The drive for greater cost control across financial and professional services in Scotland this year will have a bigger impact on recruitment activity than Brexit. Contributor Betsy Williamson, Managing Director – Core-Asset Consulting

In its Salary Guide 2018, Core-Asset’s annual bench marking tool for employers and professionals in Scotland, the recruiter argues that sector consolidation, the burden of regulation, and the cost of moving to a fairer and more equal business environment will have a dampening effect on salary levels and recruitment activity – particularly across permanent roles.

Consolidation within the asset management industry last year, if not driven solely by costs, was certainly influenced by it, while mergers and acquisitions across wealth management, platforms and pensions was driven more clearly by a need to streamline operations and maximise growth with minimum spend.

There is little doubt that whatever the sector, operating margins will continue to face pressure in 2018. The regulatory pressures on companies will increase in 2018. MiFID II, GDPR, FINREP, COREP, PRUVAL and PRIIPS are just a few of the acronyms now commonplace.

While this is good news for candidates with the requisite skills sets, it means organisations will have to invest more in the implementation and maintenance of new regulatory frameworks. The associated costs and workflows will need to be carefully managed.

Also, the introduction of gender pay gap reporting has shone a spotlight on all sectors of the economy. However, the UK government’s latest figures highlight that the most glaring disparities are in the financial services sector, alongside construction.

Creating true remunerative parity between men and women will come at a cost. A worthwhile cost, but a cost nonetheless. Whatever the driver, corporate initiatives to reduce costs will almost inevitably have a direct impact on hiring activity and salaries – particularly permanent positions.  Temporary and contract roles will perhaps be the exception. Merger and relocation projects, regulatory change programmes and IT infrastructure upgrades may even result in an upturn for day-rate workers.

For many professionals, however, opportunities for career advancement and significant salary hikes will be limited. That said, as negotiations play out towards the March 2019 deadline, it may be Brexit – that provides a much-needed shot in the arm to the economy. Markets and businesses hate uncertainty. If the details of Brexit can be agreed – even, if not, necessarily embraced – by all, clarity could provide a much-needed boost to economic sentiment. 2018 could even end on a high.