ALS International's End of Year Review 2009

Many will be happy to see the back of 2009, such has been the myriad of challenges and uncertainties facing the entire economy. The first and second quarters were particularly disastrous for the job market, with widespread layoffs and hiring freezes affecting all industries.

A notable effect of mass layoffs was the unprecedented availability of highly qualified candidates. This led to a reduction in starting salaries, sometimes by as much as 20%, as employers realised they could upgrade their workforce at reduced cost. The situation was no different in the legal sector, where an unprecedented number of highly qualified professionals were available in the first half of the year, often willing to take significant pay cuts to secure much-needed employment.

Also reflecting the financial uncertainty facing many firms, there was a detectable increase in contracting throughout 2009, particularly amongst the financial and insurance industries, as employers shied away from the fixed-cost implications of permanent hires to protect their balance sheets.

Across the financial sector in Asia, 2009 saw the few key players without much exposure to sub prime taking the opportunity to hire strong people managers and leaders with a particular emphasis on strategic abilities, offering the ability to further drive process improvement and cost streamlining. The general sentiment for investment banking front office was weak in the beginning of the year, but gained momentum towards the second half as liquidity came back into the markets and debt and equity issues were resumed. In the global space, the fixed income and commodities area experienced expansion, with 2009 seeing a number of significant moves across sales and trading and significant sign-on bonuses. In the corporate banking space, the main upgrading and expansion activity happened, not surprisingly, in cash management and trade finance.  Finally, the hedge fund and asset management industry, after having contracted significantly from 2008 into 2009, has finally seen a rebound and a sharp spike in front office hiring which will continue into 2010. It is widely anticipated that the financial markets will continue their positive sentiment into 2010, with little to no impact from the defaults in Dubai.

In the legal sector, there were opportunities amidst the gloom. Earlier in the year, we highlighted litigation and insolvency as areas of heightened hiring activity, particularly as financial firms struggled to cope with the fallout from bad debt and the collapse of entire business lines.  Also, a small number of corporates took the opportunity to expand their in-house legal teams (particularly in the insurance sector).  While lay-offs continued at associate and partner level, highly qualified experienced candidates with language skills and existing networks were increasingly the focus of strategic hiring throughout the year, as firms looked to shore up their earning potential and develop new business.  Further to this, the last quarter has seen significant demand for Chinese-speaking corporate finance lawyers as a result of the rush by companies to raise HK$100 billion from the stock exchange by the end of this year.

In the corporate arena, most sectors were impacted by a reduction in consumer demand and corporate investment.  The decline in US and European markets had a dramatic impact on Chinese manufacturing, which in turn had a ripple effect through the key economies of the region.  Production was reduced, as was the demand for raw materials and key labour.  There was some selective hiring in the area of strategy, however, as firms sought to respond to the changing economic conditions, and also in sales and business development, where there appeared some demand for key individuals with the ability to generate short-term revenue opportunities.  With a reduction in general expenditure, there was a very negative impact on service industries, with accounting and consulting hit particularly hard. This forced many to restructure their workforce through redundancies and putting employees on long leave. 2009 was a great year for a sabbatical!

With the stock market racing almost to pre-recession heights by October, fuelled by activity in Hong Kong’s luxury property sector, the tone of the fourth quarter has been one of renewed optimism for the region. In particular, Hong Kong’s financial sector has benefited from lower exposure to sub prime investments or the fallout from the credit crunch, coupled with the growing belief that China’s exceptional economic position in the world, reinforced by its government’s rapid stimulus response, appears to have prevented a drop into a deep or prolonged recession. China's rebound has also helped other Asian economies, as its consumers and factories continue to buy imports, but the World Bank has warned that manufacturing industries will be under pressure next year as the impact of the stimulus fades away. Notwithstanding fears of a ‘double dip’ scenario, a significant appreciation in new job opportunities across all sectors was detectable during the fourth quarter as employers began to invest in preparedness for an anticipated return to ‘business as usual’ – albeit a ‘new normal’ rather than the freewheeling days of old – during 2010. In terms of storm clouds on the horizon, debt repayment in the Gulf, the ongoing regional bank failures in the US and a similar potential for the UK and Europe in 2010 must be attentively watched.