Banking crisis narrows north-south IT pay divide

The financial fall-out from the recession has caused downward pressure on IT wages in London firms, according to public sector body E-skills
Written by Richard Thurston, Contributor

The recession has caused a pay gap between the north of England and London to shrink, according to figures released from E-skills, the quango tasked with improving the nation's ICT skills.

In 2009, IT workers in the north earned 69 percent of the salary of their counterparts in the capital, up from 66 percent a year earlier, according to ReThink Recruitment, which released E-skills' data on Monday.

The recruitment agency said the gap had narrowed largely because of the financial crisis. "London's heavy reliance on the financial services sector — which is a major user of IT skills — has undoubtedly hit IT professionals in the capital hard during the recession and allowed IT salaries in many northern cities to gain ground over the last year," said Debbie Davenport, a director of ReThink Recruitment, in a statement.

The average IT salary in the north is now £32,500 — up 6 percent year-on-year — compared with £47,320 (up 2.2 percent year-on-year) in London, said ReThink. 

Though E-skills is yet to publish data for 2010, ReThink Recruitment said that the salary gap between north and south will start to widen again because of a recovery in the financial sector. Speaking to ZDNet UK on Tuesday, Michael Bennett, another director of the recruitment agency said, "London is surging at the moment. We're less likely to see the figures of 6 percent and 2.2 percent because of increased demand [in London] in the fourth quarter of last year and the first quarter of this year."

However, he said the widening of the north-south divide would be mitigated by the quantity of companies now having IT operations in the north, such as Fujitsu, the BBC and public sector organisations.

One recruiter said its experience proved the north-south divide was far narrower than stated by E-skills' data. Speaking to ZDNet UK on Tuesday, David Gittoes, business development director of Manchester-based agency BD Recruitment, said there was "no real difference" in salaries after a rapid decreasing of pay levels in London's financial market.

"The recession has found a lot of people out that were paid more than they should have been," he said, adding that London-based blue-chip companies have been effective at reducing their workforce.

Gittoes said that salaries are now typically around £5,000 a year lower than a year ago, but that the decline has now ceased.

Michael Bennett agreed that the recruitment market for IT professionals has stopped worsening. "There was an improvement in demand in the fourth quarter of 2009 in the technology market. It bottomed out in the third quarter. [But] we are nowhere near back to the level of 2007," he said.

Recruiters are mostly optimistic about UK IT job prospects. A report from the Recruitment and Employment Confederation released last week said 'IT and computing' was the fastest growing sector for recruitment in the UK out of eight sectors it analysed.

Demand for technology graduates will rise by around a fifth this year, according to February research from the Association of Graduate Recruiters.

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