If 2022 was the year that daily life returned to normal, then 2023 was the year of reflection. Reflection on the now not-so-new pattern of hybrid working; war in eastern Europe; the growing cost of living, rising interest rates and inflation; and the headcount growth that almost the entire financial services sector saw in 2022. FS businesses took stock, assessing cost, headcount, and project ROI. The net effect of this was an inevitable slowdown from the frantic hiring of the previous twelve months.
In recruitment terms 2022 was astonishing. Contractor day rates and salaries increased by as much as 25% and demand for experienced FS professionals was the highest in recent memory. Project spend had well and truly returned and BAU, back and middle office teams grew significantly. The market was candidate led with almost daily increases in pay rates to capture the limited available talent. This boom in hiring at an inflated price led to large, expensive, and unsustainable workforces across the sector. It was therefore inevitable that 2023 was not likely to follow the same trends. H1 saw largescale redundancies, high-profile acquisitions and banks collapsing. Funding to the fintech sector was significantly impacted and the wider technology sector continued to make layoffs. With rising interest rates and inflation, financial institutions understandably took a cautious approach to hiring.
As the market became less buoyant many FS businesses used this opportunity to reduce the number of flexible working days, in some cases returning to five days in the office. This has had mixed reception, but most accept that this was always likely to be the case within the sector. Despite this change in stance firms continued to put staff mental health and wellbeing high on the agenda, and staff benefit packages that take this into consideration are now more important than ever. Corporate ESG strategies also emerged as key areas of development.
As 2024 approaches there is cautious optimism in the permanent hiring market. Q1 is expected to be quiet. However, bonus pools are rumoured to be below average, which should lead to some movement in Q2. Interim spend ought to remain steady through the start of the year as teams look to use any remaining budget before April. FS businesses spent big on hiring in 2021 and 2022, and they will not be looking to lose this talent. Subsequently, we expect to see a continued focus on professional development and career progression. As ever regulatory projects are expected to drive hiring with the next iteration of Basel, DORA and EMIR Refit all on the horizon. All in all whilst we do not expect to see the hiring boom of 2021-22, we are predicting a return to pre-Covid hiring levels and a normalising market in 2024.
.png)
