Since 2007, employment in the banking sector has experienced significative changes due to several factors including the 2008 financial crisis, the growth of digitalisation, market changes, and an increasingly complex EU regulatory framework.
The European Social Partners (UNI Europa Finance, EBF-BCESA, ESBG and EACB) therefore set out to analyse the positive and negative effects of changes in the European banking regulatory environment on employment in the sector.
Today at the final conference of the European banking social partners’ Pillar II project on “the impact of banking regulation on employment: analysing best practice at European, national and company level and developing joint approaches through European Social Dialogue”, the project report was presented, analysing the positive and negative impacts of regulation on employment. This study also had the objective of exchanging and collecting good European, national, sectoral and company/multinational practices on how banks and their workers deal with the impact of regulation. It also lays down the foundations for a joint European Social Partner approach, which was discussed today.
“The tightening of economic environment and banking regulation, digitalisation, the entry of new competitors and concentration of banks put pressure on competitiveness and jobs,” said Dr Jens Thau, Chairman of the EBF-BCESA.
According to the report, the overall result was that all topics are moderately to strongly influenced by regulation. The main impact was on employment levels in compliance, job profiles and workload.
Pia Desmet, UNI Europa Finance Vice President, said: “collective bargaining agreements remain the best solution to mitigate effectively any negative impacts on workers and working conditions.” She added: “A genuine social dialogue at all levels is needed now more than ever to keep the sector attractive, including by offering new quality employment opportunities.”
Michael Kammas, Vice-Chairman of EBF-BCESA said: “To maintain a healthy and sustainable European banking sector it is important to have a regulatory environment which ensures and is conducive to a level playing field across all sectors.”
The study shows that over the next two years, there is an increasing expectation for further negative development of the economy with mergers, consolidations, the loss of market share and job cuts. As FinTechs and digitalisation are major threats and in order to keep pace, banks must succeed in their digital transformation and they ask that the same regulations are applied internationally and to BigTechs.
William Portelli, UNI Europa Finance Coordinator for the European Bank Sector Social Dialogue, added: “We must ensure a sustainable digital transformation of the sector, to protect workers and jobs, as well as the industry, and ensure an essential community service for a value-driven economy.”
Chris De Noose, Managing Director of ESBG highlighted: “Decision-makers need to pursue a more proportionate approach to applying regulation, as higher compliance costs and overly complex rules affect some banks heavily. Additional use of the proportionality principle would also help level out the playing field as a result of competition from less traditional financial companies.”
Maureen Hick, UNI Europa Finance Director, noted: “Implementing regulation while staff numbers have been reduced can lead to an increased workload and stress. Workers should have access to the necessary training opportunities and resources must be allocated in the best way possible for the good of the bank, its employees and society as a whole.”
The report showed an increase in the costs of doing business including compliance costs, capital requirements and additional compliance costs derived from risk monitoring practices mandated by law such as Anti-Money-Laundering rules. This prompted a downward pressure on earnings and was one of the factors that led to banks’ cost reductions, achieved mostly through downsizing, and generally putting local banks in a disadvantaged position compared to larger, multinational ones.
“It is recommended that the impact studies carried out by the authorities should also include the effects of regulation on employment, depending on the business model and the activity of the institutions and their footprint in the local economic environment,” said Herve Guider, Managing Director of EACB.
Michael Budolfsen, UNI Europa Finance President, concluded: “Today marks the culmination of a four-year process analysing the impact of regulation on banking sector employment, and an important next step towards building a sustainable regulatory environment.”
The Social Partners said: “We would welcome a stronger coordination between different authorities involved in the regulatory process which would allow us to provide timely and useful input on future regulation.”
The documents for the final conference are available here.