Jobs in the Financial Sector: Winners and Losers

In the coming five years banks and insurance brokers are likely to see not only a fall in employee numbers, but also a change in the qualifications held by their employees. The majority of firms in the financial sector foresee a maximum decline of ten per cent in current employee numbers. Amongst other financial service providers, however, such as independent asset managers or financial consultants, the number of employees is set to rise. A large proportion of other financial service providers expect even to see increases in employee numbers of more than ten per cent.

These are the findings of a study on the development of employment in the financial sector, carried out by the Mannheim Centre for European Economic Research (ZEW) on behalf of the Federal Ministry for Economic Affairs and Energy (formerly: Federal Ministry for Economics and Technology, BMWi) and under the direction of Professor Wolfgang Gerke, University Erlangen-Nürnberg (FAU).

In the future, university graduates and graduates from universities of applied sciences shall be in greater demand in all areas of the financial sector. In contrast, the proportion of employees without formal professional training, as well as the absolute rate of employment of such employees shall fall. The trend in employment previously seen in this sector is therefore expected to re-emerge. An analysis of the demand for work according to qualification level, indicates that in the past, the implementation of Information and Communication Technologies (ICT) in the financial sector had a negative impact on the employment of poorly qualified individuals and a positive impact on the employment of highly qualified personnel. The negative impact of increased working costs was greater amongst poorly qualified workers than it was amongst qualified and highly qualified personnel.

It seems that in the future as well, areas of business in which the qualification requirements of employees are generally high (i.e. consultancy, asset management, securities trading) shall be considered more liable to growth. ICT shall play a particularly significant role in areas of business in which business volumes are expected to increase and which are therefore expected to be become more profitable in the future.

In 1998, 670,000 employees liable to pay social security payments were employed in financial institutions in West Germany. In 1997, only 99,000 such employees were employed in East Germany. Insurance brokers in West Germany employed around 267,000 such employees in 1998. Whilst this figure was around 20,000 in 1997 in East Germany.

The study is published in the 58^th volume of the ZEW-Wirtschaftsanalysen (ZEW Economic Analyses) with the title “Beschäftigungsperspektiven im Finanzsektor” (Employment Perspectives in the Financial Sector, in German), published by Nomos, Baden-Baden.

Contact

Dr. Peter Westerheide, E-mail: westerheide@zew.de