Financial job losses accelerating: U.N. agency
Jobs in the financial sector are disappearing at an accelerating rate, with knock-on effects for the broader economy in financial centers such as New York and London, the United Nations said on Monday.
A report from the U.N.'s International Labor Organization (ILO) for a meeting this week on the impact of the economic crisis on the more than 20 million people employed in the sector said financial services employment is now likely to shrink permanently, in contrast to recent strong growth projections.
Announced financial sector layoffs between August 2007 and February 12 this year totaled 325,000, and close to 130,000 jobs or 40 percent were announced between October 2008 and February 12, indicating a rapid acceleration over recent months, it said.
"As the global economy sinks further into recession, and financial institutions' assets experience even greater impairment, job losses can be expected to rise even faster," the ILO said.
Redundancies are likely to affect all kinds of jobs in the sector, including information technology specialists that were spared in previous waves of job losses, it said.
While the losses are worldwide, financial centers like New York and London will bear the brunt, with the combined New York metropolitan area expected to lose up to 100,000 financial services jobs, it said.
The U.S. securities industry alone shed 17,600 jobs in the last quarter of 2008, a rate exceeded only once in the last decade by the 18,800 jobs lost between November 2001 and February 2002 due to recession and the September 11 attacks.
As a percentage of the workforce, employment in securities is shrinking at roughly twice the pace of U.S. employment as a whole and twice as fast as the broad financial sector, it said.
Citing projections from consultancy Oxford Analytica that London-based financial institutions will have shed 30,000 jobs in 2008 and will lose at least one third more in 2009, the ILO said total jobs in London could fall to 4.51 million in 2010 from 4.71 million in 2008.
"The knock-on fiscal impact of the credit crunch due to a shrinking real economy is expected to be considerable," it said.
As in the United States, the loss of lucrative financial jobs and bonuses would have knock-on effects elsewhere, with the loss of one to two other jobs for each financial redundancy, it said.
"These figures almost certainly understate the real situation, as announcements of job cuts are not always forthcoming," the ILO said of the reported financial job losses.
Financial services employed 5.6 million people in the European Union in 2006, with banking and insurance accounting for 75 and 20 percent respectively, and intermediaries such as hedge funds and wealth managers accounting for the rest, it said.
The sector represented 2.7 percent of total EU employment. That was much less than in the United States, where the equivalent was 4.7 percent or 4.1 million workers, of whom 44 percent were in banking, it said. On a broader measure including real estate, U.S. financial sector employment was 8.36 million.