Morning Coffee: UBS is coming for its hardest to fire bankers. Millennials can’t be bothered with one of the most lucrative jobs
The Paris bankers’ job market has not heard the words “compulsory redundancies” (or even “licenciements obligatoires”) very much in the last few years – as well as having famously strong employment protection, it’s been a very hot market as global banks have decided to make it the hub of their EU operations post-Brexit. But now UBS has decided that in “a less favourable market environment”, the City of Light can’t be completely spared from the effects of the Credit Suisse merger integration.
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The actual number of jobs at risk is not huge – “less than 50”, across all the business units, including private banking. But like any other financial centre, Paris is quite a small and well-connected village, and as people start to update their profiles and ask for quick catch-up cafes au lait with former colleagues, it’s likely to contribute to a growing sense that the very best of the good times are coming to an end.
Even the substantial legal protection that French bankers have enjoyed, including the employment courts which have spent more than five years debating the Morgan Stanley compensation scheme, might not be what they were. Last year, the law was changed to cap the extent to which very high salaries were converted into equally massive redundancy packages, and the Macron government keeps making favourable noises in response to lobbying from Wall Street to make it easier to hire and fire.
There’s even a possibility that, depending on how things play out with the EU/UK agreement on trade in professional services, some banks might be tempted to hire people on London contracts and post them to the Paris office. Broadly speaking, it may never have been particularly sensible to presume that global investment bankers in the 21st century would always be able to benefit from protections that were designed for domestic industrial workers in the 20th.
So is it “Peak Paris”? It might feel that way, particularly for bankers who made the move immediately post-Brexit, and who will therefore be finding the labour market cooling just as they stop benefiting from the very generous eight year “impatriation” benefits and their tax rate rising to normal French levels. Anyone asking their employer to make good the difference in the current environment might expect to hear a few French words that they don’t teach in the lycée.
Elsewhere, it’s not exactly new that a university professor might say that her undergraduate students “have all sorts of ideas that they want to do to change the world, and then they end up in these same three places”. But it’s interesting that, for students today, those three places are “banking, consultancy and tech”. What happened to the law?
The answer appears to be that for a very long time, “Law school was sort of a default career path in many instances for people who really couldn’t think of anything else that they necessarily wanted to do”, and that this led to a glut of lawyers, making it much more difficult to get rich that way. In a survey of the highest-earning millennials, it’s very notable that although the medical and legal professions are still associated with above average incomes, they are to a much lesser extent than they were for boomers, and that technology has surpassed both of them.
It seems that this may be a result of globalisation. The biggest rewards in the modern economy seem to come from working in a global franchise, and there are comparatively few global law firms (of course, there are practically no global medical practices). That may be changing, as the biggest American partnerships expand, but for the time being it seems that “lawyer” might be on the way to joining “accountant” on the roll of professions that used to attract the most ambitious young people but doesn’t any more.
Meanwhile…
Slaughter & May in London has decided that it doesn’t need to give junior lawyers a pay rise yet – although salaries for newly-qualified solicitors are reviewed twice a year, this time they’ve been held at £150,000 (FT)
“Try to develop some emotional intelligence” and “go out and build relationships”. The founders of KKR give advice to young people in private equity that there might be more to life than compiling spreadsheets really quickly and going to lots of interviews. (Business Insider)
A useful tip in trying to analyse the strategy of big companies is that mission statements and public commitments are opinions, but office space and desk locations are facts. Josh Pack, one of the co-founders of Fortress, is relocating to London, which gives their statements of ambition in the EMEA region somewhat more of a tangible element. (Bloomberg)
A “search fund accelerator program” certainly sounds like it might be at more glamorous end of private equity, but in fact the kind of thing it does is back a business school graduate and brand manager to set up a small business hiring out portable toilets. Have fun doing due diligence on that one. (Business Insider)
HSBC is planning to create 200 new jobs in its UK wealth management business, a substantial increase on the current 400 relationship managers. Perhaps surprisingly, there doesn’t seem to be any mention of them filling vacancies with internal moves from the investment banking and trading business lines they’re closing down. (Financial News)
If you’re young and hip and want to hang out with Chamatha Palihapitiya, there’s a new club in Washington DC which costs $500,000 to join and apparently gives you unspecified “additional benefits” if that wasn’t enough. (Business Insider)
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