Leader: New banking jobs welcome, but concerns linger

Published on Monday 6 September 2010 14:48

Such has been the deluge of job loss announcements by financial services companies in recent weeks that news of 600 jobs being created by Barclays in Glasgow almost provokes a double-take.

Is not the whole industry in retreat? ln truth, while financial companies are continuing to restructure and reorganise to face market conditions much changed from two years ago, staff are also being taken on. According to authoritative reports yesterday, the Spanish banking giant Santander is set to launch a recruitment drive that could see 6,000 hired to drive its UK expansion. Metro Bank, the new start-up company that opened a second London branch last week, is looking to hire 60 more people over the next year. And job creation here in Scotland is expected at both Tesco Personal Finance and Virgin Money as they expand their respective operations. The turmoil of change in business - "creative destruction" - does not enjoy a good press. But the creative element is there to see.

The new jobs announced by Barclays and the Scottish government yesterday are part of a continuing expansion of the bank's operations in the city. But the announcement inevitably raises two concerns. The first is the inducement of a grant of up to 6.6 million in the form of Regional Selective Assistance via Scottish Enterprise. How secure and permanent will these jobs be? The second is the extent to which the new jobs being created add to the skills base of the financial sector. Might this be part of an invisible "brain drain" under which higher added value employment is lost, either through outright scrappage or transfer elsewhere, and replaced by low-skilled, low-paid administrative jobs?

Several points about the grant are relevant. First, the application has had to meet strict criteria. The jobs being created or safeguarded have to be in areas designated for regional aid under European Community law. Second, the jobs are not being transferred from other areas. And third, the payment of the grant is made in instalments as job creation milestones are met. In this particular case, the grant will help enable Barclays to take its total number of potential employees in Scotland to more than 2,000.

The shared service hub in Glasgow will support the bank's investment banking and wealth management divisions. As such, this is a significant commitment by Barclays given the growth potential of these activities. Not only does this new employment help make good the recently announced loss of 400 jobs in the city by the RBS insurance subsidiary Direct Line, but also, by building Scotland's presence in key hub services, it strengthens the financial base and will work to encourage other firms in the industry to locate here.

These are difficult and challenging times for Scotland's economy. But this is a positive development, as welcome for the boost to confidence that it gives as for the employment it will bring.