The sector employs some 1.2 million employees, 4% of the UK workforce, and produces more than 8% of the country's Gross Domestic Product (GDP). Banking accounts for 61% of employment, while insurance accounts for only 7% and auxiliary services for 32% of the workforce.

Since 2000, and despite strong output growth, employment growth in UK financial services has been weak when compared with other countries, notably the US. This is due to strong productivity gains, which the sector has achieved through increased efficiency. UK financial services have been at the forefront in cutting costs, including employment costs, when compared with the other countries.

More than 87,000 jobs have been affected by restructuring since 2002, most of them in retail banking and insurance. Distribution and administration, including the offshoring of customer services, IT and HR, are the focal areas for restructuring job losses.

The demand for skilled staff (particularly professionals and specialists) is derived from demand for their product and is consequently highly volatile. In 2004, the nominal market value of the sector’s skills inventory increased by a net £3.7 billion. Unskilled labour and staff with intermediate-level skills are most likely to be lost.

Sources: FSSC The Skills Bill: Analysis of Skills Needs in UK Financial Services 2007, FSSC The view from Europe: Productivity and change in UK financial services 2007, EU KLEMS Database 2007 and ONS Labour Force Survey 2007