THE GREATEST surprise about Royal Bank of Scotland’s (RBS) decision to lay off 950 staff at its Ulster Bank subsidiary is the scale of the proposed job losses on this island. That unwelcome news, together with job losses at Diageo affecting Kilkenny and Dundalk, marks a worrying setback for employment prospects in 2012, just as the Government prepares plans for a jobs initiative.
In 2009 when RBS – 83 per cent owned by the British government – cut the Ulster Bank workforce by 1,000, few then thought a second round of lay-offs would follow so quickly, and be of similar magnitude. Ulster Bank has cut over a quarter of its workforce since the financial crisis began. The bank, a victim of its aggressive lending practices during the later stages of the property boom, has struggled to reduce costs and contain its loan losses. And RBS, which required a €55.4 billion injection from the British government to secure its survival, has been under political pressure to scale back its operations.
The downsizing at Ulster Bank has worrying implications, for those who will lose their jobs, their competitors and bank customers in general. The two major Irish banks, which have yet to reduce staff numbers in line with their reduced operations, will be under greater pressure to act. Cumulative job losses will be far larger than those at Ulster Bank. Bank customers too will find, after domestic banks have fully downsized, major changes in the banking landscape: less competition for their custom, and far fewer bank branches offering a more limited and expensive service. One consolation that can be taken from the Ulster Bank decision is that RBS, despite the large cuts in personnel, is determined to continue as a serious force in the Irish market. That ensures some element of competition between the two pillar banks and Ulster Bank and avoids the spectre of a de facto duopoly (AIB and Bank of Ireland) re-emerging to dominate and control the banking sector.
For those who are set to lose their jobs, the employment challenges they face will be difficult for some, but should not prove insuperable for many. Undoubtedly, those in negative equity will be handicapped; with reduced labour mobility, they will be less able to exploit new job opportunities.
Others, with the skill and experience they have gained in banking, can hope with some retraining to equip themselves for careers in the financial services area. In 1987, in harsh economic conditions not unlike today, the concept of a financial services centre – which seemed like an impossible dream – was proposed as a partial solution to a major jobs crisis.
Today, the International Financial Services Centre employs some 25,000 people, and remains a beacon of hope for many. The Government, faced with a banking sector where further major job losses are expected, must establish a financial sector taskforce to develop a strategy that, where possible, matches the needs of the IFSC with the skills of thousands of redundant bank employees.