Cost of living, lack of qualifications and rival jurisdictions are contributing to a skills shortage in the Islands" finance industries. what needs to be done to turn the situation around?
The most predictable side-effect of a recession is a rise in unemployment figures. Unfortunately, as an economy begins to grow again, there"s no guarantee that those who lost their jobs will find new ones, as a financial crisis stirs things up. The economy that exits a recession can look quite different to the one that entered it.
Although the economies of Jersey and Guernsey are still finance-centric, there has been change. The banking sector in both islands is dwindling. The funds sector is growing, as is private equity and the digital industries. These all existed in the islands before 2008, but they have all gained traction and are attracting new business, and they need people to work in companies keen on growth.
On the face of it, this is all good news, but look a bit closer and you can see that today"s success stories are posing challenges for the islands" workforces.
Job creation
Jersey recently announced record employment figures, with 650 jobs having been created in the 12 months to the end of June. Guernsey hasn"t hit record levels but has seen an increase of 150 jobs created in the same period. This is positive stuff, but when you look at the unemployment figures, these new jobs have had very little impact. In fact, Jersey now has more people actively seeking work than it did a year ago, and in Guernsey the unemployment rate has remained steady over the past 12 months.
The post-recession employment picture is one of contradictions. It"s both optimistic and pessimistic. There are more jobs, but there has been no fall in unemployment.
The logical conclusion from this scenario is that firms are bringing people in to fill skilled roles that the islands" existing workforces can"t fill themselves. Whether that is the right or wrong way to deal with a skills gap is a question for another day, but it does highlight the fact that the islands find themselves in a difficult position as their economies recover.
“Governments go out and promote the islands, but we haven"t got the people with the required qualifications,” says Theresa Jackson-Guillou, Head of Human Resources at fund administrator Ipes. “As a business we are growing, but there aren"t enough skilled people in the islands.”
According to Shelley Kendrick, Managing Director at recruitment consultancy Kendrick Rose, one of the causes of the gap was the reaction of many businesses to the slowing economy.
“Today the demand for qualifications is greater, but because of the recession there was a cull in graduate trainees and other positions, but no element of succession planning for better times.”
At Ipes, Jackson-Guillou says that they continued to invest in training during the downturn but that other businesses “put a pause on training and recruitment”.
In this light, financial services businesses can be seen to have played a role in making things difficult for themselves.
And with employment licences easier to come by for more senior roles, where experienced and qualified professionals are required, it can be seen that the skills gap itself isn"t focused on a lack of candidates for top positions.
“There"s a shortage of individuals with experience in the low to mid-levels, people who are looking for their second or third job in that mid-level role,” says Mike Bonsall, Guernsey Manager of recruitment consultancy AP Executive.
The problem that this creates for the islands isn"t one that"s easily solved by issuing more licences, because at these levels Guernsey and Jersey are both much less attractive as propositions for young professionals.
“The cost of living, even with a licence, can be off-putting,” says Bonsall. “A newly qualified accountant or lawyer can still make it work in terms of cost of living, particularly if they"re single - but with a family, it can be challenging.”
Kendrick also sees the specific nature of the offshore finance industry as possibly putting people off working in the islands. “I think it"s hard to bring people in from the UK because offshore is specialised,” she says. She also points out that this means that other, more mainstream financial centres are attractive to young, qualified islanders looking for something more than the islands can offer. “There"s an awful lot of headhunting of Jersey people by UK companies. They"re using social media to get to them. It"s a more competitive world and people are much more savvy.”
Action points
Of course, making Jersey and Guernsey cheaper or changing laws so that the workings and regulation of the finance industry mirror those of other jurisdictions aren"t realistic options. So what can the islands do to ensure they have the right people available for the vacancies that companies need to fill?
Bonsall believes the licensing of workers from outside the islands for limited periods of time has its drawbacks. “As a company, you put a lot of time and resources into developing people and you get them to a point, but then you wave goodbye to them and see them disappear to a competitive jurisdiction.”
However, given the political will that would be needed to amend these laws, businesses shouldn"t hold their breath for change any time soon. What they can do, however, is look to get the most from the existing regime, says Bonsall, who believes that “firms should be aware of what"s needed to make a robust application”.
The islands can also work to make themselves more attractive in areas that are more easily controllable. On the political front, Shelley Kendrick sees Jersey"s five-year rule - which ensures that only those with five years" residency are able to apply for permanent positions - as being ripe for change. “There has to be some understanding of business needs, and reducing the five-year period to three years would help a great deal,” she explains.
At the root of the problems with the rules and regulations identified by Kendrick and Bonsall is the difficulty in changing them. Naturally, there is an ebb and flow in the size and nature of the skills gap. Just five years ago, firms were laying people off, not hiring them, but regardless of the economic conditions, employment and population laws have remained pretty much unchanged.
“Flexibility is important,” says Jackson-Guillou. “The question I would ask is, how flexible is the government?”
Given the accessibility of the islands" governments to the business sector, it could be argued that they are at least open to debate, but changing laws takes time and, unlike business leaders, politicians have to take the views of the whole electorate into account before they will make changes.
Learning curve
It"s not just these big changes that can make a difference, however. Jackson-Guillou points to the lack of opportunities for gaining professional qualifications through evening classes in Guernsey as a factor that may put employers off investing in training. “In Guernsey, it"s hard to support someone through a qualification if they might be out of the office for 40 or 50 days of the year,” she says.
Certainly, smaller companies are likely to find it difficult to make time commitments on this scale and Jackson-Guillou feels that Ipes" decision to continue investing in training throughout the recession has played an important role in the company"s growth.
Jersey is also reaching out to young islanders who have left for university. It is building an alumni network to help graduates keep up to date with the opportunities available "back home", as part of the effort to halt the brain drain that often characterises small jurisdictions.
Unfortunately, there is no silver bullet that will suddenly close the skills gap that the Channel Islands is experiencing. But aside from waiting for the ebb to become a flow once more, companies and governments must work together to address the skills shortage.
There is a need to make the islands more attractive to residents and non-residents alike and there must be opportunities for people to gain the skills they need to fill the roles that currently lie vacant.
In such a highly competitive world, doing nothing is not an option. To do so would result in businesses looking elsewhere, and then the anticipated flow may never return.