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Saturday, 27th April 2024 |
| Fund administration sector remains strong |
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| For the first time in the history of the IFSC we are now witnessing a reduction in recruitment activity says Paul Cotter, but one sector that continues to buck the trend is fund administration, where demand for staff continues to outstrip supply. |
For the last twelve months business news has been plagued with stories of corporate scandals and unstable economies causing fear and in some cases panic as to what the future has in store. Against a general backdrop of terms such as workforce shredding, market downturn, recruitment freezes, job cuts and redundancies across Europe and the USA, the Irish economy has faired surprisingly well. With continued expansion within Dublin’s IFSC and predictions of over 3 per cent growth in the country GDP for 2002, compared to an EU average of 1.5 per cent, there must be some argument as to whether there is life in the Celtic Tiger after all.
It should also be noted that although the GDP may compare well to the European average, Ireland has experienced the largest GDP fall from 9 per cent, a sharper fall than any of their European neighbours. It is also important to emphasise that companies dependent on the Irish economy have been more severely affected than those in the IFSC.
Ireland’s financial services sector has had a lot to contend with this year, with regulation and legislation being number one on the agenda. The creation of a single supervisory body for the industry was far more problematic than ever expected and its passing was delayed by well over a year. The eventual passing of the UCITS III Directive has resulted in updated regulations for investment funds and there is a planned introduction of a so-called ‘fast track’ legislative procedure for future European measures, which will affect the IFSC.
At the same time, employment issues such as remaining competitive in terms of labour and ensuring that there is a constant pool of skilled staff that meet the needs of the IFSC are a constant worry.
It is natural that any changes in the economic climate have immediate bearings on the recruitment industry and for the first time in the history of the IFSC we have witnessed a reduction in recruitment activity. In direct result to the falling US economy and worldwide events, such as Enron and WorldCom, organisations have to re-address their strategic plans for the future and learn from the mistakes that others have made.
2002 has seen companies continue to keep a tight rein on their expenditure, however unlike other financial centres the mass redundancies have not materialised as companies look to retain their existing staff and increase headcount only slightly if at all.
So what trends have we witnessed in 2002. Insurance may be the smallest sector within the IFSC, but employment opportunities within the industry remain good. 2002 was another year of growth within international insurance in Ireland, with 30 per cent of new IFSC companies authorised coming from either life assurance or non-life insurance companies. These companies, whose operations have emanated principally from Bermuda, have been able to enter the market using Dublin as it hub for their European activities. This in the main comes from new companies that have set up since September 11th. The impact on the employment market has meant there has been constant demand for professionals with up to five years experience, however the more senior end of this market has slowed down considerably.
Captive managers have experienced a surge in business activity by providing an alterative to companies who have problems in securing reinsurance. This demand has lead to an increase in recruitment activity. In the life assurance sector, despite the recent withdrawal of the Royal & SunAlliance, the market has continued to witness impressive growth, with higher staffing requirements than most.
One area that continues to buck the trend is that of fund administration/accounting where demand for staff continues to outstrip supply. Since 2000 this sector has witnessed unsurpassed growth with total assets increasing from •140.6bn in 2000 to •181 billion as of February ‘01. With a reduced corporation tax remaining highly attractive it is likely that the number of fund administration companies currently operating out of the IFSC will increase. With no end in sight to the existing skill shortage, organisations have had to adapt their recruitment methodology resulting in a number of organisations, namely Fortis, PFPC and Deutsche Bank relocating outside of Dublin in an effort to attract skilled staff from other regions.
Unfortunately the stockbroking market has been heavily affected by the downturn in the economy. The lack of confidence in the equities market because of the corporate scandals has resulted in many of the large stockbroking houses putting online trading projects on hold. There is no doubt that these projects will become a priority again, as online trading is key to the development of their business service but when, no one knows.
Although recruitment activity is sporadic and centred around certain areas, the growth of the overall financial services sector in Dublin has resulted in London type wages begin to appear in Dublin for some highflying professionals as individuals begin to be rewarded for their performance and ability. According to some unofficial estimates from the Revenue Commission, the number of people earning over •127,000 annually has almost trebled in the last three years. In 2000, 11,218 people earned over •127,000, its is estimated that the figure this year will be 32,000 people.
It is also likely that the increase witnessed in salaries, has occurred as a direct result of employees changing jobs regularly for substantial pay increases. However we have recently have seen a slight shift in attitude as job seekers realise the benefits of building a career in one organisation. Another realisation could be that the IFSC market has matured and it is likely that this maturity has passed through to its employees.
From the employers point of view emphasis continues to be placed on retaining staff, which has resulted in many organisation analysing their benefit packages. This was a trend that Joslin Rowe noticed early on in 2002 and therefore conducted a survey of 150 professional working in the IFSC to see what benefits they received and what benefits they held in high regard. The survey clearly highlighted that benefits that can offer a better quality of life are those that are attractive to the employee. Companies are now beginning to offer their staff a pay structure that rewards them for their performance and ability and benefits schemes, which are flexible so that they can be tailored to each member of staffs requirements.
In the war for talent, employers need to continually measure, monitor and improve levels in their workforce. The IFSC market relies on the growth of other financial sectors, particularly those of the USA and UK. Once these markets recover we should automatically see an improvement within the IFSC. Until this happens it is difficult to know what the future predictions are for the Irish economy. |
Paul Cotter is managing director of Joslin Rowe Ireland.
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| Article appeared in the September 2002 issue.
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