Continued success
Scotland has experienced outstanding growth as a financial services centre. Over half of the world's top 20 financial services companies have substantial operations in Scotland, including HBOS and RBS which have their global headquarters here. Added to this, over the past year, other major international companies have significantly increased their operations in Scotland including BNP Paribas, Citigroup, HSBC, Jardine Lloyd Thomson, JP Morgan and Morgan Stanley. This section sets out comparative data on the strong progress made by the financial services industry in Scotland.
Summary
Scotland's financial services industry is one of the fastest growing sectors of the Scottish economy 3 and the summary chart shows it performing strongly against UK benchmarks.
Detail and sources for individual measurements are contained in figures 1-5.
Contribution to the economy
The financial services industry in Scotland now contributes £6 billion (over 6%) to Scottish Gross Domestic Product ( GDP) 4.
In the last five years (2000 to 2005) the financial services industry in Scotland grew by 36% while the overall Scottish economy grew by 9%. In the same period, the UK financial services industry grew by 15%.
FIGURE 1: GDP Performance in Financial Services 1998-2005
Source: Scottish Executive GDP Statistics, Quarter 4 2005
Employment
Employment within Scotland's financial services industry has continued to grow, with overall employment increasing by 3% between 2003 and 2004 despite employment in the British financial services industry falling slightly.
The comparison with the rest of Great Britain in Figure 2 illustrates this for each industry sub-sector.
FIGURE 2: FINANCIAL SERVICES EMPLOYMENT IN SCOTLAND RELATIVE TO GREAT BRITAIN BY SUB-SECTOR, 1999 - 2004
Source: Annual Business Inquiry, Dec 2005
Latest figures 5 show that 113,000 people work directly in the financial services industry in Scotland, equating to almost 5% of the workforce. If indirect employment of around 90,000 is included, the industry accounts for over 9% of Scottish jobs.
Figure 3 shows absolute employment levels and during the period 2003 to 2004, employment varied across the individual sectors of the industry as follows 6:
- banking increased by 9% to 70,000
- life and Pensions fell from 21,000 to 18,000 while maintaining its UK share
- general Insurance fell slightly to 6,500
- asset Management rose slightly to 9,400
- intermediation saw a slight rise to 9,500
FIGURE 3: FINANCIAL SERVICES EMPLOYMENT IN SCOTLAND BY SUB-SECTOR, 1999 - 2004
Source: Annual Business Inquiry, Dec 2005
Scotland is the leading UK financial services centre outside London, with over 10.5% of Britain's financial services workforce. Between 2004 and 2005, median 7 financial services earnings in Scotland rose by 13.5% to £25,000. During this period median earnings in the rest of Britain's financial services industry increased by 7%, and earnings in the wider Scottish economy remained constant.
FIGURE 4: MEDIAN EARNINGS BY OCCUPATIONAL STRUCTURE
Occupational Structure | Scotland Financial Services | Scotland - All Sectors | GB Financial Services | GB - All Sectors |
|---|
% of sector | Earnings | % of sector | Earnings | % of sector | Earnings | % of sector | Earnings |
|---|
Managers and Senior Officials | 30% | 38,000 | 13% | 31,000 | 35% | 45,000 | 16% | 34,000 |
|---|
Associate Professional and Technical | 12% | 27,000 | 15% | 25,000 | 15% | 33,000 | 15% | 26,000 |
|---|
Administrative and Secretarial and Sales and Customer Service | 49% | 17,000 | 21% | 16,000 | 41% | 18,000 | 21% | 16,000 |
|---|
Other* | 8% | 31,000 | 52% | 20,000 | 9% | 36,000 | 49% | 22,000 |
|---|
Total | 100% | 25,000 | 100% | 21,000 | 100% | 30,000 | 100% | 23,000 |
|---|
*Other includes a wide range of occupations, and in financial services, includes professional occupations such as actuaries and economists.
Source: Annual Survey of Hours and Earnings 2005
Qualifications
FIGURE 5: QUALIFICATIONS
| Qualification | Scotland Financial Services | UK Financial Services | Scotland - All Sectors | UK - All Sectors |
|---|
| Number | % of sector | Number | % of sector | % of sector | % of sector |
|---|
Above NVQ4 - Degree or Higher | 31,000 | 28.3% | 313,000 | 26.5% | 19.5% | 20.3% |
|---|
NVQ 4 - Higher Education below degree | 18,000 | 16.2% | 81,000 | 6.8% | 15.5% | 9.7% |
|---|
NVQ 3 - A level or Equivalent | 33,000 | 30.7% | 325,000 | 27.5% | 29.3% | 24.3% |
|---|
NVQ 2 GCSE A-C or Equivalent | 20,000 | 18.3% | 332,000 | 28.1% | 15.6% | 22.0% |
|---|
NVQ 1 and below* | 7,000 | 6.5% | 132,000 | 11.2% | 20.0% | 23.7% |
|---|
Total | 109,000 | 100.0% | 1,182,000 | 100.0% | 100.0% | 100.0% |
|---|
* This includes other qualifications (professional, vocational and foreign) that are not matched to NVQs
Source: Annual Population Survey 2004 (January - December) (previously called the Labour Force Survey)
The quality of the workforce within Scotland's financial services industry also continues to increase. The industry has a higher proportion of university-educated workers than either the Scottish economy as a whole or the UK financial services industry. The proportion of workers with degree-level education or above rose from 24% in 2003 to approximately 28% in 2004.
International benchmarking
In 2004, the industry's exports to foreign countries were valued at over £900 million. This represents 5% of total Scottish exports, and almost 20% of total Scottish services exports.
FiSAB and FiSIG recognise the importance of benchmarking Scotland's competitiveness in an international context. Whilst up-to-date analysis will always be constrained by the time delay in collating data from other countries, a range of indicators has been identified. As part of the Strategy, the strength of Scotland's financial services industry will continue to be monitored, tracking trends using the measures outlined in Figure 6.
FIGURE 6: INTERNATIONAL BENCHMARKING - FINANCIAL SERVICES
1 Financial Services Share of Total Employment, 2003. Sources: Scotland and UK - ABI Employee Analysis; Other Countries - OECDSTAN Database Employees (Persons) in Financial Intermediation.
2 Growth in Financial Services Employment 2000-2003. Sources: Scotland and UK - ABI Employee Analysis; Other Countries - OECDSTAN Database Employees (Persons) in Financial Intermediation.
3 Financial Services Contribution to Total Value Added 2003. Sources: Scotland & UK - Calculated from ONS/Scottish Executive GDP/ GVA Index Figures; Other Countries - OECDSTAN Database for Industrial Analysis Value Added at Basic Prices for Grand Total & Financial Intermediation.
4 Exports Per Worker, 2002 (Euro). Sources: Scotland - Input-Output Tables 2002, ROW denotes Rest of World; All other countries: OECDSTAN Database - Value Added at Basic Prices & OECD Statistics on International Trade in Services Volume 1 Detailed Tables by Service Category 1993-2002. Exchange Rates; OECD Annual Exchange Rates. 2002 Exchange Rate Used.
5 Annual Average Earnings in Financial Services 2002 (Euro). Sources: Eurostat - Structure of Earnings Survey 2002; Scotland: ASHE 2005. 2002 Exchange Rates used.