The attractiveness of the labour market for candidates in the financial sector remains key to the future of the Luxembourg financial centre. However, like many other industries, finance is facing many challenges. But for Luxembourg, the challenge of having a competitive financial sector is even more important, as Gwladys Costant, co-chair of the Federation for Recruitment Search & Selection (FR2S) explained: “We need a profitable financial sector to ensure the competitiveness of our country in the short and medium term as well as sustainability in several areas. However, this competitiveness is not a given.”
The risk of changing jobs is almost non-existent. For some jobs, candidates are simply harassed every day.
Nathalie Delebois, also co-chair of FR2S, observed that a particular situation has been developing in the local recruitment market for financial profiles for several years: “We have a job market that is extremely tight and complicated, where talent is scarce. As a result, turnover in companies is quite high.” This can be explained by a dynamic job market, low unemployment and many job offers for financial profiles. “The risk of changing jobs is almost non-existent. For some jobs, candidates are simply harassed every day,” she said, pointing out that this leads a majority of candidates who are not actively looking for a job to finally give in to the temptation and put forward their demands. This is a phenomenon that she regularly observes.
Moreover, the Luxembourg recruitment market is vast, with around a hundred firms. But not all of them apply the same ethical standards. “This creates extremely complicated situations for candidates. It is not uncommon for a candidate’s CV to end up with his or her own employer,” said Costant. Such practices by recruitment agencies are not only detrimental to candidates, but also to the entire profession. This is why FR2S has defined an ethical charter for its members, containing, for example, the obligation to have an office in Luxembourg and to interview candidates. In this respect, Costant has noted increased competition from Anglo-Saxon firms working for financial institutions based in Luxembourg. "Many Anglo-Saxon firms are hurting the Luxembourg market because they have a purely transactional approach to their assignments, using a CV like any other consumer product.”
The effect on candidates
Costant lamented the fact that, as a result of being in such high demand, candidates fall into an “overconsumption of opportunities”, noting that “some candidates give the impression that they are shopping when it is actually their career”.
This sometimes leads to “questionable” habits, said Delebois. Because they are “highly courted, they sometimes feel like divas. Some candidates have to start a new contract and change their mind the day before, others practice ‘ghosting’ by not giving any sign of life. Salary expectations are spiralling. Candidates are now used to receiving several offers at the same time.” That behaviour that did not exist in the recent past. Sometimes candidates are even so solicited that they delete their social network profiles or block emails from recruiters.
On a day-to-day basis, there are assignments that we are unable to fill, either because we lack candidates or because the position does not correspond to market expectations.
The difficulty of the job for recruiters in the financial sector is also due to the shortage of talent. "There is a volume of opportunities in the market that is greater than the volume of candidates. This means that recruiters sometimes have to turn down assignments when, in order to offer a candidate to a client, they need a pool of around 100 identified profiles. "On a daily basis, there are assignments that we are unable to fill, either because we lack candidates or because the position does not correspond to the market’s expectations,” said Costant.
Indeed, financial institutions also have a role to play in ensuring that the positions they offer are attractive to candidates. “Companies still operate too much under a model of segmentation of responsibilities. This doesn’t match the need for candidates to understand the business in which they can have a role and an impact.” So employers’ response to recruitment difficulties is sometimes financial. “This is problematic in that we will overpay for functions with questionable added value.” As a result, the cost of labour in the marketplace is sometimes potentially higher than elsewhere.
The talent shortage also stems from the way financial institutions recruit, being based on the requirement of similar past work experience. Although somewhat outdated, recruitment solely on the basis of technical skills is still favoured in the marketplace. Companies feel that they get added value from candidates more quickly and do not need to train them. However, recruiting more on the basis of candidates’ ability to adapt and learn seems much more judicious in the eyes of Costant, “especially as a lot of technical skills will become obsolete within 24 months”.
The battle for talent is European
The talent shortage in the Luxembourg financial sector mainly affect jobs that include regulatory, legal, control or compliance aspects. However, these jobs are likely to change rapidly, requiring project management, analysis and process transformation skills. These are all ‘soft skills’ that are difficult to find in candidates and perhaps less usable at the beginning of a job, but which generate long-term added value for employers who invest in their training.
The limits on teleworking for cross-border workers since 1 July are a major point that politicians will have to resolve by defining an appropriate tax and social security framework. This is what will be decisive in the coming months, because we risk losing the battle for talent against neighbouring countries.
Beyond the complexities of the local market, the two years of the pandemic were marked by the intensive use of telework in the financial sector. But “the limits on teleworking for cross-border workers since 1 July are a major point that politicians will have to resolve by defining an appropriate tax and social security framework”, said Delebois. “This is what will be decisive in the coming months, because we risk losing the battle for talent against neighbouring countries.”
Indeed, financial centres such as Paris and Frankfurt are starting to become more and more attractive to cross-border commuters. For example, “candidates who are based in Metz or Thionville are more and more motivated to go and work in Paris. It takes them hardly any longer to get to Paris than to Luxembourg and they can telework without any time limit,” explained Delebois. This is without taking into account the fact that asset managers based in Paris offer more positions in the ‘front office’, closer to investors, while Luxembourg remains specialised in the ‘back office’. There are even rumours among Luxembourg recruiters that it is less attractive from a tax point of view for some French candidates to come and work in Luxembourg.
What can be done to facilitate the integration of all the young people who come from abroad, with extremely high housing costs and integration not always easy because of a still weak youth community?
Talent shortages no longer spare any European financial centre. As a result, the war for talent is no longer so much about Luxembourg and its neighbouring countries, but rather about the continent. “We are not the only ones to question the means of attracting the right profiles,” admitted Costant. Foreign recruiters are therefore coming to hunt on the local market. “It’s fair game,” she said, “but we still have to manage to keep the talent in the country.” This leds her to ask: “How can we facilitate the integration of all the young people who come from abroad, with extremely high housing costs and integration not always easy because of a still weak youth community?”
Especially since, said Delebois, “when we find candidates for clients in Luxembourg, they are candidates already present in the country. To say that we are attracting new candidates en masse from abroad is no longer true.”
FR2S members would like to hear from the country’s political and business leaders on these issues.
This article was published for the Paperjam + Delano Finance newsletter, the weekly source for financial news in Luxembourg. Subscribe using this link. Read the original French version of this article on the Paperjam site.