Covid-19: impact on the accounting & finance job market
After a busy 2019 – where vacancies in accounting and finance increased by 21%, 2020 is shaping up to be a very different year, with Covid-19 at the center of this shift.
For all businesses around the world, finance professionals will be an integral part of how they operate as they seek to weather the biggest market shock since the 2008 Global Financial Crisis (GFC).
Through a combination of grants, state-guaranteed loans, and tax breaks, the government has helped businesses “buy time” and helped businesses manage their cash flow pressures. With government measures primarily focused on survival during the lockdown, businesses that were less capitalized before Covid inevitably risk shutting down.
With finance at the heart of all business continuity strategies, accounting and finance professionals will need to prove their worth at the management level – where tough decisions are made about cost lines.
Despite the ability of companies to take time off, it is estimated that unemployment will rise to 2 million due to the Covid-19 crisis.
So what does this mean for accounting and finance jobs?
In a nutshell, companies may well reduce low-level to mid-level financial roles, as transactions slow down and the need for such roles diminishes. In contrast, senior CFOs who can help plan cash management, liquidity, and cost control are likely to have a high status. For accounting firms; the most important area of growth for 2020 will probably be in the Insolvency and Restructuring teams.
Trends in accounting firms
For accounting firms, this year will pose unique challenges that have no comparison lately. While activity in 2019 was buoyant, for example, there was a visible increase in activity in the first quarter of 2019 (increase in recruitments after Brexit), with more than double the vacancies of the previous two quarters combined. , this year is already shaping up to be very different.
For starters, the industry was already grappling with how best to advise clients regarding changes to IR35 (unpaid work) as well as the potential implications of the digital services tax.
At the same time, the Big 4 have been singled out for their audit services – none of them being able to meet the 90% quality audit target set by the French National Authority. competition and markets. As a result, audit recruitment increased in 2019 – growing by + 74% last year.
Now that Covid-19 is hitting, insolvency departments will likely be busier than they’ve been in a decade. For context, when looking at the impact of GFC, this has led to an increase in bankruptcies of + 36% above the average of the last ten years. As the government implements countermeasures to mitigate the worst impacts, UK GDP fell 19.1% in the three months to May 2020 – which means that insolvency practitioners will be in demand.
The other factor that could impact accounting firms is that as the crisis unfolds, there may well be a wave of consolidation mergers, with companies looking to cut costs and combine resources to overcome this crisis. With this, there is a potential for a peak of labor for Corporate Finance teams are under pressure to complete transactions.
However, overall for accounting firms, the main challenge of the Covid-19 crisis will be integration, – how to best present people to the business at a time when everyone is working from home, and do this as efficiently and quickly as possible in order to have a significant advantage over the competition.
Financial services trends
Within Financial Services, the impact of Brexit was undoubtedly visible in 2019 – with an overall decline in vacancies year over year, particularly in the banking sector. Along with this, there has also been a decrease in vacancies for accountants of -2.8% year over year.
Conversely, within the Insurance sector, recruitments remained dynamic, with volumes up + 19% last year. However, the greatest growth has been in Fintech.
As a result, while it is often said that the impact of technology is to reduce the number of jobs, when looking at the roles of qualified accountants, there has been a marked increase from one year to the next. ‘other when including Fintech in financial services.
The surge within FinTech is particularly noticeable if we compare the period 2017 to 2019, with volumes up + 61% over the period.
Impact of Covid-19
Now that the Covid-19 crisis is hitting, the question will be how banks and insurance companies are adjusting to the shift in priorities. For banks that have been pressured to make financing available, the challenge will be to compare the mandate established by the government to prescribed lending ratios. Moreover, while the government acts as a guarantor, it is only 80%, which means that banks will remain cautious about who they lend to, to avoid bad debts.
Analyzed by function, the roles of financial accounting and reporting dominate, where they represent 30% of the total jobs published in the field. The second pole of recruitment is that of Management Accounting and Financial Management, which has also experienced the strongest growth in recent years, with volumes up by + 55%. There was also a significant increase in the number of MI analysts, with vacancies up + 47%.
We are seeing similar trends within Fintech businesses, as management accounting and financial management positions have seen a significant year-over-year increase of + 142% making them the most recruited for the function. However, perhaps in a sign of increased regulatory pressure on FinTechs, the fastest growing area overall is internal audit.
In 2020, while the vacancies in the first quarter remained stable, the truer picture will only become clear later in the year.
Trends in trade and industry
Across commerce and industry (C&I), companies have increased the size of their finance teams over the past three years, with each industry registering more vacancies for accountants in 2019 than in 2017.
However, with the Covid-19 crisis, some sectors will be more impacted than others. For example, we would expect a freeze on consumer goods and services, while at the same time there is a noticeable increase in hiring in the health and pharmacy industry.
In 2019, it was especially in the north of England that recruitments were most dynamic – with volumes up + 137% in the North West and + 70% in Yorkshire and the Humber, making these regions the most dynamic.
Unexpectedly, London dominates with 38% of all accounting vacancies. What is also interesting about this is that despite the relocation of many large companies away from the capital, the region is still becoming too big, in part because it remains a hotbed for capital funding- risk (VC).
By function, Management Accounting and Financial Management have the most vacancies, where 2017-19 volumes are up by + 70%.
Interestingly, there has also been an increase in tax roles. As mentioned earlier, the new digital services tax regime that will come into effect will specifically affect tech companies, so they are likely to increase their teams to compensate. Likewise, the IR35 problem persists, with companies having to ensure compliance where blanket bans are not an option.
It is evident that the greatest fluctuation in hiring will be in the commercial and industrial sectors. Added to this was the government’s decision not to file a Brexit extension request. As a result, there will likely be a secondary shock to the market when the Withdrawal Agreement ends on January 1, 2021 – with many companies still unaware of the extent of the preparations they need to make.
While we are only at the start of this long road of change and market upheaval, one thing that has been certain over the past few months is the vital role that accounting and finance professionals will play at all times. levels to help businesses, individuals and the economy navigate through the pandemic and beyond.