Robert Walters, chief executive of the eponymous recruitment company, says that banks will look for contract rather than permanent staff at the next economic downturn.
When cost cutting is in the air, operations staff can suddenly seem very
vulnerable. Middle and back office people are often culled vigorously
during mergers or reorganisations.
But appearances can be deceptive. Walters told eFinancialCareers that as fast as staff
leave through the front door, replacements slip in through the side
doors. The only difference is that those leaving are 'permanent' staff,
while those arriving are on contract.
"The financial services sector is a very volatile market, and it could be
accused of overreacting," he says. "If one moment there's a headcount freeze, in the
next there will be booming demand for contractors."
In general, says Walters, banks often like to hire permanent staff in times of
expansion, and contract staff when times are bad.
"At the moment there is uncertainty," about banks' hiring plans, he says, because
of doubts about world economic prospects. "But if there is a
recession, demand for contractors will go up," as demand for permanent staff
About 35% of Robert Walters 216.8 million (€343 million) turnover
worldwide comes from the financial services sector. The company expanded its
contract business after demand for permanent staff fell in the early 1990s
and following the Asian crisis of 1997.
Walters listed various advantages in being a contract worker, including
paid overtime and higher hourly rates of pay. He said that even taking into
account the lack of paid holidays and benefits, contractors still tend to be
remunerated around 20% more generously than their permanent colleagues.
Many banks also regard a stint as a contractor as excellent preparation for
permanent work: "Contract work is a good way to gain experience", says Jacqueline Black at
Yet according to Walters, most people still want "proper jobs" rather than a
series of contracts, in spite of popular talk of people taking their
careers into their own hands through flexible working.
"Choosing to be a contractor was just a fad. In fact there are very few
people that do a project and then spend a few months painting on a Greek
island. Most people want permanent employment."
Contracts are most popular among Australians and New Zealanders keen to
spend time in Europe, he said.
In one area in particular, this demand for permanent employment looks like
being met. In the IT sector, the passing of Y2K meant the end of many
contracts. At the same time, Walters says that banks have begun to realise
that in IT it is often more realistic to hire permanent staff.
"IT managers are hired to manage projects that turn out to be never
ending," he said.
But if Walters is right, those in other support functions - financial
control and settlements for example - may find fewer permanent openings