Situations vacant within the monolith

Spring has brought with it the revival of the City job market. Friends at lunch will tell of the 23- year-old dealer they trained for two years, and paid pounds 30,000 a year, who has left for pounds 70,000, plus bonus, at another house.

Further up the pecking order is the 27-ish woman who left to set up a gilt-trading operation at a rival for pounds 300,000. 'She's nothing special, but she'll stay three years and do an okay job for them, and from her point of view it can't be bad.'

This is not the pounds 1m-a-year bonus league of Goldman Sachs last year (though expect more big bonus numbers to be revealed shortly). But what is happening at the middle and upper-middle end of the jobs market is more interesting, for it says something important about the way the City, as an industry, is performing.

The figures for market share, as always, are hopelessly out-of-date. We know less about the performance of the largest industry in the land than we do about tiny segments of manufacturing. Indeed, the financial services industry itself, so anxious to delve into the details of little companies, in case their shares are worth buying, reveals little about its own performance.

Further, in reaching any judgements about its performance, one must allow for market swings: just about everyone made money last year as the bull market ran its course, and the demand for good people picked up about the middle of last year. But the markets have been soft - the bond markets desperately so - since February, and the demand for trained people seems to have been sustained. This says something for the fundamental health of the sector. So what seems to be happening?

The City appears monolithic to outsiders; in fact, it is a very segmented business: forex traders cannot become M&A specialists. Within, parts are dull, others exciting. But, because the skills are so specialised, people who happen to be in the right corner of the forest are in enormous demand.

The dull bits are foreign exchange and banking. London is the largest centre by a fair margin, and may still be gaining ground in the world forex business. But while there have been periodic surges in the market that provide traders with an opportunity - the dollar's gyrations in the last few days will have helped - it has not been an easy market in which to make a lot of money. Mostly, it is big-volume, low-margin stuff. So, while there is solid demand for good traders, there is no particular shortage.

International banking is such an enormous business that it is impossible to generalise about demand for people. Seen in world terms, London is probably losing a little market share but, thanks to the sharper fall-off in Tokyo, it has been retaining its number one slot as the single largest centre for cross- border lending. There are specific skill shortages, as always: people with experience of 'new' areas for lending, such as Eastern Europe. But, again, there is no general shortage.

The real shortages are in the broad range of tasks in the securities business. Three areas are worth noting: fixed-interest trading, derivatives and fund management.

The thing to understand about fixed-interest trading is that for a professional trader it should be as easy to make money on a falling market as on a rising one. Traders need movement and volume, and the markets have had both in spades. The boom and crash in bonds are self-evident, while the stream of bonds on offer from deficit-ridden governments around the world continues, and will do so for the next three or four years at least.

London has a quite disproportionate share of the international bond business - 60-75 per cent of both primary and secondary markets - and a significant share of the national bond business, too. Good people are needed.

In derivatives, there is considerable evidence that London is gradually increasing market share. There are figures for the organised markets, such as Liffe, but few from the bespoke market, where banks tailor derivative products to fit the needs of corporate clients. The latter is so complex that any bank in the business is desperately worried about controls: how to ensure that its people are honest and also understand what they are doing. And there are only half-a-dozen or so market leaders, so anyone there is immensely valuable to other houses trying to get in.

Then there is fund management. This has long been a less glamorous corner of the securities business than corporate finance, and has never really developed a star system. But it has been such a solid earner for the top dozen managers that, again, people who are seen as good, or better, are finding themselves at the end of bids for their talents. The continued strength of the equity market (relative to bonds) has naturally helped sustain such demand.

In all these areas there seem to be two common themes: a widening of differentials; and a quest for youth. The differentials issue is straight- forward in that the gap in the revenues generated between the ordinary and the great is so large that it is worth paying a large premium to get the great. The quest for youth, the need for people in their 20s and the first half of their 30s, is harder to explain, except in terms of vigour. Trading skills, in particular, are quite narrow and once someone has been at a job for four years, he or she is unlikely to get much better, and may become merely slower. There is a boom under way for talent, but it is a cruel one.