Staff shortages trouble financial services firms

A shortage of skilled staff in the booming financial services industry is at its most severe for two years, according to a survey published yesterday.

Firms such as insurers, banks, building societies and securities traders have become markedly more worried about the impact that problems in recruiting qualified employees will have on their business.

The survey, by the Confederation of British Industry, found that shortage of labour as a constraint on business prospects had risen to its highest level since June 1998. It is linked to growing fears that IT systems cannot deal with the rapid technological changes in the financial services industry.

Businesses were worried about the shortage of both professional and clerical staff, indicating that recruitment problems are common across the economy. But financial services firms said IT staff were in very short supply.

Ian Dilks, head of European insurance at PricewaterhouseCoopers, which sponsored the survey, said: "Firms cited the lack of properly qualified staff as a constraint and there's some suggestion of concern about the ability to recruit IT professionals."

The quarterly survey came a day after Incomes Data Services highlighted an inflationary wage spiral in the internet-based business sector. Signs of skilled labour shortages in the key areas of finance and IT will add to existing concerns about the tightness of the labour market.

Headline earnings are rising at 5.9 per cent a year, driven by a 6.9 per cent rise in the private sector. The Bank of England believes 4.5 per cent is consistent with its inflation target. The Office for National Statistics yesterday said it would introduce a new index for private sector earnings this month to help the Bank analyse this crucial area.

The CBI survey found that, overall, financial services firms remained upbeat. Optimism about the business and economic situation continued to improve, with confidence growing for the fifth consecutive survey.

Despite this confident mood, concerns increased about constrains on prospects for the coming year. The level of domestic competition remains the biggest constraint and is at its highest level for almost a year. However, the impact of legislation and the adequacy of IT systems are both increasing concerns and are at their highest levels for six years.