1. City of London corporation
Supporting the Financial and Related Professional Services (FRPS) sector to access the skills it needs for future growth
27th January 2017
Author: PA Consulting

2. The UK is the undisputed global centre for financial services and a leading provider of related professional services. The City of London is at the heart of this…
£85-95bn in tax revenue in 2016
2.2 million
employees
1st
In the Z/Yen Group’s 2016
‘Global Financial Centres
Index’ UK UK
London
£55,393
Average annual pay rates (compared to £28,213 across the rest of the UK)
The City
750,000 employees
250,000 employees (predominantly in front-end business functions)

3. …but skills gaps and shortages threaten the FRPS sector’s growth prospects
Skills gaps are skills lacked by employees
already within the industry
Skills shortages are jobs which
cannot be filled from the available pool
of applicants
16% of FS firms report skills gaps
Technical gaps: e.g. Programming and broader technological skills; a detailed understanding of compliance
Soft-skill gaps: e.g. customer handling skills; time management; team-working
Technical shortages: e.g. advanced ICT skills; cyber security technology; actuarial and underwriting skills in the insurance industry.
Soft-skill shortages: e.g. ability to persuade or influence others; sales
4% of FS firms report skills shortages
2013
2015
83,800
6,600
2015
2013
36,400
Number of skills gaps in the FS sector
Number of skills shortages in the FS sector
2,800
Skills gaps have declined by 57% since 2013, with FS seeing the biggest decrease in skills gap density of all sectors
Skills shortages in the FS sector have risen sharply (doubling as percentage of all vacancies, from 10% to 21% between )

4. Several key issues cause skills gaps and shortages
Lack of foresight on
future skills needs
Lack of agility in
skills provision
Fewer people are attracted
to working in the FS sector
due to negative perceptions
and a lack of awareness of
alternative routes into the sector
A changing world
Tightened regulatory environment
Brexit
Automation
Little evidence of businesses and skills providers in the FRPS sector taking a joined-up approach to identifying and tackling future skills needs. This short-term approach does not take into account changing business structures and market needs
Statutory skills providers are slow to respond to employer needs. While larger employers have historically responded by paying a price premium or providing in-house training, SMEs are struggling to access the talent they need to grow
Business graduates no longer view FS as the top career destination of choice and the proportion of graduates entering this sector has declined since Apprenticeships (inc. higher and degree apprenticeships) in FRPS are in their infancy
Technological advances, the rapid increase in high-growth SMEs, millennials’ emphasis on the importance of high quality L&D, and the tightening regulatory environment – combined with the implications of Brexit (11% of FRPS employees are EU nationals)

5. There are many examples of effective interventions to tackle gaps and shortages, but certain companies (i.e. SMEs) are unable to navigate the landscape or respond as other larger businesses do
Accredited programmes for more experienced workers to up-skill
Traditional degrees in subjects related to FRPS
Degree apprenticeships
In-house and outsourced provision (as shown by increased L&D budgets)
Recruiting talented graduates and apprentices, as well as retraining more experienced workers
Recruiting from overseas and paying a significant salary premium
Skills
Providers
Employers
The Government ‘s Apprenticeship Levy (April 2017) and the National College for Digital Skills
The London Economic Action Partnership (LEAP) takes a strategic approach to skills provision and growth
The National Skills Academy for Financial Services (NSAFS) provides employers with training and development
Membership bodies, such as TheCityUK, which lobby on the sector’s behalf
Quangos, such as the UKCES (now abolished), which analyse current and future skills gaps and shortages
Other stakeholders