Covid-19 may have accelerated change in the financial services sector, but one thing remains the same: the urgent need for upskilling the workforce
The Financial Services Skills Taskforce, chaired by former Minister of State for Work and Pensions and now chair of Flood Re, Mark Hoban, Chartered FCSI(Hon), reported its findings in January 2020 to a packed auditorium in Canary Wharf.
One of its key messages in a speech given by Mark Hoban was that the financial sector is facing an existential crisis that needs immediate action, which includes an urgent need for existing financial services staff to upskill and retrain.
Then Covid-19 hit.
Rapid change but skills gap remainsIn a matter of days, the financial services sector, especially the wealth and financial planning side, moved their entire operations online, surprisingly calmly. Changes which would have taken many months, or even years, of careful planning and deliberation, involving numerous oversight committees and sign offs by internal audit, legal, compliance, IT and risk – happened, literally, overnight.
The UK regulator also changed, showing a welcome streak of pragmatism by, for example, allowing firms to accept a customer’s electronic rather than wet signature and extending by a year the time required to complete a professional qualification.
People adapted quickly. Within a short time, we all became masters of Teams and Zoom. This has become the new normal.
The UK no longer has the luxury of time, it needs to retrain people fast
Thanks to video calls and homebased broadband infrastructure, meetings have been levelled up. Everyone, regardless of status, now appears on the same sized box on the screen. Colleagues who routinely joined by conference call and struggled to be heard, are now on equal terms. The ‘raise hand’ feature means that an effective chair will ensure all participants are heard, not just the loudest or highest-ranking speaker.
What has not changed is the need to reskill and adapt. People have demonstrated, by their rapid assimilation of what was, to many, new technology in a new environment, their appetite to do so.
Singapore retraining its workforce
In 2015, Singapore came to a similar conclusion to the Hoban report: that it had a growing skills gap. It set up a national initiative – SkillsFuture – that provides access to training and qualifications to help retrain its people. This year, everyone will receive SGD$1,000 (about £600) towards training in specific areas, including finance, pharma and IT.
It also recognises that retraining is critical and in 2020 will provide 20% of an individual’s salary (up to SGD $6,000), so that they can be trained for one day a week while still employed. It has targeted this initiative at the 40 to 60 age group – exactly the group on which the UK should focus.
But, in the UK, thanks to Covid-19, there is another problem. Unemployment increased from 1.35 million to 2.01 million in April and expectations are that it may be close to 2.75 million people – double what it was – by end of June. And, as of 28 May, the government, through its furlough scheme, is contributing to the wages of more than 10 million people.
The UK no longer has the luxury of time, it needs to retrain people fast.
How to pay for it
In April 2017, the Apprenticeship Levy was introduced which is, in effect, a 0.5% tax on salaries. However, since 2017 the number of apprentices has fallen by 20% while the number of people in work, and therefore the size of the contribution to the apprenticeship ‘pot’, has increased. As at Nov 2019, £2.8bn has been contributed to the pot, but only £864m was spent, leaving nearly £2bn – and rising – unspent.
The UK government needs to widen the scope for which the levy pot can be used. It should be made more flexible to include an expanded range of focused training. As a start, everyone who has been displaced because of Covid-19 should have access to a £1,000 grant solely for targeted retraining. This is not new money; it is merely using what is in the fund. Access to the fund in the following year can be widened to those, estimated to be around 250,000 in the finance sector, whose jobs are under threat from obsolescence arising through automation in whatever sector they are employed.
The learning grant should only be used on focused, relevant and appropriate training, just like in Singapore, with funds earmarked for, perhaps, in-demand tech skills in the areas of artificial intelligence, cyber security, data analytics, blockchain, some coding, and server management.
This is affordable; the funds are already ring-fenced in the apprentice pot. It just needs to be directed, unlocked and released, quickly.