By Neil Patrick
News reached me this morning that RBS is to make 20,000 (about 20%) of its staff redundant in the next few years. These job cuts will take RBS staff numbers to their lowest level in more than a decade.
RBS is expected to exit its Connecticut-based US investment banking business, as well as shutting down large parts of its Asian investment bank.
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| Ross McEwan, Chief Executive of RBS. Photograph: Ian Macaulay/PA |
If you are not familiar with RBS, in brief, these job losses and business closures will likely see RBS staff numbers, which stood at 161,000 at the time of its £46bn government bailout in 2008, fall to below 100,000 for the first time since the bank’s 2000 takeover of larger rival NatWest.
Since the bailout, the RBS share price has been languishing in the doldrums:
So what?
You may not care about bankers losing their jobs. You might even think it’s the very least they deserve.
I spent almost 20 years in banking and finance and left it for good in 2004. I cannot claim any great moralistic reasons for this choice or even foresight about the tsunami which was headed towards the sector. No, I was just a bit bored and wanted to do other things. But I have retained an interest in the sector and watched its grisly agonies like a train wreck.
So I feel I have a unique perspective. First inside experience of how banks operate and stage manage their communications and second a degree of detachment which makes me neither sympathetic nor an outright bank hater.
Why this news is significant
The public reaction to this news was even more interesting than the news itself. People’s reactions are shaped by their political and social beliefs more than anything else it seems.
Those of a socialist persuasion see this as some kind of moral victory, but also suspect that these redundancies will be softened with generous exit packages. Those of a more capitalist orientation see it as share price manipulation and the share price did tick up a few points on this news granted. Those who are inclined to a conspiracy view of the world see this news as evidence of yet more government and big business bosses in collusion for their own ends.
I subscribe to none of this positions, though I can see some truth in all of them. What I am really interested in though is what this tells us about the future of work in general.
This is yet more evidence of how technology will continue to destroy jobs for everyone
Buried behind the headlines was this comment:
Project Cook, the internal codename for the plans, will deliver cost cuts which are intended to help fund increased investment on vital IT systems after a series of embarrassing glitches caused millions of the bank’s customers to lose access to their money.
Ross McEwan, CEO, is understood to believe that only increased automation will allow the bank to compete with rivals such as Barclays and Santander UK, which have spent billions of pounds building state-of-the-art computer platforms to offer customers better online and mobile banking services.
This is how the banks frame their statements for public consumption. These headcount cuts are presented as being an investment to enable them to deliver better customer services through more and better IT.
The job cuts are explained as being necessary so that customers and investors can both benefit. Regulators will be happier too as these changes will improve the bank’s capital ratios.
These things may all be at least partially true. But they don’t matter. What matters is that thousands of high paying jobs will be lost and replaced with a combination of technology and lower cost labour. And because similar trends are developing within the rest of the sector and businesses as whole, many within this massive exodus of workers will find nowhere to be rehired.
This accelerated contraction of the banking sector jobs means these people will soon be looking for jobs outside the sector. Which may well mean they’ll be after your next job.
This is why this isn’t good news for anyone.
So what?
You may not care about bankers losing their jobs. You might even think it’s the very least they deserve.
I spent almost 20 years in banking and finance and left it for good in 2004. I cannot claim any great moralistic reasons for this choice or even foresight about the tsunami which was headed towards the sector. No, I was just a bit bored and wanted to do other things. But I have retained an interest in the sector and watched its grisly agonies like a train wreck.
So I feel I have a unique perspective. First inside experience of how banks operate and stage manage their communications and second a degree of detachment which makes me neither sympathetic nor an outright bank hater.
Why this news is significant
The public reaction to this news was even more interesting than the news itself. People’s reactions are shaped by their political and social beliefs more than anything else it seems.
Those of a socialist persuasion see this as some kind of moral victory, but also suspect that these redundancies will be softened with generous exit packages. Those of a more capitalist orientation see it as share price manipulation and the share price did tick up a few points on this news granted. Those who are inclined to a conspiracy view of the world see this news as evidence of yet more government and big business bosses in collusion for their own ends.
I subscribe to none of this positions, though I can see some truth in all of them. What I am really interested in though is what this tells us about the future of work in general.
This is yet more evidence of how technology will continue to destroy jobs for everyone
Buried behind the headlines was this comment:
Project Cook, the internal codename for the plans, will deliver cost cuts which are intended to help fund increased investment on vital IT systems after a series of embarrassing glitches caused millions of the bank’s customers to lose access to their money.
Ross McEwan, CEO, is understood to believe that only increased automation will allow the bank to compete with rivals such as Barclays and Santander UK, which have spent billions of pounds building state-of-the-art computer platforms to offer customers better online and mobile banking services.
This is how the banks frame their statements for public consumption. These headcount cuts are presented as being an investment to enable them to deliver better customer services through more and better IT.
The job cuts are explained as being necessary so that customers and investors can both benefit. Regulators will be happier too as these changes will improve the bank’s capital ratios.
These things may all be at least partially true. But they don’t matter. What matters is that thousands of high paying jobs will be lost and replaced with a combination of technology and lower cost labour. And because similar trends are developing within the rest of the sector and businesses as whole, many within this massive exodus of workers will find nowhere to be rehired.
This accelerated contraction of the banking sector jobs means these people will soon be looking for jobs outside the sector. Which may well mean they’ll be after your next job.
This is why this isn’t good news for anyone.
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