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There will be more vacancies than suitable candidates in London in the third quarter 2010


London will officially experience a shortage of job candidates in the third quarter of this year, new research reveals.

According to financial and professional services recruitment company, Ambition, there are currently nine vacancies for every 10 skilled candidates actively looking in London.

This has risen from three vacancies per 10 candidates at the bottom of the economic downturn in quarter one of 2009. Applying this growth to the rest of 2010, London can expect to have 10.3 vacancies for every 10 active candidates in quarter three and 12 vacancies per 10 candidates by quarter four.

Within the financial services industry, operations, middle office, risk and compliance, and product control candidate numbers have been in decline since the second half of 2009. Growth within the interest rates, structured rates and structured credit markets over the past seven months has meant increased demand for these skills and experience. Candidates with experience in interest rates have been snapped up, leaving demand beginning to outstrip supply.

This is in stark contrast to the graduate market in which 75 candidates are applying to every financial services and investment banking graduate job.

Tim Gilbert, UK managing director of Ambition, said: "Businesses now demand more full and varied skill sets from candidates in order to maximise their value to the business. Any candidate that fits the bill is being snapped up and well rewarded in order to retain them. This has left a very shallow talent pool.

"We’re not expecting a fall in the number of jobs available in London. But even if job growth does slow slightly there won’t be huge numbers of experienced candidates suddenly appearing on the market. This will leave businesses in a number of sectors fighting over talent. As a result you can expect wage inflation – particularly base salary inflation – and more valuable counteroffers being handed out."

Firms within the professional services are also suffering from a lack of experienced candidates. Many candidates are staying in their current roles, waiting for long overdue salary reviews to be announced in the next few months. Similarly, many in the legal sector are being offered attractive packages and more diverse roles in order to deter them from moving.

Skilled temporary candidates within the financial services industry have seen their rates rise dramatically over the past six months as a result of the increased demand. Experienced product controllers who were receiving £300-£350 per day in January can now expect to command £350-£450 per day. This marks a median increase of 23%.

On the permanent side, skilled financial services candidates are being awarded generous counter-offers in order to remain in their roles. Increases of £10,000-£15,000 on top of base salaries of around £55,000 are not uncommon.

Gilbert added: "Financial services firms are leading the charge in London and this sector will be the first to officially enter a candidate short market. But legal and professional services firms aren’t far behind.

"The government has stated it expects jobs growth in the private sector over the next five years as a result of the austerity measures. In London there are early signals that this trend is underway and the private sector candidate pool cannot support the demand."