House of Commons - Trade and Industry

Select Committee on Trade and Industry Written Evidence

APPENDIX 7

Memorandum by the Financial Services Skills Council—The Sector Skills Council for the Financial Services Industry

EMPLOYMENT, SKILLS DEVELOPMENT AND GENDER IN THE FINANCIAL SERVICES SECTOR

THE FINANCIAL SERVICES SKILLS COUNCIL (FSSC)

1. The FSSC leads the UK financial services sector in seeking improvements in productivity and skills. It has no specific remit for engaging in pay issues, although it is not possible to address productivity improvements without taking into account wage prices and pay strategies.

2. The FSSC holds a licence, effective from April 2004, from the Secretary of State for Education and Science to operate as a Sector Skills Council. Founded by employers as a membership organisation, it represents the whole of the sector—that is, retail and wholesale banking, insurance, investment, stockbroking, financial advice and related activities.

3. Less than 12 months since its establishment, the FSSC has set its strategic agenda and is beginning to work closely with employers and public planning and funding agencies in England and the devolved administrations in Wales, Scotland and Northern Ireland.

4. A central measure in its strategy is the setting of standards for workforce development—benchmarks by which the quality of the sector's workforce development efforts can be measured and which can drive continuous improvement.

4.1. These standards encompass sector-specific national occupational standards as benchmarks for use by firms in developing and managing a competent workforce, and as a basis for sector qualifications.

4.2. It has a Memorandum of Understanding with the Financial Services Authority, under which it sets standards for examinations that the FSA requires individuals to pass before engaging in specified regulatory activities. It uses these standards to assess and endorse qualifications that meet the regulatory requirements for expert knowledge and consumer protection.

4.3. The FSSC has also set a Training Standard for the sector and is about to launch a programme of accreditation schemes which will encourage employers, private training companies and trainers to achieve a standard of excellence in enabling people to learn and apply that learning in their work.

5. The FSSC conducts its business on the basis of three principles:

5.1. Working in partnership with employers and other stakeholders.

5.2. Basing initiatives on evidence drawn from qualitative and quantitative research.

5.3. Promoting equality of opportunity to entry (and re-entry) into sector employment, and access to education, training, qualifications and lifelong learning on merit.

6. We are a small, but growing organisation. Table 1 shows the profile of the current workforce.

Table 1

FSSC STAFF PROFILE AT 23 FEBRUARY 2005

Job	Men	Women	Total
CEO/Directors	1	3	4
National managers	1	2	3
Business Managers	0	2	2
Operations Managers	3	2	5
Professionals	4	11	15
Administration Staff	0	4	4
Totals	9	24	33

EMPLOYMENT TRENDS IN THE FINANCIAL SERVICES SECTOR

7. Table 2 shows projected trends in employment by gender and employment status for the period 1990 to 2010.

Table 2

TRENDS IN FULL AND PART TIME WORK AND GENDER STRUCTURES IN EACH SUB-SECTOR

	UK	Financial Services (All)	SIC 65 (Banking, etc services)	SIC 66 (insurance and pension funding)	SIC 67 (auxiliary services)
1990
Female FT	25	45	47	42	39
Female PT	23	13	13	8	18
Male FT	47	40	38	44	41
Male PT	5	3	1	6	3
2000
Female FT	26	42	41	44	40
Female PT	23	12	14	9	9
Male FT	44	44	43	45	49
Male PT	7	2	2	2	2
2010
Female FT	27	39	36	42	41
Female PT	24	17	25	11	7
Male FT	42	41	36	44	50
Male PT	7	3	3	2	2

Source: Business Strategies, January 2002.

8. The data shows that:

8.1. Part-time employment for men and women is smaller in the sector than for the UK as a whole.

8.2. The situation is changing and there is an upward trend in part-time employment, particularly for women, largely because of changing employment structure in the banking sub-sector, where total numbers employed are projected to fall.

8.3. Employment and the gender balance in the Insurance and Pensions sub-sector is projected to remain static.

8.4. In other financial services (SIC 67) the proportion of women in full time jobs is slowly rising. Employment in this sub-sector is also projected to rise to 24% of the total sector employment by 2010 (compared with 17% in 1990). Outsourcing and the growth of specialised and small "niche" businesses will account for much of this growth.

9. Relevant points from other recent research includes:

9.1. Part-time female workers in the financial services sector earn on average £5.10 less per hour than men working full-time. [32]

9.2. The most successful retention rates for women returning to work come from those companies that alter their working structure to incorporate flexible working hours. For example:

10. However, the FSSC has inherited a weak database of research on the issues of gender, pay and employment. Although there have been valuable regional studies (such as studies of the City), there has been no recent in-depth research of the UK sector as a whole. This is a matter of concern, since findings from more general UK studies indicate problems that, if they exist in the financial services sector pose both reputational and productivity risks: for example:

10.1. Full-time female employees are paid approximately 18% less per hour than male counterparts. [34]

10.2. Employer attitudes towards women wanting to take time off to start a family remain largely hostile to providing support for this, with "a surprisingly high proportion of women experiencing serious discrimination whilst pregnant".[35]

10.3. Often women are forced to take part-time jobs that are well below their employment potential because higher positions are not catered for or considered on a part-time, time-share or home/office basis. The Sex and Power EOC report also recognises the assumption "that by working part-time for a while [women have] chosen not to go any further. This is simply not true".[36] Less investment is made in the skills of part-time workers and the gap between those part and full-time workers is growing.

10.4. Around 20% of women face dismissal or financial loss as a result of pregnancy. [37]

10.5. 12.3% of small businesses with women as majority directors.

10.6. There are only 28.8 places for every 100 children under the age of eight.

10.7. Women are becoming more qualified than.

TAKING GENDER ISSUES FORWARD

11. We have no evidence that these are UK-wide features of the employment of women in the financial services sector. However, lack of evidence is not proof that the problems do not exist.

12. There are three substantial reasons for the FSSC to investigate further the position of gender and employment in the sector:

12.1. Ours is a knowledge industry. The expertise our people have and their motivation to deploy it in the interests of the firms for which they are crucial to continuing competitive success. Unfair discrimination of any sort, whether personal, institutional or structural undermines productivity and, with it, competitiveness.

12.2. The sector faces more and more competition in attracting and retaining the talent it needs in order to thrive. The reputational damage that bad employment practices could incur is a cost we cannot afford.

12.3. Success is founded in, or founders on, consumer confidence—whether the consumer is a member of the public or a corporate client or a market. Bad employment practices will undermine that confidence.

13. Despite the sensational court cases that have featured in the press in the last few years, the FSSC is confident that most employers take equality of opportunity seriously and have active and successful programmes for recruiting and advancing women on merit. We know that most firms take investment in skills seriously (because of the importance of expertise to the business). For example, in 2003 the sector spent £300 million on education and training. [38]During that year four out of five staff received training.

14. However, one of our principles is to adopt an evidence based approach to productivity and skills—and it has to be admitted that there is insufficient evidence that the sector as a whole leads the field in the employment and development of women.

15. The FSSC has therefore embedded in its work programme four measures to ensure that this issue is addressed:

15.1. Focused research: our own research programme is focused on in-depth studies of issues directly affecting the sector's productivity and workforce development. Gender issues will be embedded in each of these studies. In addition, we will be undertaking a specific study of opportunity, ender and training opportunities as part of the work leading to a Sector Skills Agreement. [See 15.4 below.]

15.2. We are working with public planning and funding agencies, such as RDAs and the LSC to create a "joined-up" research agenda for labour market research. The relationships between gender, diversity and access to opportunity are to be key features of this agenda.

15.3. The aim of this research is to produce evidence of good practice and its positive impact on business performance, which the FSSC can then communicate to the sector, both by promoting exemplar firms and setting and disseminating good practice standards.

15.4. This year we begin the process of creating a Sector Skills Agreement—commitments by employers to invest in public sector education and training through agreements with public planning and funding agencies. The Sector Skills Agreement will provide the strategic plan for improving productivity and skills and will take account of gender issues and their resolution.

16. This represents a programme of work over 2005-07.

Teresa Sayers

Chief Executive

Financial Services Skills Council

February 2005