when it's about food inflation or transport. Doesn't really touch the size, does it for

a city trader. And yet they're still using that as an argument they need to shift jobs and get fit. I was I suppose I was referring to the whole market. But if if you can see a job very similar to your own and it's paying fifty more, it's going to get your attention, isn't it. And and that's why employers are doing this because a lot of people are sitting quite comfortably in their in their current jobs. They might have got a deal where they can work more

flexibly than they were before. They're well set up at home and in the office. They probably enjoy their job and they enjoy the people they work with. So to get someone like that to move, employers are having to pay a premium to get their attention, and the two things that we were told from applicants that they particularly look for more money and if it's significant, they're very

much more likely to move, and more flexibility. Right. Yeah, I wanted to ask about the flexibility question because we all thought companies are going to have to reinvent their approach to this. We've been on a bit of a journey at Bloomberg on this as well, about how often we expect people to be in the office. But actually some of the banks have been pretty clear that they expect people back at their desks. Are they having to soften their tone in order to get people to make

those switches? Well, it depends who they are. I think employers that I would describe as destination employers where people really want to work and when they get very good packages, they can call the shots still. But there are a lot of other people who aren't in that position, and we have a lot of applicants who are declining opportunities because they're not offered with flexible working as a possibility.

Technology one of those places. Yeah, I mean, we've got some great clients in the technology space who say we want people in attendance every day, and really good applicants are saying that doesn't work for me anymore, and they're they're looking for other opportunities and turning it down, and that is quite surprising. It's very different to three years ago. Just looking forward then to the rest of the year, we've had this hot jobs market. You're saying it's still there.

There's still a shortage. We're hearing from some of the banks. They're starting to forecast a slowdown as the year goes on. And if they're having to bid up salaries some of these top jobs, that's not sustainable as it so towards the end of the year. Are we going to see firms having to cut back? The question is what's going to give. It depends on the financial circumstances of the bank.

You know, are they prepared to forego profit in the short run to keep the team together and have a very strong team for when things resume in a more buoyant way, or are they keener to sort of cut back costs at the same time. So it might be that they allocate a certain amount of money for bonuses and increases. That's it. If some people are going to get more than others than other people will have to leave, so it could be a sort of reckoning for for

a number of reckoning. I mean, I actually heard a pretty shocking phrase from his chief executive told me yesterday that the great resignation that we had earlier this year when people switch jobs, is going to turn into the great sacking towards the end of the year. Do you

think's overplaying it? Well, that's pretty bleak. And interestingly, our data, which has been a very reliable indicator of recessions for over a quarter of a century, because we have a lot of jobs advertised on our website, our data is not currently showing a recession in prospect and it's been

very reliably doing so every time until now. And so either there's not a recession coming, this is something else, or if it is a recession, it's not going to be a recession where lots of jobs are lost according to our data, because we're just seeing such big volumes of jobs, so many people are hiring, and the big and most harmful consequence of many recessions is so many people losing work and demand plummeting, so there's less demanding the column. It becomes a sort of downward spiral. I

can't see that happening from our data. That's fascinating. Can you tell us a bit more about that data? Is that sort of weekly you're getting the you're you're looking at a snapshot of open roles and the kind of we have. We have over a quarter of a million jobs advertised on red dot co dot uk any one time, and we see on a daily basis how many jobs are coming in and how many jobs are being filled,

and how many people are applying. And we've seen since a year and a half ago, rapidly increasing numbers of jobs, and it's now sustained at a very high level, so there are still many jobs. We saw a downturn long before the pandemic in June. We could see that the market was going off before COVID made it even worse. We can't see that now. Now. It might be that it's a different type of recession, but from my experience, it doesn't look like a recession. It's something else that

is fascinating. I would love to I think we should be starting to track the read index here like as the kind of recession indicator. Right, it's been pretty reliable so far. I mean, I look at it with b D eyes, because our businesses are very cyclical. Business recruitment companies are very cyclical. It's a leading edge because the first thing someone does when they're thinking of hiring is

advertised the role. You know, the government data comes up when they've been hired or when they start paying taxes, so it's always a bit later. So no recession according to your data. And again that's a bit of an outlier called increasing now, isn't it. You know, we tracked the kind of amount of time that word is used, and it's definitely going up. But casting our minds forward into the autumn again, we've got a kind of big divergent path here, haven't we. We've got two competing visions

for the economy and the tour relaveship contests. As we record this, this trust has a pretty sizeable lead over Richie Sonac. She's talking about a very radical new direction, isn't she for the economy? Is that something that you think would be a positive as we try to skirt this recession. I've been looking at this, I mean, is it a radical new direction or is it just a return to where we were a couple of years ago?

Because you know, these decisions to increase taxes and put up corporation tax have all been relatively recent, and there's a lot of debate around whether that timing was good or correct, And as a policy direction, it seems to be a bit of an outlier compared to other world leading economies to be increasing taxes at a time when the cost of living is also going up so fast.

So I think as a business person, I'm not a I'm not a party member, I don't have a vote in this election, but as a business person, I won't be unhappy to see corporation tax come back to where it was or even better if that's the plan. I don't know, because tax of that sort of cost to our business, and you know, it's money that we might reinvest in our business if we still had a trust anomics. I think we're calling it what it might mean. I guess we'll learn a bit more in the coming weeks.

But tax is clearly a big central plank of that, isn't it, both on the corporation front and on the personal level as well as a way to support the economy and get things growing again. And and Company is going to respond to actually think, yeah, well, One interesting observation I would make is, you know, we've heard about the Great Resignation. It became known as the Big Lie

Down in China. Lots of people leaving the workforce because the pandemic led them to have reflections and thoughts about how they want to live their lives, and it didn't involve doing so much work. Tax and increasing tax on working obviously fuels that because you know, if you if you're getting paid less ultimately when you go home because your national insurance has gone up, or relatively speak, your income tax has gone up, that's a disincentive to going

to work. So I think is a legitimate argument for saying a lower tax economy will encourage more people to go to work, more companies to interest and help the economy grow. But but you know, I understand that you know, public finances aren't where they should be, right. That's the richest snak angle on this, isn't it. You know that

a true conservative approach is balancing the books. But can I just talk a bit more about the city as well, because the government published their recommendations for ripping up some of the eu legacy ways of running the City of London in particular, I optimistic going forward that that's going to manage to bolster the city as Europe's financial capital. I don't want to mention the B word necessarily Brexit, probably I guess I had to touch on that, like

the effects of that stobbing foult aren't they? Well you just did. And you know, if if Brexit is to be a success in the long run, that the opportunity it offers to do things a bit differently need to be seized. I mean, what what where can we improve regulation? Where can we changed the way businesses are run and managed to make our country and our economy more successful. I mean I look at particular the sort of labor market, and you know there needs to be there needs to

be a workforce strategy to help deal with these big problems. Um. You know, every business we're talking to at the moment seems to be struggling to hire people and that could be uniquely UK initiative. It doesn't you know, they might be able to do things now that they weren't able to do before because of the parameters and the rules. So you know, I think there should be a real investment in vocational education, real investment in apprenticeships, and there's

been a lot of talk about lifelong learning accounts. Well that should be delivered. So you know, they say, as a consequence of Brexit, it's policy we want to give opportunities to people in the UK for two British workers. Great, that's great, but you need to prioritize education if you're going to make that happen, and if you're going to create high growth, low tax, high wage economy, you need to really have us attitude to deliver it. I mean,

just just cutting the taxes on its own won't be sufficient. Obviously, the big flood of jobs leaving the city after Brexit didn't happen, right There has been a drip direct trip, hasn't there of jobs going to Paris, going to Frankfurt. There's not been a flood, but some people say that

that's going to just continue. And there's a kind of long slow bleeding of the city of London in terms of roles because of the way that Brussels is putting up barriers for transactions between London and the rest of the continent. Do you see that in in your work, uh, Lundley, No, London feels incredibly busy and dynamic, to me just looking at it as a whole and compared to other cities across the continent. So I think I'm speaking as a biased person because I am in London, but I think

London's got a great future. But it is the duty of our political leaders and regulators to ensure that the regulations are well thought through. And you know, there's been a lot of distractions, hasn't there recently in terms of the pandemic and what's going on in politics. I'm hoping that, you know, we can put that behind us and really focus on making the city of London and the wider UK economy really successful. And do you think the government

doing enough to keep those jobs here? I mean things like the banker bonus cap M a legacy of the financial crisis. Is that one thing that who have the new Chancellor and Prime Minister in the alternationship should tackle well. I don't think it's going to get many votes outside not a massive but I think light touch regulation. You know what people have paid is I think it should be contractual between them and their employer, not not something

I don't see that. I think this idea that government needs to get involved in every aspect of commercial life is it's probably not right. And I think if there has been a drip drip drip over the last twenty or thirty years, it's been a sort of accumulation of things that businesses are expected to do beyond business that that has increased costs. And you know how much of that we really care about and how much of it could we look at in the cold light of day

and say, let's scrap that and do something else. I'm loving your optimism about the city of London and about the British economy overall. That you're very bullished by the sounds of things on everything. But what is worrying you at the moment? There are so many headwinds on there coming coming our way. One thing that's worrying enough is I'm fully invested in Britain. I mean, I run a UK company, our businesses in the UK, so yeah, I do want Britain to succeed. I mean there are a

number of things that that are concerning, aren't there. I mean, inflation is not under control and every time the number is published it's higher than the one before. And that's not just here. I do business in Turkey, for instance, and you know, they've got huge inflation now, So you know that's a that's a problem around the world. You see that are basing here later in the year, or

it's abou unpredictable. It's very unpredictable, and you know, no one saw it coming to those that perhaps should have seen it coming in terms of economists and bank con central bank in the way that it has. So that's that's an on going problem. But also fixing it is often difficult. But the jobs market is key to getting it under control, isn't it, Because if if the wages are being bit up, as you say it, inflation becomes

completely entrenched, doesn't it. Well, I want to stick up for workers here a bit, because pay settlements have not been the cause of inflation, and pay settlements behind inflation. You know, overall private sector pay increases seven percent inflations now north of nine. I think it's a tough ask

to ask people who are already relatively low paid. Many people in particularly sort of service jobs, public service jobs, the people that were described as key workers during the pandemic and being applauded for their efforts and now on getting one to three increases are getting Yeah, And it's that fair. No, it's not, and I think, you know, we should reflect on that. Maybe this inflation is being caused by woeful energy strategy across the continents of Europe.

Maybe it's being caused by lack of resolve in the Ukraine. I don't know, but there are lots of other places that this is coming from that are not on our door set. I think each to their own in a way. If you've got to do the best you can, haven't you If you're in if you're a working person, you want to try so. If you can't get a pay rise where you are, a lot of people are now looking to go somewhere else. Can I ask about the top tier here executive pay in a climate where there

is a cost of living crisis. You say public sector pay is lagging inflation. It's not a great look, is it to be awarding the c suite big pay increases? But when the labor market is tight, when talent is tight, are the top companies having to offer increasing the massive packages to get the top people? That's an interesting dilemma.

I mean, it's a definite trade off. You are seeing situations where people are being paid more to move and you know the best talent in management very valuable because you know, really good leaders can make a huge difference to the performance of organizations. So you can see why

boards would pay a premium for that. But I suppose I would urge those leaders to reflect a bit on their own sort of position and how much money do you actually need and do you really want to be earning so much more than your neighbors and the people who work in your organization. Can you really look yourself in the mirror and say, yeah, I'm happy with that. If you can, then fair enough. But if not, have a think about it, because you know, I'm a well

paid person, but I don't. I wouldn't move for double my salary. I feel I'm really engaged in the job I'm doing. I like what I do, and I feel fairly remunerated. So if you feel fairly remunerated, what's the problem. Thank you so much James Reid for joining us on in the City. Thank you David, thanks for listening to this week's In the City. We will be back next week, but in the meantime, if you like our show, please head on over to Apple Podcasts or wherever you listen

to podcasts and rate review and subscribe. This episode was hosted by me David Merritt and produced by Summer Sadi and Eleen Agnatra. Special thanks to Tom Metcalf and James red h