The paradox of record profits and simultaneous cut downs
Job-cuts and record profits – reports of both have reached us from the Nordic region the last few weeks. In Denmark and Sweden jobs in the financial sector are getting fewer and fewer. At the same time banks in Norway and Sweden are earning gigantic profits. Quite often it is the same banks that operate all across the Nordic region, appearing high in the ranking lists both for earnings and job-cuts.
The jobs being cut have not disappeared. Many of them are still being done, across the Baltic Sea or by sub-contractors. Companies and staff who give service to financial sectors are constantly growing, doing jobs that were earlier done in-house.
In Denmark, more than 1200 finance employees have lost their jobs during 2012, according to an article from Finansforbundet. Downsizing in the large companies Danske Bank, IBM, Nykredit and Nordea accounts for 838 of them. If we look at the longer perspective, there are 7.577 jobs less in the Danish finance sector the second quarter of 2012 compared with the second quarter of 2008.
The development in Sweden is similar: 3358 jobs have disappeared from the financial sector in the last 10 years, as banks have cut down their staff with 11% and insurance companies with 7%, according to Finansliv. Companies with the largest scissors are banks Swedbank, Nordea and SEB and insurance company Folksam.
The jobs are moving across the sea, with several big companies placing back-office services in the Baltic region and Poland. But many jobs are still being done in the same country as before, sometimes even at the same desk as before, but by sub-contractors. In Sweden, the number of staff in the category “services towards financial sector” has increased with 99% during the last ten years. It is getting more and more likely that your colleague does not have the same employer as you.
While jobs are being cut, banks are earning big money. Both in Sweden and Norway, this year’s profits are touching the roof – in Norway even seaming to create new records, says Dagens Næringsliv. Looking to Sweden, SVT reports that Nordea, Swedbank and Handelsbanken have together built up a profit of 54 billion SEK so far this year. From Denmark FinansWatch reports that the wages of the CEO’s of the four largest banks are 21% higher today then they were in 2007, before the financial crisis hit us.
While a sound company of course should make a healthy profit, this raises questions about priorities and also about long term thinking. If too many jobs are cut, how can the companies continue to grow and deliver in the future?